NATIONAL Commercial Bank (NCB) Group managing director Patrick Hylton has responded to criticism that the firm has been charging its customers a fee for holding small balances in their accounts.

In response to a story carried in the Business Observer on Wednesday that NCB and Scotiabank — the two most profitable banks — were charging for balances which fell below $2,000 and $5,000 respectively, criticism of the institutions have been strident. Some have said that the minimum balance fee is another way of penalising the poor for being poor, while others blame regulators for allowing the practice described as ‘oppressive’ and ‘predatory’ to take place.

However, the head of NCB said the fees are not peculiar to NCB or to Jamaica for that matter, adding that it is a way of recovering some of the cost of administering the accounts on behalf of the account holders. NCB currently charges $153 plus tax (179.78) on accounts that fall below the minimum balance.

Hylton told Sunday Finance that the bank had made efforts to encourage customers to find ways to minimise or cut their banking fees. However, there was no mention of how this applies to the minimum balance fee.

“The reason for it is because there is a cost associated with maintaining an account,” Hylton said. “What we charge does not recover that cost. For example, we have to pay our system provider a certain dollar value per account that we maintain on the system. We also have to pay a licensing fee which is based on the number of accounts. We go further, we have to pay somebody to maintain those accounts, to monitor those accounts and so what we do is set a minimum balance so that based on what we could potentially earn from the account it will give us a reasonable offset against some of those charges,” Hylton added.

“To the extent that the account falls below those balances, then the offset that we have would have reduced, and we try to recover some of that with the fees. We are not recovering all of that with the fees. We try to give our customers an alternative in terms of avoiding or minimising those fees,” he said.