Daijiworld Media Network - New Delhi

New Delhi, Mar 17: Raghav Chadha, Rajya Sabha MP from the Aam Aadmi Party (AAP), on Tuesday raised concerns in the Rajya Sabha over penalties imposed by banks for failing to maintain the required minimum account balance, urging the Union government to abolish such charges on small accounts.

Speaking in Parliament, Chadha said banks have collected nearly Rs 19,000 crore in penalties over the past three years from customers who could not maintain the stipulated minimum balance in their bank accounts.

According to him, public sector banks collected about Rs 8,000 crore, while private sector banks collected nearly ?11,000 crore during the same period.

“These penalties are not collected from the rich or large borrowers. They are collected from the poorest accounts in the system,” Chadha said while addressing the House.

He pointed out that ordinary citizens such as farmers, pensioners and daily wage earners are often penalised simply for failing to maintain the required balance in their accounts.

“A farmer misses the minimum balance — penalty. A pensioner withdraws money for medicines — penalty. A daily wage worker falls short by a few hundred rupees — penalty,” he said.

Chadha argued that such practices contradict the goal of financial inclusion, discouraging people from using formal banking channels.

“The poor keep their money in banks for safety, not to be quietly fined for being poor,” he added.

The AAP leader further said that repeated charges sometimes push account balances into the negative, leaving customers paying more in penalties than the amount they initially deposited.

“Many times banks keep adding charges and the balance becomes negative. Sometimes they take more money in charges than what we have actually deposited,” he said.

Chadha emphasised that bank accounts are meant to provide financial security, but for many citizens they have become a source of financial stress.

“Financial inclusion should protect small savings, not punish small balances. Bank accounts are meant to give us financial security, but these days they are giving many people financial stress rather than security,” he said.

He urged the government to abolish minimum balance penalties to ensure that the banking system does not penalise economically vulnerable citizens.