Citibank, Barclays Bank increase minimum balance for savings accounts

The foreign banks are increasing the minimum balance the customers required to hold in their savings accounts. The banks are taking this move in order to close inactive accounts and increase low cost deposits.

Citibank, largest foreign lender in the country, has increased the average monthly balance requirement for its Suvidha savings account. From November 1 the Suvidha savings account customers will be required to maintain average monthly balance of Rs 25,000 instead of Rs 10,000. Earlier this year, British lender Barclays Bank has increased minimum balance requirement from Rs 10,000 to Rs 25,000. After this move both the banks have to similar level of Standard Chartered, last year in December, the bank had increased its minimum balance requirement, so as HSBC. However ABN AMRO, has not hiked its minimum balance requirement of Rs 10,000.

Saru Kaushal, Business Manager-Suvidha at Citibank India told, “Citibank Suvidha is designed as a zero minimum balance account and continues to remain so. The monthly relationship value is a requirement that applies only when there is an interruption in salary credit... Suvidha account holders can choose to maintain the net relationship value across a bouquet of products comprising savings account balance, fixed deposits, mutual funds and insurance premium paid.”

According to a senior executive of a leading foreign bank, “Most foreign banks are doing it to weed out inactive accounts and attract the right kind of customers, since most foreign banks target premium customers. Banks also want to encourage the right kind of behavior among customers”.

Another foreign banker pointed out, “Foreign banks do not have the branch network that Indian banks do to access low-cost deposits. And since every transaction costs money, accounts with a minimum balance of Rs 10,000 are not remunerative”.

In India all public sector banks and foreign banks are required to offer a minimum number of no-frills accounts with zero minimum balance requirements. On these accounts banks do not give any basic features such as ATM-and-debit card and free cheque books.

Previously this year in March, HDFC Bank country’s second largest private sector lender, raised its minimum balance requirement to Rs 10,000 for urban savings account customers.

While last year ICICI Bank had raised its minimum balance requirements to Rs 10,000.