AU Small Finance Bank Negative Balance Issue | RBI Banking Ombudsman Superpower

[VISHESH_BANSAL]

here you go -
View attachment 11994

Scroll down You will se Account Balance.
Account Balance is Also negative ?

 

[TechnoFinoTechnoFino is verified member.]

Scroll down You will se Account Balance.
Account Balance is Also negative ?

after that app showing recent transactions. Available balance is the account balance.

 

[mgforce]

................................................
Also we often say that a certain public sector bank is bad in offering basic services and a certain private sector bank charging unnecessarily and exorbitantly. I just want to add that one should criticise the players (read bad bankers) not the game. The banking game is beautiful. We love their LTF cards. 🙂

Thanks for sharing the other perspective! Interesting to read.

For Customers, Bankers = Bank! It is people and their behavior which matters.

 

[VISHESH_BANSAL]

after that app showing recent transactions. Available balance is the account balance.

When you scroll Down till end, You will see Account Balance, Unclear and Hold Separately under the Head Funds.

Last .Month SMS charges was deducted from My AU Account.
Pending SMS Charges was visible in Hold, Account Balance was zero and Available Balance which is reflecting in your screenshot was -17.70 INR

 

[G1jot]

Here you go -

View attachment 11994
Statement is not showing negative balance doesn't mean that the account balance is not negative, we have to check effective balance also. you are right, bank doesn't show negative balance but they hold that negative charges and when customer fund their account they deduct that charges? but is that allowed?


I'm ready to pay that fees, I just asked for non maintenance charges waiver, why should I mention other charges?

Here I introduce lien and negative lien. While lien holds your own funds (accounts having sufficient balance) the negative lien holds the future funds (account balance as zero). Negative Lien is the next level thing that requires senior managerial or HO level authority to impose on the account and this generally means something is not right in the account or the matter has been escalated to take such a call. This depends on bank to bank. Some new age banks might allow automated negative lien. Most of the banks that I know of do not put an automated negative lien and if funds are now available the bank will wait for "day end" to deduct those charges. This is supposed to be the automated way. If by manual intervention a negative lien has been marked that is a different story.

The mobile app or internet banking is for the convenience of the customer. Whenever the negative lien is marked in the account the effective available balance will show as negative but that is only indicative of the accrued charges even though they are not yet debited from the account as the actual balance is zero. As you correctly mentioned the bank will wait for the next credit of funds to deduct those accrued charges. This is an automated process well within the guidelines. Also charges are only accrued till the account becomes dormant.

Also in the original post the ombudsman complaint mentioned the total dispute amount as 8,378/- which meant the dispute was for ALL the charges and not just AMB charges. So basically you were asking for waiver for both kind of charges. We all want our charges back so no judgements here and no offence meant. But the correct way would have been to visit your bank and ask for the bifurcation of such accrued charges and make the reversal request accordingly.

As I mentioned earlier the banker can reverse all kind of charges but reversing the dishonour cheque/EMI charges is neither moral nor ethical as they promote an offence. But again if one is having a good repo with the RM or the branch manager and ask them nicely nothing is impossible. It is totally their call on how much to reverse.

 

[G1jot]

Thanks for sharing the other perspective! Interesting to read.

For Customers, Bankers = Bank! It is people and their behavior which matters.

This is absolutely correct. Just like we chose who we want to be friends with we should always bank with people/bankers (if we are lucky enough) who are truly genuine in nature and will not exploit us and will guide us correctly.

The idea is to know our rights as a customer and at the same time be polite to the banker then we maximise our chances to find a good banker.

 

[TechnoFinoTechnoFino is verified member.]

But the correct way would have been to visit your bank and ask for the bifurcation of such accrued charges and make the reversal request accordingly.

I've done that multiple times, and they were not helpful. And yes, holding a negative balance for future credit is well within RBI guidelines, but I think that is not ethical. And I think RBI should clarify this, multiple complaints can trigger a feedback to the senior RBI officials.

As I mentioned earlier the banker can reverse all kind of charges but reversing the dishonour cheque/EMI charges is neither moral nor ethical as they promote an offence.

