Banks collected ₹7,086.63 crore from customers in FY26 for failing to maintain the required minimum average balance in savings and current accounts. The figure, shared in Parliament, is higher than the ₹6,974.79 crore collected in FY25. Across FY23 to FY26, these deductions reached ₹26,170.37 crore.
The number has reopened an old complaint. A person may withdraw money for rent, medicines or school fees, then find another deduction waiting at month-end. Public sector banks have stepped back from savings-account penalties, yet private banks and several current-account products continue to levy them under approved schedules.
How Much Did Banks Collect From Low-Balance Customers?
Private banks collected ₹4,948.71 crore in FY26, more than twice the ₹2,137.92 crore reported by public sector banks. HDFC Bank led private lenders with ₹1,798.14 crore, while Axis Bank followed with ₹1,081.33 crore. ICICI Bank collected ₹353.50 crore, and Kotak Mahindra Bank collected ₹290.65 crore.
Among public sector lenders, SBI reported ₹477.27 crore, followed by Bank of Baroda at ₹394.10 crore and Indian Bank at ₹299.17 crore. SBI’s amount relates to current accounts because it removed minimum balance penalties from savings accounts in March 2020. The FY26 private-bank data is provisional.
Key figures from the latest disclosure include:
- FY26 total minimum balance charges: ₹7,086.63 crore
- Private bank share: ₹4,948.71 crore
- Public sector bank share: ₹2,137.92 crore
- Four-year total from FY23 to FY26: ₹26,170.37 crore
- Exempt basic savings and Jan Dhan accounts: about 73 crore
Ten of India’s 12 public sector banks have discontinued such penal charges on savings accounts, while the other two have rationalised them. Private lenders still account for the bulk of collections.
Why Are Customers Still Paying Minimum Balance Penalties?
The Reserve Bank of India does not prescribe one common minimum balance for every bank account. Banks may set the requirement through board-approved policies, depending on the account type, branch location and services included. Two customers with similar balances can therefore face different rules.
The calculation also catches people off guard. Minimum average balance is not always the closing balance on the final day. Banks commonly use daily closing balances across the month. A customer can receive a salary, spend most of it quickly and still fall below the required average.
Under the RBI’s minimum-balance guidelines, the bank should inform the customer through SMS, email or letter, allow at least one month to restore the balance, and keep the charge proportionate to the shortfall. The deduction should not turn a savings account negative solely because of the penalty.
Customers may still miss alerts, leave old accounts open after changing jobs, or unknowingly move from salary-account status to a regular savings variant. A once-free account can then begin attracting standard account charges.
Which Accounts Can Avoid These Bank Charges?
A Basic Savings Bank Deposit Account, or BSBDA, requires no minimum balance. It includes cash deposits, electronic credits, an ATM or debit card, and at least four withdrawals per month. Jan Dhan accounts fall within this zero-balance framework. The RBI’s BSBDA instructions explain these facilities.
The policy shift among government-owned lenders has gathered pace. A March 2026 parliamentary reply said SBI waived savings-account penalties in 2020, nine more public sector banks followed in 2025, and the remaining two rationalised charges.
Canara Bank confirmed its change through an official X announcement, stating that no penalty would apply for non-maintenance of minimum balance across savings accounts from June 1, 2025.
What Should Customers Check Before The Next Deduction?
Customers should identify the exact account variant, not merely the bank name. The mobile app, welcome kit, or tariff page should show the required balance and charge slab. They should also check whether a salary account was converted, whether unused accounts remain active, and whether a zero-balance option offers enough services.
Where an alert was never sent, the charge appears disproportionate, or the account became negative only due to penalties, customers can raise a written complaint with the bank. Statements and SMS records help. If the bank does not resolve it, the complaint can be escalated through the RBI Complaint Management System.
FAQs On Minimum Balance Penalties
Are all savings accounts charged for low balance?
No. Basic savings and Jan Dhan accounts carry no minimum balance requirement or penalty charges.
How soon can a bank deduct a penalty?
RBI rules require notice and at least one month for restoring the agreed minimum balance.
Can penalty charges make a savings account negative?
No. RBI says such deductions alone should not push a savings account into a negative balance.
Why do private banks collect more?
Many private banks retain minimum balance rules, while most public banks have withdrawn savings penalties.
How can customers avoid future penalties?
Check account terms, set balance alerts, switch account variants, or choose a zero-balance savings account.
