Hello everyone,
Earlier, I posted about an incident where AU Bank turned my account balance negative and asked me to pay to continue using the account. You can read the article here.
Today, I would like to point out some problems with the system. In my opinion, the RBI should work on these points to protect customers' interests.
When you open a bank account with a bank, the bank asks you to maintain a certain amount (minimum balance) in your account. Otherwise, they will charge you non-maintenance penalties. These charges can vary from bank to bank.
If you do not maintain the required minimum balance, the bank charges you non-maintenance penalties according to their SOC (Schedule of Charges). They will continue to do this every month until your bank account balance becomes zero.
For example, suppose you have a bank account with a 10,000 AMB requirement, and you do not maintain 10,000. In that case, the bank will charge you non-maintenance fees every month until your balance becomes zero, or you start maintaining 10,000.
Here is the RBI guideline regarding non-maintenance penalties, I am quoting for you:
RBI Guideline -
RBI/2014-15/308 DBR.Dir.BC.No.47/13.03.00/2014-15, Point no (vi) "It should be ensured that the balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance."
link- https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9343&Mode=0
But some banks, mainly private sector banks, still charge non-maintenance penalties even after your account balance becomes zero.
Do they make your account balance negative?
Not exactly. They have found a smart way to bypass RBI guidelines. They continue to charge you non-maintenance penalties even after your balance becomes zero, but they don't make your actual account balance negative. They just hold the negative balance for future debit. If you check your account details, you will see "Account balance," "Hold balance," and "Overall balance." So, although you have a negative balance overall, your actual balance will never become less than zero because that's against RBI guidelines. Instead, they will hold the negative balance for future debit. That means if you have a hold balance of -5000 and deposit 10,000 rupees in your account, your actual account balance will be only 5,000 rupees.
When you complain to the RBI banking ombudsman, the bank will send your account statement to the RBI, which will show your bank account balance as zero. However, the RBI does not check the hold balance or its reason. So they can close your case without any action.
So, what is the meaning of the RBI guidelines here? Banks are smarter than the RBI, and ultimately customers are suffering. I would request the RBI to look into this matter and update the guidelines to protect customers' interests.
Now, let me share what AU Bank did after I complained to the RBI against them. They closed my bank account without even asking me, and the reason is very silly: "Unsatisfactory/inappropriate conduct of the account."
My question to AU Bank is, what have I done? If I have used my bank account for any inappropriate transactions, why don't you take legal action against me? The main problem is that I filed a complaint against them with the RBI banking ombudsman and highlighted the grey areas that all banks are using to fool their customers.
I strongly request everyone to file a complaint with the RBI if you face such problems from any Indian banks. And I also request the RBI to look into this matter and update the guidelines to protect customers' interests.
Earlier, I posted about an incident where AU Bank turned my account balance negative and asked me to pay to continue using the account. You can read the article here.
Today, I would like to point out some problems with the system. In my opinion, the RBI should work on these points to protect customers' interests.
When you open a bank account with a bank, the bank asks you to maintain a certain amount (minimum balance) in your account. Otherwise, they will charge you non-maintenance penalties. These charges can vary from bank to bank.
If you do not maintain the required minimum balance, the bank charges you non-maintenance penalties according to their SOC (Schedule of Charges). They will continue to do this every month until your bank account balance becomes zero.
For example, suppose you have a bank account with a 10,000 AMB requirement, and you do not maintain 10,000. In that case, the bank will charge you non-maintenance fees every month until your balance becomes zero, or you start maintaining 10,000.
Here is the RBI guideline regarding non-maintenance penalties, I am quoting for you:
RBI Guideline -
RBI/2014-15/308 DBR.Dir.BC.No.47/13.03.00/2014-15, Point no (vi) "It should be ensured that the balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance."
link- https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=9343&Mode=0
But some banks, mainly private sector banks, still charge non-maintenance penalties even after your account balance becomes zero.
Do they make your account balance negative?
Not exactly. They have found a smart way to bypass RBI guidelines. They continue to charge you non-maintenance penalties even after your balance becomes zero, but they don't make your actual account balance negative. They just hold the negative balance for future debit. If you check your account details, you will see "Account balance," "Hold balance," and "Overall balance." So, although you have a negative balance overall, your actual balance will never become less than zero because that's against RBI guidelines. Instead, they will hold the negative balance for future debit. That means if you have a hold balance of -5000 and deposit 10,000 rupees in your account, your actual account balance will be only 5,000 rupees.
When you complain to the RBI banking ombudsman, the bank will send your account statement to the RBI, which will show your bank account balance as zero. However, the RBI does not check the hold balance or its reason. So they can close your case without any action.
So, what is the meaning of the RBI guidelines here? Banks are smarter than the RBI, and ultimately customers are suffering. I would request the RBI to look into this matter and update the guidelines to protect customers' interests.
Now, let me share what AU Bank did after I complained to the RBI against them. They closed my bank account without even asking me, and the reason is very silly: "Unsatisfactory/inappropriate conduct of the account."
My question to AU Bank is, what have I done? If I have used my bank account for any inappropriate transactions, why don't you take legal action against me? The main problem is that I filed a complaint against them with the RBI banking ombudsman and highlighted the grey areas that all banks are using to fool their customers.
I strongly request everyone to file a complaint with the RBI if you face such problems from any Indian banks. And I also request the RBI to look into this matter and update the guidelines to protect customers' interests.