The Finance Ministry shared the data in response to a question by Congress president Mallikarjun Kharge in the Rajya Sabha, on Tuesday
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Eleven public sector banks (PSBs) collected around ₹9,000 crore in the last five years as penalty for low balance in savings bank accounts, according to the Finance Ministry’s data presented in the Rajya Sabha on Tuesday.
The State Bank of India discontinued average monthly minimum balance charges in March, 2020. Canara Bank, Bank of Baroda, Punjab National Bank, Indian Bank, Bank of India, Central Bank of India and Union Bank of India followed suit from the second quarter of FY26. Private sector banks, which level higher charges than public sector banks, are yet to announce any waiver on such charges.
‘Logic behind fine’
Some public sector banks collected penalty from customers who failed to maintain the minimum monthly balance, while some others charged account holders for not maintaining the quarterly balance. PM Jan Dhan Account, basic saving bank deposit accounts (BSBDA) and salary accounts, besides other categories of accounts, are exempted from maintaining minimum balance.
In a written reply to a question by Congress President and Rajya Sabha MP Mallikarjun Kharge, Minister of State in the Finance Ministry, Pankaj Chaudhary said, “The Department of Financial Services (DFS) has advised banks to examine the issue of rationalisation of penal charges for non-maintenance of the minimum average valance (MAB), with specific emphasis on providing relief to customers in semi-urban and rural areas.” It seems that seven out of 11 PSBs have followed the advise while the remaining four are expected to follow the same soon.
The Reserve Bank of India (RBI) has laid down guidelines regarding levy of penal charges for non-maintenance of minimum balances in savings bank accounts and regarding customer service in banks.
“Banks are permitted to fix penal charges regarding non-maintenance of minimum balance in savings accounts, as per their Board-approved policy, while ensuring that penal charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening the account,” said Chaudhary.
Published on July 29, 2025
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