Wednesday, 23 January, 2019

SBI cuts base rate by 30 basis points to 8.65 per cent

SBI cuts base rate by 30 basis points which will benefit 80 lakh customers SBI cuts base rate by 30 basis points to 8.65 per cent
Nellie Chapman | 02 January, 2018, 20:37

The Ministry data showed the bank charged ₹1,771.67 crore from customers on account of non-maintenance of minimum average balance between April and November 2017.

During April-November Punjab National Bank (PNB) collected Rs97.34 crore while Central Bank of India collected Rs68.67 crore and Canara Bank raised Rs62.16 crore in penalties from customers who failed to keep stipulated minimum balance in their accounts.

Banks review MCLR on a monthly basis, while the base rate revision happens once a quarter.

The amount collected by the SBI - Rs 1,771 crore - is more than the bank's Q2 net profit (from July - September 2017) at Rs 1,581 crore, and almost half of the net profit in the half year, from April to September of 2017, at Rs 3,586 crore.

The bank re-introduced these charges in current fiscal after a long gap of five years.

If the account holder fails to maintain the required deposits SBI charges Rs 30 - Rs 50 for urban areas and metro cities; Rs 20 - Rs 40 for rural and semi-urban areas.

SBI is largest PSU bank. In India nearly all the banks charge a certain amount to account holders for non-maintenance of amount specified by banks.

He says that "This high rate of penalty appears to have no correlation with the costs for arranging such funds at, say, the call money market rate", and added "Thus it raises question of efficacy of regulation B (whereby it should be ensured that such penal charges are reasonable and not out of line with the average cost of providing the services) of the RBI's guidelines on levy of charges for non-maintenance of minimum balance in savings bank account". But the rest, 29 crore savings accounts, were subjected to charges in case the MAB wasn't maintained. The bank has also reduced BPLR (Benchmark Prime Lending Rate) from 13.70 percent to 13.40 percent.

SBI has 42 crore savings bank accounts, out of which 13 crore are Basic Savings Bank Deposits Accounts and Pradhan Mantri Jan Dhan Yojana accounts, both categories exempted from levy of such charges.

The combined bad loans of 21 public sector banks (PSBs) are estimated at Rs 7.33 lakh crore as at the end of September 2017. If the shortfall is 50 per cent or less, then the bank charges Rs 50 plus service tax.

One basis point is a hundredth of a percentage point. Initially, the accounts were divided into four - metro, urban, semi-urban and rural categories.

In September, the SBI reduced the MAB requirement for customers in metro cities to Rs 3,000 from an earlier Rs 5,000.