How much do banks earn from minimum balance penalties? Government data reveals ₹26,170 crore in 4 years

Banks collected more than ₹26,170 crore from customers as penalties for failing to maintain the minimum average balance (MAB) in their accounts over the four financial years from FY23 to FY26, according to a written reply by Minister of State for Finance Pankaj Chaudhary in the Rajya Sabha. The data, compiled from public sector banks and the Reserve Bank of India (RBI), shows private lenders accounted for the larger share of these collections.

In FY26 alone, banks collected ₹7,086.63 crore through minimum balance charges. Private sector banks accounted for ₹4,948.71 crore, more than twice the ₹2,137.92 crore collected by public sector banks (PSBs).

The government also said public sector banks have significantly eased such charges in recent years. Of the country’s 12 PSBs, 10 have discontinued penal charges for non-maintenance of minimum average balance in savings accounts, while the remaining two have rationalised them in line with their board-approved policies and commercial considerations.

HDFC Bank tops private lenders, SBI leads PSBs

Among private banks, HDFC Bank collected the highest amount through minimum balance charges in FY26 at ₹1,798.14 crore, followed by Axis Bank at ₹1,081.33 crore. Together, the two lenders accounted for nearly 58% of the total minimum balance charges collected by private sector banks during the year.

Other major private banks included ICICI Bank ( ₹353.50 crore), Kotak Mahindra Bank ( ₹290.65 crore), Yes Bank ( ₹195.05 crore) and IDBI Bank ( ₹175.15 crore). The RBI noted that data for private banks before FY23 is not maintained, while FY26 figures are provisional.

Among public sector lenders, State Bank of India (SBI) reported the highest collection at ₹477.27 crore, followed by Bank of Baroda ( ₹394.10 crore) and Indian Bank ( ₹299.17 crore). However, the government clarified that SBI’s figure pertains to current accounts, as the bank has waived minimum balance penalties on savings accounts since March 2020.

Zero-balance accounts remain exempt

The finance ministry reiterated that Basic Savings Bank Deposit Accounts (BSBDAs), including those opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY), do not require customers to maintain a minimum balance. These accounts offer basic banking services such as deposits, withdrawals and ATM access free of charge.

According to the government, around 73 crore BSBDAs, including PMJDY accounts, are currently exempt from any penalty for non-maintenance of minimum balance.

The ministry also said RBI allows banks to levy minimum balance charges on other savings and current accounts under their board-approved policies, provided the charges are reasonable, transparent and commensurate with the cost of providing banking services. Banks are also required to notify customers through SMS, email, letter or other appropriate means and generally provide them time to restore the required balance before penalties are imposed.