Minimum balance penalties help finance JDY accounts, says SBI

State Bank of India's proposal to penalise customers who don't maintain a minimum balance will subsidise financial inclusion accounts including those under Prime Minister's Jan Dhan Yojna (PMJDY), the bank's chairman Arundhati Bhattacharya said on Wednesday.

''SBI's requirement for minimum balance is the lowest among all banks. SBI was the only bank that didn't have this as we removed it in 2012. However, now there is a burden of a lot of things. We have 11 crore financial inclusion accounts - basic savings and Jan Dhan accounts - and have to manage them as well,'' Bhattacharya said on the sidelines of a women entrepreneur convention in Mumbai.

As on 1 March, the total number of PMJDY accounts opened by SBI is 83.6 million (and another 10 million at SBI subsidiaries).

The bank also said it has not received any "formal communication" from the government for re-considering the penalty and it will take a call "if something comes". It also clarified the penalty would not apply to Jan Dhan accounts.

According to her, there are costs attached to handling, maintaining, transporting, counting, security and recycling. ''It is paid by the taxpayers. And the more cash is used, the more obstacles in inclusion. There is more credit history when cash goes away. We need credibility on the loans we give so a transparent credit history of the customer helps,'' the SBI chief said adding that most of their customers keep more than Rs5,000 in their account so they need not worry and there was no basis for such a debate.

Last week, SBI, which is the country's largest bank, said that from 1 April it would penalise its savings account holders for non-maintenance of a monthly average balance (MAB) of Rs5,000 for branches in six metros.

The move is likely to hit 310 million depositors, including pensioners and students.

It was reported that the government had urged SBI to reconsider the charges on minimum balance and also other lenders, including private sector banks to ''reconsider the charges on cash transactions and ATM withdrawals above a certain limit''.

But Rajnish Kumar, managing director – national banking at SBI, said that there has been no formal communication from the government to review or reconsider the charges.

Kumar said that if a formal communication comes, ''We will see. Every product is reviewed but this has to be looked at from a certain perspective … there are many superfluous accounts which create pressure on the system. It (charging penalty) was allowed in 2012 by RBI and we review this product every year.''

From 1 March, some private sector banks such as HDFC Bank, ICICI Bank and Axis Bank have started charging a minimum of Rs150 per transaction for cash deposits and withdrawals beyond four free transactions a month.

From 1 April, SBI will also charge Rs50 after the first three cash deposits of the month while for current account holders the cash transaction charges can be as high as Rs20,000.

''We don't think any person needs to withdraw more than four times in a month,'' Bhattacharya  said.