At the outset, let me clarify that this site is designed by a group of senior Banking Professionals to assist Bank Customers at large to provide guidance for resolution of any complain/query/grievance in respect of financial services. This site does not belong to any Bank or a regulator, which may please be noted.
As regards your complaint, I am reproducing the relevant RBI guidelines with regard to levy of penal charges.
November 20, 2014
Levy of penal charges on non-maintenance of minimum balances in savings bank accounts
Please refer to our circular DBOD.Dir.BC.53/13.10.00/2002-03 dated December 26, 2002 on ‘Minimum Balance in Savings Bank Accounts’ advising banks to inform customers, in a transparent manner, regarding the requirement of minimum balance in savings bank account and levy of penal charges for non-maintenance of the same at the time of opening the account.
2. In this connection, a reference is invited to paragraph 30 of Part B of First Bi-monthly Monetary Policy Statement, 2014-15 announced on April 1, 2014, regarding ‘Developmental and Regulatory Policies’ proposing certain measures towards consumer protection. One of the proposals contained therein was that banks should not take undue advantage of customer difficulty or inattention. Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level. A reference is also invited to the recommendations of Damodaran Committee on customer service in banks which, inter-alia, recommended that ‘banks should inform the customer immediately on the balance in the account breaching minimum balance and the applicable penal charges for not maintaining the balance by SMS/Email/letter. Further, the penal charges levied should be in proportion to the shortfall observed’.
3. The policy announcement has been reviewed after extensive consultation with banks. Consequent to these deliberations and after taking into consideration the recommendation of Damodaran Committee, it has been decided that while levying charges for non-maintenance of minimum balance in savings bank account, banks shall adhere to the additional guidelines given in Annex. The guidelines come into effect from April 1, 2015.
4. These guidelines should be brought to the notice of all customers apart from being disclosed on the bank’s website.
5. In the meantime, all banks are advised to take immediate steps to update customer information so as to facilitate sending alerts through electronic modes (SMSs/emails etc) for effective implementation of the guidelines.
The latest on the subject is a news item in the Time of India dated May 11, 2016 which reads "Negative balances in savings accounts due to penalty charges are now history following a directive from the central bank. The RBI has asked banks to stop imposing charges for non-maintenance of minimum balance once the balance in a savings account touches zero.
In the light of the above, I suggest you to take up the matter with the Bank's Nodal Officer for amicable resolution. Contact details of Nodal Officer can be found on the bank's website. In case you don't receive satisfactory response you can escalate to the Banking Ombudsman for resolution, 30 days after your complaint to the bank
J R Mohandas