In India, where almost every citizen has a bank account, either with a government or private sector bank, banks have their own set of rules. One of these rules is the requirement to maintain a minimum average monthly balance in accounts. If the balance falls below the prescribed limit, a penalty is imposed. Recently, DBS Bank, a private sector institution, made a significant announcement that has raised concerns among its account holders. According to the new rule, if the account balance is less than Rs 10,000, a penalty of 6% will be charged.
The rule states that the average monthly balance must be maintained at a minimum level, and any shortfall will attract a penalty. For instance, if a person has Rs 8,500 in their account, which is 6% less than the required balance of Rs 10,000, they will have to pay a penalty of 6% on the shortfall of Rs 1,500. DBS Bank has informed all its customers about this new rule through text messages, stating that it will come into effect on August 1, 2025.
The minimum average monthly balance requirement varies for different types of accounts. For a regular Savings Account, the limit is Rs 1,000, while for a Growth One Savings Account, it is Rs 5,000. The DBS Bank’s Savings Account requires a minimum balance of Rs 10,000. Additionally, the Lakshmi Savings Youth Power Account requires a balance of Rs 100, and the TASC Savings Youth Power Account requires Rs 10,000. If the account holders fail to maintain the minimum average monthly balance, they will be levied a penalty of up to 6% on the shortfall.
This new rule is expected to have a significant impact on DBS Bank account holders, who will need to ensure that they maintain the minimum required balance to avoid the penalty. The rule is set to come into effect on August 1, 2025, and account holders are advised to take necessary steps to comply with the new requirements. The move by DBS Bank is seen as a way to encourage account holders to maintain a minimum balance, which can help the bank to manage its liquidity and reduce the risk of low deposits. However, it remains to be seen how account holders will respond to this new rule and whether it will have a significant impact on their banking behavior.