AU Small Finance Bank Negative Balance Issue | RBI Banking Ombudsman Superpower

[TechnoFino]

Hello TFC Members,
Today i want to share a banking kissa with you guys.
I have a royal savings account with AU Small Finance Bank, but I failed to maintain the minimum balance requirement of 1 lakh rupees after February 2022. As a result, the bank deducted around 900 rupees from my account as a non-maintenance fee, and my account balance became zero. Despite this, the bank continued to charge me non-maintenance fees, leaving me with a negative balance of 8400 rupees.

I brought this issue to the attention of AU Small Finance Bank and cited the RBI guidelines, which state that a bank cannot impose non-maintenance fees on a customer whose account balance is zero.

However, the bank refused to comply with my request and even asked me to pay the negative balance before closing my account.



Frustrated by this, I decided to file a complaint with the RBI banking ombudsman. Surprisingly, I received an email from AU Bank the following day (attached screenshot), indicating that they are willing to close my account without any deposit.


I am impressed by the swift action taken by the RBI banking ombudsman, and I now have a 15-day window for AU Small Finance Bank to resolve this issue.
Hopefully, this experience will serve as a lesson for the bank to comply with the RBI guidelines and treat their customers fairly.

If you want to know about "How to file a complaint against a bank on the RBI banking ombudsman portal" visit this link - https://www.technofino.in/community...ank-on-the-rbi-banking-ombudsman-portal.3130/

Here is the RBI guidelines regarding non maintenance penalty screenshot [link- https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9343&Mode=0 ]

 

[cr_1290]

Kindly share rbi guidelines link

 

[TechnoFino]

Kindly share rbi guidelines link

Here is the guide- https://www.technofino.in/community...ank-on-the-rbi-banking-ombudsman-portal.3130/

 

[Wealth is my birth right!]

Hello TFC Members,
Today i want to share a banking kissa with you guys.
I have a royal savings account with AU Small Finance Bank, but I failed to maintain the minimum balance requirement of 1 lakh rupees after February 2022. As a result, the bank deducted around 900 rupees from my account as a non-maintenance fee, and my account balance became zero. Despite this, the bank continued to charge me non-maintenance fees, leaving me with a negative balance of 8400 rupees.

I brought this issue to the attention of AU Small Finance Bank and cited the RBI guidelines, which state that a bank cannot impose non-maintenance fees on a customer whose account balance is zero.

However, the bank refused to comply with my request and even asked me to pay the negative balance before closing my account.



Frustrated by this, I decided to file a complaint with the RBI banking ombudsman. Surprisingly, I received an email from AU Bank the following day (attached screenshot), indicating that they are willing to close my account without any deposit.


I am impressed by the swift action taken by the RBI banking ombudsman, and I now have a 15-day window for AU Small Finance Bank to resolve this issue.
Hopefully, this experience will serve as a lesson for the bank to comply with the RBI guidelines and treat their customers fairly.

If you want to know about "How to file a complaint against a bank on the RBI banking ombudsman portal" visit this link - https://www.technofino.in/community...ank-on-the-rbi-banking-ombudsman-portal.3130/

Dada is good at making things happen but it’s not easy for everyone 😧

 

[Subhajeet]

Hello TFC Members,
Today i want to share a banking kissa with you guys.
I have a royal savings account with AU Small Finance Bank, but I failed to maintain the minimum balance requirement of 1 lakh rupees after February 2022. As a result, the bank deducted around 900 rupees from my account as a non-maintenance fee, and my account balance became zero. Despite this, the bank continued to charge me non-maintenance fees, leaving me with a negative balance of 8400 rupees.

I brought this issue to the attention of AU Small Finance Bank and cited the RBI guidelines, which state that a bank cannot impose non-maintenance fees on a customer whose account balance is zero.

However, the bank refused to comply with my request and even asked me to pay the negative balance before closing my account.



Frustrated by this, I decided to file a complaint with the RBI banking ombudsman. Surprisingly, I received an email from AU Bank the following day (attached screenshot), indicating that they are willing to close my account without any deposit.


I am impressed by the swift action taken by the RBI banking ombudsman, and I now have a 15-day window for AU Small Finance Bank to resolve this issue.
Hopefully, this experience will serve as a lesson for the bank to comply with the RBI guidelines and treat their customers fairly.

