Legal Question in Banking Law in India

Interest levied for non-maintenance of minimum balance on saving account

Minimum balance criteria of the bank is Rs.1500/- on saving deposit account. Bank allows to withdraw below minimum balance. Balance on my account was Rs.2500/- and I issued cheque of Rs.1800/- and bank passed the same. After passing the cheque, balance on my account was Rs.700/-. Bank levied interest on Rs.800/- (i.e. Rs 1500 � Rs.700 = Rs.800) @ 20% pa for 20 days.

Whether charging of interest for non-maintenance of minimum balance on saving account is as per law?


Asked on 8/14/08, 7:44 am

4 Answers from Attorneys

J. Radhakrishnan independent Practice

Re: Interest levied for non-maintenance of minimum balance on saving account

It is not legal for the Bank to charge interest on the credit balance in your savings Bank account, when it falls short of the minimum balance to be required to be kept. Take up the matter with the Bank and if it does not solve the issue, write to the chief executive and in case he does not also solve the problem, take up the matter with the Banking Ombudsman. These practices are rampant with the new private sector or foreign banks. The practical solution is to open a no frills savings Bank account with a nationalized bank and close the account with the new private sector Bank.

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Answered on 8/14/08, 8:31 am

Re: Interest levied for non-maintenance of minimum balance on saving account

Some banks at the time of opening an account have their customers signed agreements, where in the terms and conditions this particular provision in your question is included. So later on they charge interest on credit balance below the minimum level and show that agreement as an excuse. But a customer can chalange such agreement before judicial authority on the ground of unlawfulness of such clause. But since very small amount of money is involved in your case going for litigation will not be practicable. I suggest try to dissolve the issue through dialouge with higher authority.

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Answered on 8/14/08, 10:22 am
Pravin Vaidya Independent

Re: Interest levied for non-maintenance of minimum balance on saving account

Legally for any Bank to charge interest on the credit balance in S.B.A/c.is not permitted even if such undertaking is taken by the Bank from the customer.Please approach higher authority of the Bank & in case non-response from them approach to Banking Ombudsman of your state.

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Answered on 8/23/08, 6:52 pm
Aniruddha Pawse Aniruddha.P.Pawse Advocates

Re: Interest levied for non-maintenance of minimum balance on saving account

Write to bank and get the details

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Answered on 8/18/08, 2:12 am


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