So, let me share why this happened. One AU employee told me "If you can give me an X lakh rupee cheque (which will be deposited in your bank account), then I'll manage the non-maintenance charges waiver". I said, "Okay, but manage the charges waiver first and then deposit.
But he deposited my cheque without managing the charges waiver and told me he'd give me 5000 rupees from his pocket. lol
So I called my bank and asked them to stop the cheque.
I have reported this to the AU SFB also.

 

[blacktiger]

Hi All

This is my first post in the forum as I am quite new here. I wish to inform that I am a banker and would like to shed some light in the near vacinity of the subject matter and I am in no way associated with the bank in question.

First of all banks are not allowed to make the account balance "negative" by any means as they please. However if terms and conditions already agreed upon at the time of opening the account are not met by the customer it results in deduction of charges in the account. However this doesn't give banks the right to turn your balance negative but instead the charges are accrued in the account after the account turns zero. In other words they remain outstanding or pending for deduction from the account. The term "negative balance" used by the branch bankers is a misnomer and will never be used when communicating with the escalation matrix. This is generally used verbally by the branch officials only to make the general folks understand the ongoing situation of "accrued charges" or "outstanding charges" as the general public often don't always understand the technical terms. So this means when funds are available in future then only such "accrued or outstanding charges" will be deducted from the account. To summarise I have never seen a statement where the account balance is in negative unless it is a loan account. This is not how the bank accounting is supposed to work. Banks can not turn your savings account into a loan account.

In this particular case when the matter is escalated it is revealed that there are two types of charges mentioned. One is minimum balance charges and other one is return handing (handling?) charges which ideally pertain to cheque bounce/EMI bounce which were clearly not mentioned in the ombudsman complaint later (cheeky but this happens all the time honestly) Now the bank takes an action by stating that due to unsatisfactory/inappropriate conduct the account must be closed which is most probably due to the high cases of dishonour of cheque/EMI itself and not due to minimum balance dues or the RBI intervention. FYI the dishonour of cheque is a criminal offence and probably the reason for the misconduct mail and account closure. Also RBI is always pro-customer even if the customer is in the wrong and doesn't share complete facts with the ombudsman. Ombudsman will always ask for explanation from the respective bank regarding the complaint and from what I have seen, banks generally don't like to contest with customer on complaints to avoid further customer dissatisfaction and also to please the ombudsman. Banks only contest if the reputational risk and/or financial risk far outweighs the customer profitability and the customer is outrageously in the wrong 😉.

Also note that Bank and Banker are completely two different things. The bank will always work under the purview of the guidelines issued from time to time but the onus is on the banker to ensure the same. The communication from escalated officials is almost fool proof and will never use such words as "negative balance". Your local branch banker on the other hand may or may not be able to guide you correctly (often due to limited knowledge among other random factors) leading to confusion among customers and often this becomes the reason for complaints in future. The banker often make mistakes which are generally borne by the customer and in turn expose the bank to face the associated risks from the regulator when the matter is escalated. Meanwhile the same bankers also have the authority to simply reverse the charges if approached let's say not aggressively. The whole matter would have been resolved in a matter of minutes if the repo with manager was good. It is the mutual trust and understanding between the customer and the banker that keeps the relationship going. The charges for dishonour of cheque/EMI in particular are generally very high so as to discourage the customers to commit this criminal offence and generally managers don't promote reversals in dishonour cases.

Cutting short I am willing to bet that the account statement showed zero balance but the banker "told" the customer about the negative balance and the situation was escalated. If in a rarest scenario I am wrong 😎 and indeed the balance in the statement shows a negative figure and it is not a loan account then it has to be a technical bug still not taken care of and the bank remains at risk. Please do share such a statement for research purposes.

Also we often say that a certain public sector bank is bad in offering basic services and a certain private sector bank charging unnecessarily and exorbitantly. I just want to add that one should criticise the players (read bad bankers) not the game. The banking game is beautiful. We love their LTF cards. 🙂

the rbi rule talks about balance going negative Lets say my bank has 0balance. can the bank still show as 0 balance, and add the amb charges in 'lien amount'. in other words, lets say i am maintaining 0 balance for 3 months, and load money in 4th month, can the bank deduct the amb for the entire 3 months?

 

[VISHESH_BANSAL]

the rbi rule talks about balance going negative Lets say my bank has 0balance. can the bank still show as 0 balance, and add the amb charges in 'lien amount'. in other words, lets say i am maintaining 0 balance for 3 months, and load money in 4th month, can the bank deduct the amb for the entire 3 months?

