Indian Banks Collected ₹7,086 Crore in Minimum Balance Penalties in FY26

Indian banks amassed a substantial ₹7,086.63 crore in penalties from their customers during the Financial Year 2025-26 (FY26) due to the non-maintenance of minimum average balances in their savings and current accounts. This significant figure was revealed in the Rajya Sabha on Tuesday, July 28, 2026, by Minister of State for Finance Pankaj Chaudhary, citing data from the Reserve Bank of India (RBI). The disclosure underscores a consistent, albeit controversial, revenue stream for the banking sector in India. A closer look at the data indicates a stark divergence in collection amounts between private and public sector banks. Private sector lenders were the primary collectors, gathering ₹4,948.71 crore in FY26 for minimum balance shortfalls. This sum is more than double the ₹2,137.92 crore collected by the 12 public sector banks (PSBs) during the same period. Among the private sector banks, HDFC Bank emerged as the top earner, collecting a staggering ₹1,798.14 crore in FY26. Following closely was Axis Bank with ₹1,081.33 crore. Together, these two private banking giants alone collected ₹2,879.47 crore, accounting for approximately 58% of the total collection by 19 private sector banks. When ICICI Bank's collection of ₹353.50 crore is added, the combined penalties from these three major private banks far exceeded the total amount collected by all 12 public sector banks in FY26. This trend is not new; cumulative data highlights that banks have collectively pocketed over ₹26,170.37 crore in penalties for non-maintenance of minimum average balances over the last four financial years, from FY23 to FY26. The government, through Minister Pankaj Chaudhary, also clarified that Basic Savings Bank Deposit Accounts (BSBDAs), including those opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY), are exempt from such penal charges. These accounts are designed to ensure universal access to banking facilities and promote financial inclusion for unbanked, vulnerable, and small depositors. Approximately 73 crore BSBDAs, including PMJDY accounts, are therefore not subject to minimum balance penalties. While some public sector banks, such as the State Bank of India (SBI), have waived penal charges for non-maintenance of minimum average balance in savings accounts since March 2020 (though they still collect charges on current accounts), and others have rationalized their fee structures, many private banks continue to enforce these charges. RBI guidelines permit banks to levy charges for non-maintenance of minimum balance, provided these charges are transparent, reasonable, and proportionate to the shortfall. Banks are also required to notify customers through SMS, email, or letter if their balance falls below the minimum, allowing a grace period (typically one month) to restore the required balance before penalties are applied. Furthermore, the guidelines stipulate that a savings account should not turn into a negative balance solely due to these charges. The continuous collection of such substantial amounts highlights the importance for account holders to be aware of their bank's specific minimum balance requirements and associated charges to avoid incurring penalties. The data also fuels ongoing discussions about banking practices and consumer protection in India's financial sector.

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