New Delhi, March 17 (IANS) Aam Aadmi Party (AAP) Rajya Sabha MP Raghav Chadha, on Tuesday, raised the issue of minimum account balance penalties in the Upper house of Parliament, urging the Union government to end such charges on small bank accounts, saying that they disproportionately affect the poor and financially vulnerable.

Speaking in the Rajya Sabha, Chadha said banks have collected nearly Rs 19,000 crore in penalties over the last three years from customers, who failed to maintain the required minimum balance in their bank accounts.

He added that of the total amount, public sector banks collected around Rs 8,000 crore, while private sector banks charged nearly Rs 11,000 crore during the period.

“These penalties are not collected from the rich or big borrowers. They are collected from the poorest accounts in the system,” Chadha said.

He noted that many ordinary citizens, including farmers, pensioners and daily wage earners, are being penalised simply because they could not maintain the stipulated minimum balance.

“A farmer misses the minimum balance — penalty. A pensioner withdraws money for medicines — penalty. A daily wage worker falls short by a few hundred rupees — penalty,” he said.

According to the AAP Rajya Sabha MP, such practices defeat the very purpose of financial inclusion and discourage people from using the formal banking system.

“The poor keep money in banks for safety, not to be quietly fined for being poor,” Chadha added.

He also said that repeated bank charges often push account balances into the negative, leaving customers paying more in penalties than what they originally deposited.

“Many times banks keep adding charges and the balance becomes negative. Sometimes they take more money in charges than what we have actually deposited,” he added.

Chadha said that bank accounts are meant to provide financial security to citizens but, in many cases, they are instead becoming a source of financial stress.

“Financial inclusion should protect small savings, not punish small balances. Bank accounts are meant to give us financial security, but these days they are giving many people financial stress rather than of financial security,” he added.

The AAP leader has proposed in the Parliament that minimum balance penalties should be abolished so that the banking system stops charging people for their poverty.

–IANS

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