Why not ?

While opening Account you have agreed that You Acknowledged and Accepted Schedule of Charges (SOC)of that particular Savings Account.

So bank has right to recover charges mentioned in SOC.

It is your mistake you have not maintained AMB. Why to blame Bank ?

But you can request your Home Branch for Reversal otherwise , You are Liable to Pay Charges mentioned in SOC

 

[blacktiger]

Why not ?

While opening Account you have agreed that You Acknowledged and Accepted Schedule of Charges (SOC)of that particular Savings Account.

So bank has right to recover charges mentioned in SOC.

It is your mistake you have not maintained AMB. Why to blame Bank ?

But you can request your Home Branch for Reversal otherwise , You are Liable to Pay Charges mentioned in SOC

i think you not understand what i asked. i asked the question with respect to the rbi rule which says bank account balance cant go negative on account of maintaining amb. what does 'negative' mean here. is it that the banks should not recover once balance turns 0? or can bank lien the amount and recover later?

 

[blacktiger]

Why to blame Bank ?

where did i blame bank?

 

[VISHESH_BANSAL]

where did i blame bank?

Not directly but indirectly.

 

[blacktiger]

Not directly but indirectly.

how indirectly? it was a clarification question about the rbi rule with respect to bank

 

[VISHESH_BANSAL]

i think you not understand what i asked. i asked the question with respect to the rbi rule which says bank account balance cant go negative on account of maintaining amb. what does 'negative' mean here. is it that the banks should not recover once balance turns 0? or can bank lien the amount and recover later?

In case of Axis , Axis Deduct Consolidated Charges every month.
Consolidated Charges include Charges Like SMS charges, Cheque return or Auto Debit Return Charges.

Axis Bank combine these Charges with non maintenance charges and then put a lien against the Account.

But never Put a Lien Against your Account for Non-Maintence Charges only.

As per RBI Guidelines:--
"It should be ensured that the balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance"

Thus, Balance can go negative when with Non-Maintence charges other charges are also Levied.

Whenever you fund Your Account, Most Probably next day or Even Same day after few Hours Bank will recover Non Maintenance Charges whereas In Case of Lien Charges are adjusted Immediately.

 

[VISHESH_BANSAL]

how indirectly? it was a clarification question about the rbi rule with respect to bank

Okay. I have give clarification read my reply

 

[akshayhs]

Hi All

This is my first post in the forum as I am quite new here. I wish to inform that I am a banker and would like to shed some light in the near vacinity of the subject matter and I am in no way associated with the bank in question.

First of all banks are not allowed to make the account balance "negative" by any means as they please. However if terms and conditions already agreed upon at the time of opening the account are not met by the customer it results in deduction of charges in the account. However this doesn't give banks the right to turn your balance negative but instead the charges are accrued in the account after the account turns zero. In other words they remain outstanding or pending for deduction from the account. The term "negative balance" used by the branch bankers is a misnomer and will never be used when communicating with the escalation matrix. This is generally used verbally by the branch officials only to make the general folks understand the ongoing situation of "accrued charges" or "outstanding charges" as the general public often don't always understand the technical terms. So this means when funds are available in future then only such "accrued or outstanding charges" will be deducted from the account. To summarise I have never seen a statement where the account balance is in negative unless it is a loan account. This is not how the bank accounting is supposed to work. Banks can not turn your savings account into a loan account.

In this particular case when the matter is escalated it is revealed that there are two types of charges mentioned. One is minimum balance charges and other one is return handing (handling?) charges which ideally pertain to cheque bounce/EMI bounce which were clearly not mentioned in the ombudsman complaint later (cheeky but this happens all the time honestly) Now the bank takes an action by stating that due to unsatisfactory/inappropriate conduct the account must be closed which is most probably due to the high cases of dishonour of cheque/EMI itself and not due to minimum balance dues or the RBI intervention. FYI the dishonour of cheque is a criminal offence and probably the reason for the misconduct mail and account closure. Also RBI is always pro-customer even if the customer is in the wrong and doesn't share complete facts with the ombudsman. Ombudsman will always ask for explanation from the respective bank regarding the complaint and from what I have seen, banks generally don't like to contest with customer on complaints to avoid further customer dissatisfaction and also to please the ombudsman. Banks only contest if the reputational risk and/or financial risk far outweighs the customer profitability and the customer is outrageously in the wrong 😉.

