Daijiworld Media Network - New Delhi
New Delhi, Aug 1: Banks across India levied a colossal sum exceeding Rs 7,086 crore on customers during FY26 as penalties for failing to maintain minimum average balance (MAB) requirements in savings and current accounts.
In a written reply in the Rajya Sabha, minister of state for finance Pankaj Chaudhary informed Parliament that private sector lenders collected Rs 4,948.71 crore, whilst public sector banks (PSBs) gathered Rs 2,137.92 crore over the same financial year.
Chaudhary highlighted that 10 out of the country’s 12 public sector banks have completely discontinued penal charges for non-maintenance of minimum average balances in savings accounts. The remaining two PSBs have rationalised their fee structures in accordance with commercial considerations and board-approved policies.
Private lenders dominate fines
Private sector banks accounted for nearly 70% of the total penalty pool. Among private lenders, HDFC Bank recorded the highest collection at Rs 1,798.14 crore, closely followed by Axis Bank at Rs 1,081.33 crore. Together, these two institutions generated nearly 58% of the total charges levied by private sector banks.
Other major private collectors included ICICI Bank (Rs 353.50 crore), Kotak Mahindra Bank (Rs 290.65 crore), Yes Bank (Rs 195.05 crore), and IDBI Bank (Rs 175.15 crore).
The Reserve Bank of India (RBI) noted that central records for private bank data prior to FY23 are not maintained, and the FY26 figures remain provisional.
Among public sector institutions, State Bank of India (SBI) reported the highest penalty revenue at Rs 477.27 crore, followed by Bank of Baroda (Rs 394.10 crore) and Indian Bank (Rs 299.17 crore). However, the government clarified that SBI’s figures relate exclusively to current accounts, as the lender scrapped minimum balance penalties on savings accounts in March 2020.
Exemption for zero-balance accounts and RBI rules
Addressing consumer protections, Chaudhary reiterated that Basic Savings Bank Deposit Accounts (BSBDAs)—including those opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY)—are fully exempt from MAB requirements. These zero-balance accounts provide core banking services, including deposits, withdrawals, and ATM access, without any penal risk. Approximately 730 million BSBDAs and PMJDY accounts are currently protected under this exemption.
Under RBI regulations, banks are permitted to impose minimum balance charges provided the fees are reasonable, transparent, and commensurate with operational costs. Furthermore, banks must notify customers via SMS, email, or written correspondence, allowing them adequate time to restore the mandatory balance before applying a penalty.
Strengthening balance sheets and geopolitical buffers
In response to a separate query, Chaudhary noted that the financial health of public sector banks has strengthened considerably, marked by robust balance sheets, record profits, multi-decadal lows in gross non-performing assets (GNPAs), and sustained credit growth across various economic sectors.
The minister further stated that the government introduced the Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 in May 2026 to assist businesses coping with short-term liquidity disruptions caused by the crisis in West Asia.
Administered by the National Credit Guarantee Trustee Company Ltd (NCGTC), the scheme provides 100% guarantee coverage for micro, small, and medium enterprises (MSMEs) and 90% coverage for non-MSMEs and the scheduled passenger airline sector, supporting credit flow of up to Rs 2.55 trillion—including Rs 5,000 crore designated specifically for passenger airlines.