Banks Amass Rs 19,000 Crore in Minimum Balance Penalties Over Three Financial Years
In a significant revelation, private sector and state-run banks have collectively garnered around Rs 19,000 crore from account holders for failing to maintain minimum balance requirements across three financial years—2022-23 to 2024-25. This data, disclosed by the finance ministry in the Lok Sabha on Monday, highlights the substantial revenue generated from such penalties, despite ongoing efforts to promote financial inclusion.
Private vs Public Sector Banks: A Breakdown of Collections
Private sector banks emerged as the top collectors, mopping up approximately Rs 11,000 crore during this period. In contrast, public sector banks collected Rs 8,093 crore. Among private banks, HDFC Bank led the pack with Rs 3,872 crore, followed closely by Axis Bank. On the public sector front, Punjab National Bank (PNB) topped the list, underscoring the widespread imposition of these charges across the banking landscape.
Diverging Approaches: Waivers and Continued Penalties
Interestingly, the State Bank of India (SBI), the nation's largest bank, has waived penal charges for not maintaining minimum balance in savings accounts since March 2020. Following SBI's lead, nine other public sector banks, including PNB and Canara Bank, have eliminated such charges for savings accounts over the past year, with two others rationalizing the fees. However, private sector banks continue to enforce these penalties, contributing to their higher collection figures.
Government Perspective on Penal Charges
In a written reply, Finance Minister Nirmala Sitharaman provided context to these collections. She stated, "The amount of Rs 8,092.8 crore collected over the last three financial years constitutes approximately 0.2% of the total income of Public Sector Banks during the same period, indicating that such charges form only a very small proportion of banks’ income and are primarily aligned with the cost of providing banking services rather than revenue generation through penalties."
Financial Inclusion and Zero-Balance Accounts
To mitigate the impact on vulnerable populations, the finance minister highlighted that about 72 crore Basic Savings Bank Deposit Accounts (BSBDA), including those under the PM Jan Dhan scheme, are exempt from penal charges for non-maintenance of minimum balance. Banks offer zero-balance savings accounts for these accounts to ensure universal access to banking facilities, particularly for unbanked, small depositors, and vulnerable groups, thereby promoting financial inclusion.
This dual approach—penalizing some while protecting others—reflects the banking sector's balancing act between revenue generation and social responsibility. As debates around banking fees continue, these figures serve as a critical reference point for policymakers and consumers alike.
