Many banks send messages if the balance in your bank account goes below the minimum required amount. The minimum bank balance is the minimum amount that a customer needs to keep in his or her account for enjoying some service benefits. Banks impose a penalty if you fail to maintain a minimum balance in their accounts. Some banks insist on maintaining a minimum average quarterly balance while some ask their customers to maintain a monthly balance. As a bank account holder, you must know the importance of keeping the minimum balance in your account. Get an idea about why banks insist to maintain a minimum balance in your account.
Important to keep the minimum bank balance but neglected by many
Many public and private sector banks in India collected thousands of crores of rupees from their customers for their failure to maintain the minimum bank balance in their account. Everybody knows that it is important to maintain the minimum balance in their account, but most of them neglected it. Each and every holder of a savings bank account needs to maintain the minimum balance in order to avoid penalties and enjoy complete bank services.
How the minimum Average balance in your bank account calculated
Banks consider every closing – day balance in a given month and calculate its average to check the minimum average bank balance. They add the end-of-the-day balance of each day and divide the amount by the number of days in that month to calculate the minimum balance required in your account.
Widely imposed penalty by banks
The banks operating in India insist their customers keep a minimum balance in their account. Non-maintenance of minimum bank balance can be a major issue for several banks in India as it is a cost for them to maintain and provide service to the savings account. Banks impose minimum balance conditions in order to recover this cost. They retain an amount on a regular basis in the savings account to recover the cost. The charges levied by banks for non-maintenance of minimum balance generate significant revenue for them. Charges levied by banks for non-maintenance of minimum balance are among the widely imposed penalties by banks.
Summary of non-maintenance of minimum bank balance
- Each bank has the responsibility to inform their customers when the minimum bank balance required in their savings accounts go below through email/SMS/letter
- Penalty charged for the non-maintenance of minimum bank balance is in proportion to the shortfall of the required balance.
- Bank may limit the services to their customers if they do not maintain the minimum bank balance in their account.
- Usually, banks offer one month grace period to their customers to restore the minimum balance in their account.
- Bank cannot charge any penalty more than the actual cost of providing the service.
- The charges levied for not maintaining the minimum balance must be reasonable.
Keep a minimum balance in your saving bank account in order to avoid the penalty charged for not maintaining the minimum balance and enjoy all the services provided by your bank.