SBI had earlier defended the charging of penalties, saying that it was meagre compared to services it provided.
The country's largest lender, State Bank of India (SBI) has slashed charges for non-maintenance of Average Monthly Balance (AMB) in savings accounts by almost 75 per cent.
The revised charges will be effective from April 01, 2018 and will benefit over 25 crore customers.
The bank said in a release that customers in metro and urban centres will now have to pay Rs 15 per month plus GST.
SBI has also slashed charges for not-maintenance of Rs2,000 as ABM in bank accounts in semi-urban areas to Rs7.50-12 and Rs1,000 in accounts in rural area to Rs5-10. The AMB for accounts from metro areas was set at Rs5,000 and those from urban areas at Rs3,000.
Jan Dhan Yojana accounts, basic savings bank deposits accounts (BSBD), pensioners, beneficiaries of social benefits from the government and accounts of minors are exempted from complying with the minimum balance requirement.
According to the last notification issued by the bank, account holder in urban, semi-urban and rural places had to maintain a minimum balance of Rs 3000, Rs 2000 and Rs 1000 respectively. The move had invited widespread criticism.
Public sector banks (PSBs) are reeling under bad loans.
The features of BSBD accounts are available on the bank's website bank.sbi. "The bank has always focused on keeping the interests of its customers first and this is one of our many efforts towards fulfilling customers' expectations", he added. On the other hand, if we talk about rural areas, you have to maintain a balance of 1000 rupees in your account as a minimum balance.
In this case, the SBI Bank has replaced the penalty again. Within a particular category, the bank levies charges depending on the shortfall.
However, it needs to be noted that, the customer can not have any other Savings Bank Account, if he/she has a BSBD Account.
SBI claims the reduction is expected to benefit 250 million customers. Currently, the charges are in the range of Rs20-40.