If you want to know about "How to file a complaint against a bank on the RBI banking ombudsman portal" visit this link - https://www.technofino.in/community...ank-on-the-rbi-banking-ombudsman-portal.3130/

this is exactly the same thing that is happeing with alomost every branded private and foreign banks they are asking and forcing us to close down the account if any complaint is been done against them for any illegal practises be it icici, hdfc, standard chartered to name a few have experience with this three they will charge us but when asked to reverse will ask to close account pathetic

 

[prakashraj]

Here is the guide- https://www.technofino.in/community...ank-on-the-rbi-banking-ombudsman-portal.3130/

Maybe he was asking for the guideline not process.

 

[prakashraj]

After filing complaint with the bank, we have to wait for 30 days and then file a complaint with RBI.
Am I right?

 

[ltf4ever]

After filing complaint with the bank, we have to wait for 30 days and then file a complaint with RBI.
Am I right?

that is only when bank is not replying. but rbi says that you need not wait for 30 days if the bank has replied with incorrect/unsatisfactory resolution.

 

[TheMentalist]

Maybe he was asking for the guideline not process.

guidelines link has been updated in the OP I guess

 

[RupayMan]

Thank you, one lesson learned today 👍

 

[iNokia]

Interesting. I believe account closure should not be an option available to the banks to get away scot free. Let's hope RBI makes some changes.

 

[vn_1]

I guess I have to do the same for my Idfc online account. Opened it back in September 2022 and they froze it immediately because my permanent and communication addresses are different. When contacted they asked me go to the branch which is 100km away and when I declined they said they will some agent to my place. That is it. No call, email or sms. But I do get warnings for non maintenance of mab. Now the balance is -1770.

 

[ltf4ever]

a question, what happens if you let the 'negative' balance pile up and just forget about that account? let it reach in minus lakhs or crores. since it is against rbi rules, banks wont even be allowed to take any action against you or send recovery agents etc. are they counting this negative balance as overdraft or something? @TechnoFino ?

 

[Walter White]

a question, what happens if you let the 'negative' balance pile up and just forget about that account? let it reach in minus lakhs or crores. since it is against rbi rules, banks wont even be allowed to take any action against you or send recovery agents etc. are they counting this negative balance as overdraft or something? @TechnoFino ?

If you don't use the account for a long time, it becomes dormant. As per RBI guidelines, MAB charges cannot be deducted for dormant accounts. You can negotiate with the bank to close the account without any charges. Else, forget about the fact that the account exists.

 

[RupayMan]

If you don't use the account for a long time, it becomes dormant. As per RBI guidelines, MAB charges cannot be deducted for dormant accounts. You can negotiate with the bank to close the account without any charges. Else, forget about the fact that the account exists.

I had SBI salary zero balance account in 2014 and it's used one year only after that moved to another bank, from then till today account balance is still in positive, left 300 rs, now it's 400+ with interest.. but account status is inoperative.. means dormant.. SBI didn't impose MAB charges still now

 

[vn_1]

I guess I have to do the same for my Idfc online account. Opened it back in September 2022 and they froze it immediately because my permanent and communication addresses are different. When contacted they asked me go to the branch which is 100km away and when I declined they said they will some agent to my place. That is it. No call, email or sms. But I do get warnings for non maintenance of mab. Now the balance is -1770.

Adding more details:
1. Your aadhaar address<permanent> and current residence address must be same. It was not mentioned during application stage.
2. They did not inform me when they froze it.
3. They froze my account, but they want me to take their personal loans.
frozen account: no contact
Personal loan: contact and harassment.

 

[Walter White]

I had SBI salary zero balance account in 2014 and it's used one year only after that moved to another bank, from then till today account balance is still in positive, left 300 rs, now it's 400+ with interest.. but account status is inoperative.. means dormant.. SBI didn't impose MAB charges still now

Unlike banks such as HDFC and Axis, SBI is much lenient when it comes to MAB charges. And the good part is that SBI now doesn't charge for not maintaining MAB.

 

[G1jot]

Hello TFC Members,
Today i want to share a banking kissa with you guys.
I have a royal savings account with AU Small Finance Bank, but I failed to maintain the minimum balance requirement of 1 lakh rupees after February 2022. As a result, the bank deducted around 900 rupees from my account as a non-maintenance fee, and my account balance became zero. Despite this, the bank continued to charge me non-maintenance fees, leaving me with a negative balance of 8400 rupees.

I brought this issue to the attention of AU Small Finance Bank and cited the RBI guidelines, which state that a bank cannot impose non-maintenance fees on a customer whose account balance is zero.

However, the bank refused to comply with my request and even asked me to pay the negative balance before closing my account.



