Missed your minimum balance? Banks pocketed ₹26,100 cr in penalties in just 4 years

Banks have collected over Rs 26,100 crore from customers in the last four financial years as penalties for non-maintenance of the minimum average balance.

In FY26, banks have already collected Rs 7,086.63 crore as penalty charges for non-maintenance of the minimum average balance. In FY25, they collected Rs 6,974.79 crore. Overall, between FY23 and FY26, banks collected Rs 26,170.37 crore in such charges.

The information was shared by Minister of State for Finance Pankaj Chaudhary in the Rajya Sabha on Tuesday in response to a question on penalties levied by banks on customers.

“To enhance customer centricity and promote inclusive banking, Public Sector Banks (PSBs) have reviewed their service charge structures. Of the 12 PSBs, 10 have discontinued penal charges for non‑maintenance of minimum average balance in savings accounts, while two have rationalised such charges, in accordance with their Board‑approved policies and commercial considerations,” the minister informed the Rajya Sabha.

In FY26, public sector banks levied Rs 2,137.92 crore in such charges, while private sector lenders levied Rs 4,948.71 crore. Among PSBs, State Bank of India levied the highest such charge at Rs 477.27 crore in FY26. However, this amount pertains to current accounts, as SBI has completely waived penal charges for non-maintenance of the minimum average balance in savings accounts since March 2020.

Bank of Baroda collected the second-highest amount among PSBs in FY26, at Rs 394.1 crore, as charges for non-maintenance of the minimum average balance.

Meanwhile, private lenders collected Rs 4,948.71 crore in such charges in FY26, led by HDFC Bank, which collected Rs 1,798.14 crore, followed by Axis Bank at Rs 1,081.33 crore.

In cases of non-maintenance of the agreed minimum balance in bank accounts, banks have been advised by the Reserve Bank of India to notify customers through SMS, email, letter or other appropriate means, the minister further said, adding that customers are generally given time to restore the required minimum balance before penal charges are applied.

“Banks offer zero-balance savings account facilities. These accounts include Basic Savings Bank Deposit Accounts (BSBDAs), including accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY), to ensure universal access to banking facilities, particularly for unbanked, vulnerable and small depositors, and to promote financial inclusion through affordable and accessible banking services. These accounts do not require maintenance of any minimum balance,” he said, adding that approximately 73 crore BSBDAs, including PMJDY accounts, are not subject to any penal charges for non-maintenance of minimum balance.

As per extant RBI instructions, banks may levy charges for non-maintenance of the minimum average balance (MAB) in accordance with their Board-approved policies, subject to such charges being reasonable, transparent and commensurate with the cost of providing the services, the minister further said.