Also note that Bank and Banker are completely two different things. The bank will always work under the purview of the guidelines issued from time to time but the onus is on the banker to ensure the same. The communication from escalated officials is almost fool proof and will never use such words as "negative balance". Your local branch banker on the other hand may or may not be able to guide you correctly (often due to limited knowledge among other random factors) leading to confusion among customers and often this becomes the reason for complaints in future. The banker often make mistakes which are generally borne by the customer and in turn expose the bank to face the associated risks from the regulator when the matter is escalated. Meanwhile the same bankers also have the authority to simply reverse the charges if approached let's say not aggressively. The whole matter would have been resolved in a matter of minutes if the repo with manager was good. It is the mutual trust and understanding between the customer and the banker that keeps the relationship going. The charges for dishonour of cheque/EMI in particular are generally very high so as to discourage the customers to commit this criminal offence and generally managers don't promote reversals in dishonour cases.

Cutting short I am willing to bet that the account statement showed zero balance but the banker "told" the customer about the negative balance and the situation was escalated. If in a rarest scenario I am wrong 😎 and indeed the balance in the statement shows a negative figure and it is not a loan account then it has to be a technical bug still not taken care of and the bank remains at risk. Please do share such a statement for research purposes.

Also we often say that a certain public sector bank is bad in offering basic services and a certain private sector bank charging unnecessarily and exorbitantly. I just want to add that one should criticise the players (read bad bankers) not the game. The banking game is beautiful. We love their LTF cards. 🙂

Thank you for your detailed reply.
If you plan to write such long replies in the future, please include a TLDR section at the top.

 

[blacktiger]

Okay. I have give clarification read my reply

still doesnt say where i blamed bank indirectly in my question.

Whenever you fund Your Account, Most Probably next day or Even Same day after few Hours Bank will recover Non Maintenance Charges

isnt this the process of lien? they might not show up in the ui, but banks having account of the non-maintenance charges and recovering later still comes under lien. (or negative lien , as per what G1jot said). my question is whether this is treated as negative balance?

 

[VISHESH_BANSAL]

still doesnt say where i blamed bank indirectly in my question.


isnt this the process of lien? they might not show up in the ui, but banks having account of the non-maintenance charges and recovering later still comes under lien. (or negative lien , as per what G1jot said). my question is whether this is treated as negative balance?

In your first post You wrote "can the Bank deduct the AMB of entire 3 month"

This line clearly indicate it.

In second post you mentioned proper facts which changed the Meaning of this Line

In case of lien whenever an Amount is credited in the Account, Charges are Adjusted.
So this is definitely not a lien, because charges are deducted later when System receives an alert that customer has funded the Account and Bank has followed RBI Guideline by not making your Account Balance negative in advance solely for the charges of NON-MAINTENCE

 

[blacktiger]

In case of lien whenever an Amount is credited in the Account, Charges are Adjusted.
So this is definitely not a lien, because charges are deducted later when System receives an alert that customer has funded the Account and Bank has followed RBI Guideline by not making your Account Balance negative in advance solely for the charges of NON-MAINTENCE

well this is confusing. because the financial term lien hold for any charges that bank keep tracks and holds, that the account holder is liable to pay. here its the amount that they later recover when the account is loaded again. it may or may not show up in ui as 'lien'. but the process still comes under lien.

my thought is that, as per the RBI rule mentioned, banks can deduct AMB penalty as long as your balance balance is positive. once it is zero, they cant accure the AMB penalty charge

 

[blacktiger]

In your first post You wrote "can the Bank deduct the AMB of entire 3 month"

This line clearly indicate it.

In second post you mentioned proper facts which changed the Meaning of this Line

In case of lien whenever an Amount is credited in the Account, Charges are Adjusted.
So this is definitely not a lien, because charges are deducted later when System receives an alert that customer has funded the Account and Bank has followed RBI Guideline by not making your Account Balance negative in advance solely for the charges of NON-MAINTENCE

this is a question, let me teach you english

Blaming bank -
My bank has deducted AMB penalty, who allowed them to deduct?
Asking question
Can bank deduct AMB penalty for this XXX case?