Frustrated by this, I decided to file a complaint with the RBI banking ombudsman. Surprisingly, I received an email from AU Bank the following day (attached screenshot), indicating that they are willing to close my account without any deposit.


I am impressed by the swift action taken by the RBI banking ombudsman, and I now have a 15-day window for AU Small Finance Bank to resolve this issue.
Hopefully, this experience will serve as a lesson for the bank to comply with the RBI guidelines and treat their customers fairly.

If you want to know about "How to file a complaint against a bank on the RBI banking ombudsman portal" visit this link - https://www.technofino.in/community...ank-on-the-rbi-banking-ombudsman-portal.3130/

Here is the RBI guidelines regarding non maintenance penalty screenshot [link- https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9343&Mode=0 ]

Hi All

This is my first post in the forum as I am quite new here. I wish to inform that I am a banker and would like to shed some light in the near vacinity of the subject matter and I am in no way associated with the bank in question.

First of all banks are not allowed to make the account balance "negative" by any means as they please. However if terms and conditions already agreed upon at the time of opening the account are not met by the customer it results in deduction of charges in the account. However this doesn't give banks the right to turn your balance negative but instead the charges are accrued in the account after the account turns zero. In other words they remain outstanding or pending for deduction from the account. The term "negative balance" used by the branch bankers is a misnomer and will never be used when communicating with the escalation matrix. This is generally used verbally by the branch officials only to make the general folks understand the ongoing situation of "accrued charges" or "outstanding charges" as the general public often don't always understand the technical terms. So this means when funds are available in future then only such "accrued or outstanding charges" will be deducted from the account. To summarise I have never seen a statement where the account balance is in negative unless it is a loan account. This is not how the bank accounting is supposed to work. Banks can not turn your savings account into a loan account.

In this particular case when the matter is escalated it is revealed that there are two types of charges mentioned. One is minimum balance charges and other one is return handing (handling?) charges which ideally pertain to cheque bounce/EMI bounce which were clearly not mentioned in the ombudsman complaint later (cheeky but this happens all the time honestly) Now the bank takes an action by stating that due to unsatisfactory/inappropriate conduct the account must be closed which is most probably due to the high cases of dishonour of cheque/EMI itself and not due to minimum balance dues or the RBI intervention. FYI the dishonour of cheque is a criminal offence and probably the reason for the misconduct mail and account closure. Also RBI is always pro-customer even if the customer is in the wrong and doesn't share complete facts with the ombudsman. Ombudsman will always ask for explanation from the respective bank regarding the complaint and from what I have seen, banks generally don't like to contest with customer on complaints to avoid further customer dissatisfaction and also to please the ombudsman. Banks only contest if the reputational risk and/or financial risk far outweighs the customer profitability and the customer is outrageously in the wrong .

Also note that Bank and Banker are completely two different things. The bank will always work under the purview of the guidelines issued from time to time but the onus is on the banker to ensure the same. The communication from escalated officials is almost fool proof and will never use such words as "negative balance". Your local branch banker on the other hand may or may not be able to guide you correctly (often due to limited knowledge among other random factors) leading to confusion among customers and often this becomes the reason for complaints in future. The banker often make mistakes which are generally borne by the customer and in turn expose the bank to face the associated risks from the regulator when the matter is escalated. Meanwhile the same bankers also have the authority to simply reverse the charges if approached let's say not aggressively. The whole matter would have been resolved in a matter of minutes if the repo with manager was good. It is the mutual trust and understanding between the customer and the banker that keeps the relationship going. The charges for dishonour of cheque/EMI in particular are generally very high so as to discourage the customers to commit this criminal offence and generally managers don't promote reversals in dishonour cases.

Cutting short I am willing to bet that the account statement showed zero balance but the banker "told" the customer about the negative balance and the situation was escalated. If in a rarest scenario I am wrong and indeed the balance in the statement shows a negative figure and it is not a loan account then it has to be a technical bug still not taken care of and the bank remains at risk. Please do share such a statement for research purposes.

Also we often say that a certain public sector bank is bad in offering basic services and a certain private sector bank charging unnecessarily and exorbitantly. I just want to add that one should criticise the players (read bad bankers) not the game. The banking game is beautiful. We love their LTF cards.

 

[VISHESH_BANSAL]

Hi All

This is my first post in the forum as I am quite new here. I wish to inform that I am a banker and would like to shed some light in the near vacinity of the subject matter and I am in no way associated with the bank in question.

