PSBs pocketed almost Rs 9,000 crore over 5 years for minimum balance non-maintenance

By | July 30, 2025
Minimum balance penalty India – breakdown by year

Public sector banks (PSBs) in India collected close to ₹9,000 crore from customers in just five years. These charges were imposed for not maintaining the required minimum balance in savings accounts. The figure, revealed in Parliament, has sparked concern among customers and consumer rights groups.

Penalties Have Piled Up Over Time

Between 2018 and 2023, PSBs earned ₹8,989 crore in penalties related to average minimum balance (AMB) non-maintenance. Although the charges seem small—usually ranging from ₹10 to ₹100—they quickly add up across millions of accounts.

Moreover, many customers are unaware of the deduction until they check their account statements. As a result, low-balance users suffer the most.

Which Banks Collected the Most?

The largest penalty amounts came from:

  • State Bank of India (SBI)
  • Punjab National Bank (PNB)
  • Bank of Baroda
  • Canara Bank
  • Union Bank of India

These banks serve a massive number of customers. Even small deductions per user have generated huge revenues.

Why This Practice Faces Criticism

Consumer rights activists argue that these charges hurt the poor and financially vulnerable. Maintaining a minimum balance is often difficult for low-income users. However, they still rely on banks for access to savings and government subsidies.

In fact, many customers are unaware of the balance rules or don’t receive proper notifications from their banks. This leads to repeated charges, reducing their already limited savings.

What the Government and RBI Are Doing

The Reserve Bank of India (RBI) has reviewed these charges several times. In 2020, SBI waived AMB charges for all savings account holders. However, many other PSBs continued the practice.

Meanwhile, the central government has urged banks to act with customer sensitivity. It wants banks to ensure fair practices while maintaining financial health.

How to Avoid These Charges

Here are a few steps customers can take:

  • Know the rules.
    Each bank has its own minimum balance requirement. Visit your bank’s website or branch to get accurate details.
  • Check your balance regularly.
    Monitor your account through SMS alerts or online banking to avoid surprise deductions.
  • Opt for a zero-balance account.
    Jan Dhan Yojana and Basic Savings Bank Deposit Accounts (BSBDAs) do not require a minimum balance.

Larger Implications for Financial Inclusion

The ₹9,000 crore collection highlights a deeper issue in India’s banking system. While banks need revenue, heavy reliance on penalty charges affects those least equipped to handle them.

Moreover, financial inclusion goals suffer when basic banking becomes costly. For India to achieve universal banking access, customer-friendly reforms are essential.

Conclusion

Minimum balance penalties may seem minor, but they have a significant impact on millions. As banks continue to evolve, policies must protect low-income customers and promote fair banking for all.