'The less fortunate are affected by this unfair practice. We hope the banks will look at the whole economic scenario and waive the charges,' he said.

'We are particularly concerned about low-income groups who need to conduct transactions such as receipt of pensions and school fee payments through bank accounts.' Those who receive the old-age allowance - from $625 to $705 - and Comprehensive Social Security Assistance are required to open an account for monthly auto-payments.

There were 443,420 old-age allowance recipients and 222,699 CSSA recipients in October.

Twenty-one banks did not warn customers of the interest reduction.

For instance, an account holding $999 - below the designated $1,000 - would have $50 deducted half-yearly and lose $44.90 in interest, based on a savings account rate of 4.5 per cent.

Major banks such as Standard Chartered breached the Code of Banking Practice by failing to tell customers it charged $100 and paid no interest on balances of less than $1,000, according to the council.

'Our bank would not consider any waiver at the present stage. The practice has been around for a long time,' a Standard Chartered spokeswoman said.

She said the bank would contact the council for clarification of its comments on the code.

Hongkong Bank lowers its interest rate by one per cent if the balance falls below $1,000 and charges $50 every six months if the account is dormant for 24 months. It did not respond to the council's findings.

The Bank of China charges $50 and does not pay interest for accounts that are left inactive for 24 months.

'We cannot waive the fees because of computer technicalities,' a spokeswoman said. 'They are deducted automatically.'