First of all banks are not allowed to make the account balance "negative" by any means as they please. However if terms and conditions already agreed upon at the time of opening the account are not met by the customer it results in deduction of charges in the account. However this doesn't give banks the right to turn your balance negative but instead the charges are accrued in the account after the account turns zero. In other words they remain outstanding or pending for deduction from the account. The term "negative balance" used by the branch bankers is a misnomer and will never be used when communicating with the escalation matrix. This is generally used verbally by the branch officials only to make the general folks understand the ongoing situation of "accrued charges" or "outstanding charges" as the general public often don't always understand the technical terms. So this means when funds are available in future then only such "accrued or outstanding charges" will be deducted from the account. To summarise I have never seen a statement where the account balance is in negative unless it is a loan account. This is not how the bank accounting is supposed to work. Banks can not turn your savings account into a loan account.

In this particular case when the matter is escalated it is revealed that there are two types of charges mentioned. One is minimum balance charges and other one is return handing (handling?) charges which ideally pertain to cheque bounce/EMI bounce which were clearly not mentioned in the ombudsman complaint later (cheeky but this happens all the time honestly) Now the bank takes an action by stating that due to unsatisfactory/inappropriate conduct the account must be closed which is most probably due to the high cases of dishonour of cheque/EMI itself and not due to minimum balance dues or the RBI intervention. FYI the dishonour of cheque is a criminal offence and probably the reason for the misconduct mail and account closure. Also RBI is always pro-customer even if the customer is in the wrong and doesn't share complete facts with the ombudsman. Ombudsman will always ask for explanation from the respective bank regarding the complaint and from what I have seen, banks generally don't like to contest with customer on complaints to avoid further customer dissatisfaction and also to please the ombudsman. Banks only contest if the reputational risk and/or financial risk far outweighs the customer profitability and the customer is outrageously in the wrong .

Also note that Bank and Banker are completely two different things. The bank will always work under the purview of the guidelines issued from time to time but the onus is on the banker to ensure the same. The communication from escalated officials is almost fool proof and will never use such words as "negative balance". Your local branch banker on the other hand may or may not be able to guide you correctly (often due to limited knowledge among other random factors) leading to confusion among customers and often this becomes the reason for complaints in future. The banker often make mistakes which are generally borne by the customer and in turn expose the bank to face the associated risks from the regulator when the matter is escalated. Meanwhile the same bankers also have the authority to simply reverse the charges if approached let's say not aggressively. The whole matter would have been resolved in a matter of minutes if the repo with manager was good. It is the mutual trust and understanding between the customer and the banker that keeps the relationship going. The charges for dishonour of cheque/EMI in particular are generally very high so as to discourage the customers to commit this criminal offence and generally managers don't promote reversals in dishonour cases.

Cutting short I am willing to bet that the account statement showed zero balance but the banker "told" the customer about the negative balance and the situation was escalated. If in a rarest scenario I am wrong and indeed the balance in the statement shows a negative figure and it is not a loan account then it has to be a technical bug still not taken care of and the bank remains at risk. Please do share such a statement for research purposes.

Also we often say that a certain public sector bank is bad in offering basic services and a certain private sector bank charging unnecessarily and exorbitantly. I just want to add that one should criticise the players (read bad bankers) not the game. The banking game is beautiful. We love their LTF cards.

Lien is Marked Against the Account/Amount is on Hold Appears in Netbanking or Mobile Banking App for any Pending Charges.

Some Banks also Show Available Balance and Effective Available Balance Separately

but as you told My Bank Statements never showed Available Balance in negative Even if lien is Marked against my Account for any Pending Charges.

But When you check netbanking or Mobile Banking , Effective Available Balance would become negative but Available Balance is always Zero if Lien is Marked or Amount is on Hold for any Pending Charges

 

[TechnoFino]

Cutting short I am willing to bet that the account statement showed zero balance but the banker "told" the customer about the negative balance and the situation was escalated. If in a rarest scenario I am wrong and indeed the balance in the statement shows a negative figure and it is not a loan account then it has to be a technical bug still not taken care of and the bank remains at risk. Please do share such a statement for research purposes.

Here you go -


Statement is not showing negative balance doesn't mean that the account balance is not negative, we have to check effective balance also. you are right, bank doesn't show negative balance but they hold that negative charges and when customer fund their account they deduct that charges? but is that allowed?

return handing (handling?) charges which ideally pertain to cheque bounce/EMI bounce which were clearly not mentioned in the ombudsman complaint later (cheeky but this happens all the time honestly)

I'm ready to pay that fees, I just asked for non maintenance charges waiver, why should I mention other charges?