Module: | KYC, NPAs, Advances & Investment Valuations
Q191: Consider the following statements regarding penal charges for the non-maintenance of minimum balances in savings accounts:
1. Banks must provide a minimum of 30 days advance notice to account holders before implementing any changes to the prescribed minimum balance limits.
2. If an account balance falls below the threshold, the bank must provide exactly one month's notice to allow the customer to restore the balance before levying penal charges.
3. Penal charges must be levied as a fixed, direct proportion of the actual shortfall observed, rather than a flat, uniform fee across all deficit levels.
4. The savings account balance can eventually turn into a negative balance solely due to the repeated levy of these penal charges over consecutive quarters.
Which of the statements given above is/are correct?
2. If an account balance falls below the threshold, the bank must provide exactly one month's notice to allow the customer to restore the balance before levying penal charges.
3. Penal charges must be levied as a fixed, direct proportion of the actual shortfall observed, rather than a flat, uniform fee across all deficit levels.
4. The savings account balance can eventually turn into a negative balance solely due to the repeated levy of these penal charges over consecutive quarters.
Which of the statements given above is/are correct?
✅ Correct Answer: A
The correct answer is A. Statement 1 is correct: To ensure transparent communication, the regulatory framework imposes a mandatory 30-day advance notice period prior to banks executing any modifications to minimum balance criteria or associated fees.
Statement 2 is correct: A grace period is strictly established, dictating that banks must issue a notice and grant a full month for the customer to inject funds and cure the shortfall before assessing any penalties.
Statement 3 is correct: The guidelines explicitly forbid the use of flat penal fees, requiring the penalty to be directly proportionate (calculated as a percentage) to the exact quantum of the shortfall observed in the account.
Statement 4 is incorrect: The framework provides an absolute protective floor, explicitly stating that a savings account balance must never plunge into negative territory solely due to the automated deduction of minimum balance penalty charges.
Statement 2 is correct: A grace period is strictly established, dictating that banks must issue a notice and grant a full month for the customer to inject funds and cure the shortfall before assessing any penalties.
Statement 3 is correct: The guidelines explicitly forbid the use of flat penal fees, requiring the penalty to be directly proportionate (calculated as a percentage) to the exact quantum of the shortfall observed in the account.
Statement 4 is incorrect: The framework provides an absolute protective floor, explicitly stating that a savings account balance must never plunge into negative territory solely due to the automated deduction of minimum balance penalty charges.