India's largest lender State Bank of India (SBI) may keep the average balance requirement same in the financial year 2018-2019, however, some rationalisation is possible as the bank is currently reviewing the changes.
India’s largest lender State Bank of India (SBI) may keep the average balance requirement same in the financial year 2018-2019, however, some rationalisation is possible as the bank is currently reviewing the changes. However, it is not clear what kind of rationalisation, the bank is mulling.
In an interview with The Times of India, SBI Chairman Rajnish Kumar said while the average balance requirement at the bank may remain the same, they may do some further rationalisation effective April 1. Currently, SBI has different monthly average balance requirement for accounts held in different branches.
The bank faced criticism when it earned Rs. 1,771.67 crore, higher than its second-quarter profits from penalties imposed customers for not maintaining a minimum balance. From October last year, the bank had lowered the minimum average monthly balance (MAB) from Rs 5,000 to Rs 3,000 for saving accounts and also revised downwards the penalty imposed for not maintaining the minimum balance.
In April last year, the bank re-introduced the average balance requirement after a gap of five years. It was set differently for different types of branches. In metro cities, the minimum balance requirement was Rs 5,000; for urban and semi-urban branches, it was Rs 3,000 and Rs 2,000 respectively; and for rural branches, it was Rs 1,000.
On PNB fraud, in which Nirav Modi, a diamond czar allegedly colluded with a former employee of the Punjab National Bank (PNB) for obtaining fake Letter of Understandings (LoUs) worth Rs 11,345 crore, Rajnish Kumar said that the SBI does not have any exposure in Nirav Modi, but has exposure in the PNB and in Gitanjali. The SBI has disclosed a total exposure of Rs 1,360 crore with respect to LoUs.
On the recently announced framework by the Reserve Bank of India subsuming 20 schemes of stressed asset resolution, the SBI chief told the paper that it has given discretion to banks which will make things easier. He also said that major resolution of the 12 accounts identified by the RBI in its first list of big defaulters will be completed by next quarter.