My friend Sheetal Sharma, a 30-year old marketing professional, loves shopping around to buy the goodies. She holds a savings bank account with State Bank of India, the largest bank in India having more than 15,000 branches and about 50,000 ATMs across the country. And it's the cash that she uses for the bulk of her shopping. But now she would have to change her strategy as SBI has introduced a minimum balance norm with effect from April 1, failing which a penalty would be levied on the account holders. So, if all of you including my friend Sheetal would need to be updated of the new phenomenon that has been introduced or rather re-introduced by SBI. And this platform aims to deliver that dose of update you need to stay free of the charges that could eat into your account balance.

What's the Fuss About SBI Minimum Balance Norm?

It's not that the minimum balance requirement is anything new for SBI as it was charging customers for not able to maintain the same five years back. The minimum balance requirement is ₹5,000 in the metro cities, ₹3,000 in urban, ₹2,000 in semi-urban and ₹1,000 in rural areas. If you are living in the metro cities, a penalty of ₹100 plus service tax would be levied in the event of the balance falling below 75% of the Monthly Average Balance (MAB). Get ready to pay a charge of 50 plus service tax in case the shortfall is 50% or less. The people, living in rural areas, would have to pay a penalty of ₹20-50 if they fail to keep up with the minimum balance requirement.

How is MAB Calculated?

The calculation of MAB is done in a simple way across banks in India. The first step in the calculation is the addition of closing balances of each day throughout the month. The sum total then gets divided by the number of days in a month to arrive at MAB, which you need to maintain.

MAB=Sum Total of Daily Closing Balance in a Month/Number of Days in a Month

Sheetal is residing in Nagpur which figures among the Tier-II city of India. In that region, SBI minimum balance requirement would be ₹3,000. So, Sheetal, if you are reading this article, you can skip the penalty by keeping ₹90,000 in a day and have zero in the remaining days of a month. But depositing ₹90,000 in one go may not be feasible for you. So, stay glued to the calculation process and the formula as shown above to get an idea of how much you need to keep in your account to be up with MAB requirement.

But people like Sheetal are required to focus on other things beyond MAB as well. It is because of the fact that SBI has now started charging on cash deposits and withdrawal from ATMs beyond a specific limit.

Charges on Cash Deposits

If you are a savings account holder with SBI, you can get away from the penalty on three instances of cash deposits in a month, beyond which ₹50 and service charge would get debited from your account.

ATM Withdrawals Too Come Under Charge Scanner

Cash withdrawals from SBI ATMs beyond five times in a month would attract a penalty of ₹10. The penalty doubles to ₹20 when the withdrawals from other bank's ATMs exceed three in a month. But there is a silver lining on ATM withdrawals for account holders. Dying to know what is it? It's the balance of a specific number that holds the key here. If the balance is more than 25,000, account holders withdrawing from SBI's ATM will not be charged irrespective of the limit set by the bank for a free transaction. Those customers who are using SBI debit card to withdraw cash from other banks' ATMs won't be charged provided they have a balance of more than ₹1,00,000 in their account.

Given the way the charges have come up with regards to SBI minimum balance requirement and cash transactions, it won't be a bad idea if you transition your financial life into a digital mode. By doing so, you can escape the charges while executing the transactions without any worry. There are many e-wallets today which you can use to shop and avail discounts at the same time. Get cashless and prevent your hard-earned money to become the bunny of 'Charge' syndrome.