Rs 8,092 Crore Collected as Minimum Balance Penalties by Public-Sector Banks

In a written response to questions raised in the Lok Sabha regarding excessive bank charges for not maintaining a minimum balance, the Finance Minister, Nirmala Sitharaman, replied on Monday, March 9, 2026 that Public Sector Banks collected about Rs 8,092.83 crore as minimum balance penalties between FY 2022-23 and 2024-25, but zero-balance accounts under Pradhan Mantri Jan Dhan Yojana are exempt.

The following are the questions asked in the Lok Sabha:

“(a) whether it is a fact that Public Sector Banks have collected more than 8,000 crore rupees from ordinary citizens for not maintaining a minimum balance, if so, the details thereof along with the details of private banks still doing the same;

(b) the total amount collected so far as a penalty for not maintaining a minimum balance in bank accounts, bank-wise;

(c) whether the Government is aware that small depositors and daily wage earners are being penalised for insufficient balances despite the national push for financial inclusion; if so, the reasons therefor and the corrective action taken in this regard;

(d) whether the Government is likely to order immediate reversal and recredit of unfairly collected Monthly Average Balance (MAB) charges from low-income account holders, if so, the timeline thereof and, if not, the reasons therefor.

(e) whether the RBI/Government has taken any decision to write off penalty charges for not maintaining a minimum balance in bank accounts and, if so, the details thereof;

(f) whether there is any judgement by Court(s) for writing off penalty charges; if so, the details thereof;

(g) whether banks are prioritising revenue generation through penalties instead of public service obligations expected from taxpayer-supported institutions and, if so, the response of the Government thereto; and

(h) whether customers were adequately warned before the deduction of penalties or whether the charges were imposed automatically without informed consent and if so, the details thereof and safeguards in place in this regard?”

Answers given by Nirmala Sitharaman:

(a) to (h) Banks provide zero-balance savings accounts so that people who do not have much money can still use banking services. These accounts are called Basic Savings Bank Deposit Accounts (BSBDAs). Many of them are opened under the government scheme Pradhan Mantri Jan Dhan Yojana (PMJDY). Their purpose is to give everyone, especially poor and vulnerable people, access to banking services.

In these accounts, customers do not need to keep any minimum balance. They can deposit money, withdraw money, and use ATM services without paying any penalty. Around 72 crore such accounts exist in India, and they are not charged any penalty for not maintaining a minimum balance.

She added that other types of savings and current accounts usually require customers to maintain a Minimum Monthly Average Balance (MAB). If customers fail to maintain this balance, banks may charge a penalty according to their policies and the guidelines of the Reserve Bank of India (RBI). These charges must be reasonable and transparent.

From the financial year 2022-23 to 2024-25, Public Sector Banks (PSBs) collected around Rs 8,092.83 crore from customers because they did not maintain the required minimum balance in their savings or current accounts.

Even though this amount seems large, it makes up only about 0.23% of the total income of public sector banks during that period. This means the charges are mainly meant to cover the cost of providing banking services rather than to earn profit through penalties.

To make banking more customer-friendly, many banks have started reducing or removing these charges. The State Bank of India (SBI) removed the penalty for not maintaining a minimum balance in savings accounts in March 2020. Later, in 2025, nine more public sector banks also removed such charges, while the remaining two banks reduced them.

The RBI has also said that it does not keep records of court decisions related to waiving such penalties. As per the available information, no order from the Supreme Court of India or any High Court has required all banks to cancel or refund these charges.

Apart from this, the RBI advised banks that in case a customer does not maintain the required balance, banks must inform them through SMS, email, letters, or other messages. Customers are usually given some time to maintain the required balance before the bank applies any penalty.