The government has clarified that it has not issued any direct instructions to write off the penalty charges imposed by banks for not maintaining minimum balance in the savings account. The government replied that many public sector banks have voluntarily reviewed or waived such penalties in recent years to make banking more customer-friendly. This clarification was given by Finance Minister Nirmala Sitharaman in Lok Sabha in response to the question of MPs Suresh Kumar Shetkar and Saugata Ray, in which there was talk about the high charges imposed by banks for not maintaining the required minimum balance. The MPs had sought details about the amount collected by banks and also asked whether the government was planning to withdraw or write off these charges, especially for small depositors.
How much penalty did government banks collect?
The Finance Ministry told Parliament that public sector banks (PSBs) collected Rs 8,092.83 crore from deposit account holders as penalty for not maintaining minimum monthly average balance (MAB) between FY 2022-23 and FY 2024-25. These charges were taken from those savings and current account holders whose balance was less than the minimum requirement. However, the government said that this amount is much less than the total income of the banks.
Finance Minister Nirmala Sitharaman said in a written reply that the amount of Rs 8,092.83 crore collected in the last three financial years is about 0.23% of the total income of public sector banks during the same period. According to the government, this shows that such charges are mostly to recover the cost of providing banking services, and not to earn revenue from penalties.
Zero-balance account not affected
The government also said that a large number of bank accounts in India do not require any minimum balance. These include Basic Savings Bank Deposit Account (BSBDA) and accounts opened under Pradhan Mantri Jan Dhan Yojana. These accounts are designed to promote financial inclusion and are completely free from minimum balance requirements and penalty charges. The Finance Minister said that there is no penalty charge for not maintaining minimum balance on about Rs 72 crore BSBDA including PMJDY account. Such accounts offer basic banking services like deposits, withdrawals and ATM access without any minimum balance requirement.
Many government banks have already waived the charges
The government said that many PSBs have reviewed their service charge structures in recent years to make banking more inclusive. For example, State Bank of India had already waived the penalty charges for not maintaining minimum balance in savings account in March 2020. The ministry further told Parliament that 9 more public sector banks have completely waived these charges in 2025; The remaining two PSBs have reduced the minimum balance charge. These steps were taken as part of efforts to improve customer centricity and support financial inclusion.
Will the government order refund of such charges?
On whether the government plans to refund or recredit the charges taken from low-income account holders, the Finance Ministry did not indicate any such decision. Banks are allowed to levy such charges based on their board-approved policies, provided they follow regulatory guidelines. The Reserve Bank of India wants banks to ensure that service charges are fair, transparent and commensurate with the cost of providing the service.
Is there any court order to waive such penalty?
The government also clarified that there is no general court order to waive or refund minimum balance penalty to banks. According to the information shared by RBI: The Supreme Court or any High Court has not issued any general direction to waive or refund such penalty charges in banks. The Central Bank also said that it is not aware of specific court cases related to such charges.
Banks will warn customers before deducting penalty
The Finance Ministry said that if a customer’s account balance falls below the required minimum level, then it is necessary to inform the banks. Under RBI guidelines, banks generally inform customers through SMS, email, letter and other communication channels. Usually, customers are given time to bring back the minimum balance before penalty is imposed.