Private banks collect ₹4,949 crore in minimum balance penalties in FY26, more than double of PSBs

Private sector banks collected more than twice as much from customers in penalties for failing to maintain minimum average balances than their state-owned peers in fiscal year 2026 (FY26), highlighting the widening divergence in fee practices even as most public sector lenders have scrapped such charges on savings accounts.

Private lenders collected ₹4,948.71 crore through minimum average balance (MAB) penalties during the year, compared with ₹2,137.92 crore collected by the country’s 12 public sector banks (PSBs), according to provisional data tabled in the Rajya Sabha on Tuesday. The figures were disclosed by the government in response to a parliamentary question on penalties levied by banks on customers.

HDFC Bank collected the highest amount among private sector lenders at ₹1,798.14 crore, followed by Axis Bank at ₹1,081.33 crore. ICICI Bank collected ₹353.50 crore, Kotak Mahindra Bank ₹290.65 crore, Yes Bank ₹195.05 crore, IndusInd Bank ₹177.92 crore and IDBI Bank ₹175.15 crore. The Reserve Bank of India (RBI) told the government that it maintains data for private sector banks only from FY2022-23 onwards, while the FY2025-26 figures are provisional.

Among PSBs, State Bank of India collected the highest ₹477.27 crore, followed by Bank of Baroda at ₹394.10 crore, Indian Bank at ₹299.17 crore, Canara Bank at ₹213.48 crore and Punjab National Bank at ₹206.68 crore. The government noted that SBI’s figure relates only to current accounts because the bank waived penal charges for non-maintenance of minimum average balance in savings accounts from March 2020.

Public banks pull back

The parliamentary reply suggests that fee collections at public sector banks have generally moderated as more lenders withdrew such charges on savings accounts, although the trend has not been uniform.

Punjab National Bank’s collections fell from ₹674.04 crore in FY2023-24 to ₹206.68 crore in FY2025-26. Bank of Baroda collected ₹443.30 crore in FY2023-24 and ₹394.10 crore in FY2025-26. State Bank of India’s collections, however, rose from ₹190.68 crore in FY2021-22 to ₹477.27 crore in FY2025-26, although those collections relate only to current accounts.

Replying to another question, minister of state for finance Pankaj Chaudhary said public sector banks have reviewed their service charge structures to enhance customer centricity and promote inclusive banking. Of the 12 PSBs, 10 have discontinued penal charges for non-maintenance of minimum average balance in savings accounts, while the remaining two have rationalized such charges in line with their board-approved policies and commercial considerations.

The government also said that basic savings bank deposit accounts (BSBDAs), including accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY), do not require maintenance of any minimum balance and are exempt from such charges. Around 730 million BSBDAs, including PMJDY accounts, are not subject to penal charges for non-maintenance of minimum balance.

Under the RBI’s extant instructions, banks may levy charges for non-maintenance of minimum average balance in accordance with their board-approved policies, provided such charges are reasonable, transparent and commensurate with the cost of providing banking services.

Banks have also been advised to notify customers through SMS, email, letter or other appropriate means when the agreed minimum balance is not maintained, and customers are generally provided time to restore the required balance before penal charges are applied.