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18
September 2017
State Bank of India (The Total Investment & Insurance
Solutions)
State
Bank of India (SBI) expects to collect Rs 2,000 crore as penalty on savings
bank accounts which have failed to maintain a minimum balance, a sum which may
be used to partly cover the costs incurred on the linking of accounts with
Aadhaar. The Total Investment & Insurance
Solutions
The
recent directive of the government to link all savings bank accounts with
Aadhaar by December 31 was a "very costly affair" as lenders were
already facing high costs in maintaining such accounts and complying with the
KYC (know your customer) requirement, says SBI Managing Director Rajnish Kumar.
To
recover such costs, including the lender's costs on ATMs and business
correspondents, the bank expects to realise over Rs 2,000 crore in the current
fiscal from account holders as penalty for failing to maintain minimum balance
in their savings accounts, he said. The Total
Investment & Insurance Solutions
"Maintaining
savings bank accounts and complying with KYC requirement is not an easy task.
Now the government has said that you have to link Aadhaar to each and every
account by December 31. So I have to look at (SBI's) 40 crore (savings bank)
accounts and it is a very costly affair," he told IANS.
According
to the government's mandate, all existing bank account holders will have to
submit Aadhaar card numbers to banks by December 31 this year, failing which
the accounts will become invalid.
Kumar
said that the process would add to the costs of banks as it involves a process
and making changes in the IT-backend as well.
"It
(Aadhaar linking) is a costly affair because you have to contact the customer,
you have to do the process, you have to make changes in IT. There are costs
associated with savings bank accounts," he said.
The
largest public lender said it also invests heavily in technology requirement to
take care of the transactions made in the savings bank accounts.
"For
maintaining savings bank accounts, there are certain costs. We have to invest
heavily in technology. Our cost on technology every year is very high and that
is more to take care of the transactions in (savings) accounts," he said.
"The
penalty realised, we will use it to recover our outgo on ATMs. On business
correspondents (BCs) channel, SBI incurs a loss of more than Rs 400 crore. We
are incurring a cost of almost Rs 2,000 crore on business correspondents
channel and ATMs per year. At least we should be able to recover that (from the
penalty)," he said. The Total Investment
& Insurance Solutions
From
April 1, SBI made it mandatory for savings bank accounts in metropolitan cities
to maintain Rs 5,000 as minimum balance, Rs 3,000 in urban areas, Rs 2,000 in
semi-urban areas and Rs 1,000 in rural areas, failing which a penalty is
levied.
He
said that the rest of the penalty realised would go to recover the bank's other
costs, including Aadhaar linking. The Total
Investment & Insurance Solutions
According
to an RTI query, SBI realised Rs 235.06 crore as penalty till June-end from
more than 60 million savings bank accounts.
"Out
of 27 crore (270 million) savings bank accounts which are required to comply
with the minimum balance requirement, there may be about 20 per cent accounts
that have not maintained the balance. We have given them enough time and
notice. These charges were applicable from April 1. Those who couldn't comply,
we recovered penalty in June," he said.
Kumar
said that the bank is, however, thinking of exempting senior citizens' and
students' accounts from such penalty.
"There
is some feedback from senior citizens and students but by and large customers
have accepted this. Whether we do make exemption relating to income group, or
senior citizens or students, is under deliberation. We are now doing some
analysis and we will take a call," he said.
In
the normal course, review on such charges happens once in a year and is
effective from April 1, but based on customer feedback, the review is expected
earlier, the SBI MD said. The Total
Investment & Insurance Solutions
"Review
is expected earlier than 2018. Nothing is cast in iron. We will also take into
account the competitive situation in the market," he said.
SBI
has a total of 400 million savings bank accounts, out of which 130 million are
Jan Dhan accounts and Basic Savings Bank Deposit (BSBD) accounts which are
exempt from minimum balance requirement and no charges are recovered from these
accounts.The Total Investment & Insurance
Solutions
