Even if consumers have no money in their savings accounts, banks are still making money by charging fees for not keeping a minimum balance.
Banks Earned ₹2,331 Crore (AED 1.08 Billion) in Penalties
In the financial year 2024, 11 public sector banks charged account holders ₹2,331 crore (AED 1.08 billion) in penalties for not maintaining a minimum balance in their savings accounts. This is a 25.63% increase from ₹1,855.43 crore (AED 872 million) in the previous year.
Over the past three years, these banks have collected ₹5,614 crore (AED 2.59 billion) from customers who didn’t maintain the required minimum balance.
Since FY 2020, the State Bank of India (SBI) has stopped charging penalties for not maintaining a minimum balance.
Which Banks Charged the Most?
In response to a question in Parliament, the Ministry of Finance revealed that Punjab National Bank (PNB) collected the most in penalties, totalling ₹633.4 crore (AED 295 million). Bank of Baroda was next with ₹386.51 crore (AED 179 million), followed by Indian Bank with ₹369.16 crore (AED 171 million), and Canara Bank with ₹284.24 crore (AED 132 million).
Indian Overseas Bank collected the least, with just ₹4.58 crore (AED 2.1 million) in penalties for not maintaining the minimum balance.
Also read: UAE company fined AED 10 million for showing fake employees
Fees from Private Sector Banks
Including fees from private sector banks would make the total penalties even higher. Private banks also charge substantial fees for not keeping a minimum balance.
RBI Rules on Minimum Balance Penalties
The Reserve Bank of India (RBI) set guidelines in 2014 and 2015 regarding customer service and penalties for not maintaining a minimum balance in savings accounts. Banks are allowed to charge fees, but these must be based on the difference between the actual amount and the agreed minimum balance when the account was opened.
(This article is published under a mutual content partnership arrangement between The Brew News and The Free Press Journal)
