PSBs pocketed almost Rs 9,000 crore over 5 years for minimum balance non-maintenance
According to data shared by Minister of State for Finance Pankaj Chaudhary in response to a question in the Rajya Sabha, state-owned lenders collected Rs 8,932.98 crore as penal charges on non-maintenance of minimum Average Monthly Balance in the five years starting 2020-21 and up to 2024-25.
The data shared by the finance ministry on Tuesday comes days after Union Bank of India joined a host of other PSBs in waiving off penalties on non-maintenance of minimum balances, an issue that has been a sensitive one for some time. 'This move is aimed at ensuring uniformity, fairness, and enhancing accessibility of basic banking services to customers,' Union Bank of India said last week.
Other PSBs that have ended these charges from the ongoing quarter include Canara Bank, Bank of Baroda, Punjab National Bank, Indian Bank, Bank of India, and Central Bank of India, the finance ministry said on Tuesday. The country's largest lender, State Bank of India, has not levied non-maintenance penalties since March 2020.
'The Department of Financial Services (DFS) has advised banks to examine the issue of rationalisation of penal charges for non-maintenance of Minimum Average Balance (MAB), with specific emphasis on providing relief to customers in semi-urban and rural areas,' Chaudhary further told the Rajya Sabha on Tuesday.
As per the data shared by the Minister of State for Finance, Indian Bank garnered a fifth of all these penalties over the five-year period, amounting to Rs 1,828.18 crore. Punjab National Bank was in second place with Rs 1,662.42 crore, while Bank of Baroda rounded off the top-three with Rs 1,531.62 crore worth of fines collected from customers who did not maintain a certain minimum amount of funds in their accounts.
After PSBs collected Rs 1,142.13 crore as penalties for non-maintenance of minimum balances in 2020-21, the amount rose sharply by 25 per cent in 2021-22, 30 per cent in 2022-23, and 26 per cent in 2023-24 to Rs 1,428.53 crore, Rs 1,855.43 crore, and Rs 2,331.08 crore, respectively. However, there was a slight decline of 7 per cent in 2024-25 to Rs 2,175.81 crore.
The waiving off of minimum balance non-maintenance charges by several PSBs comes at a time when they have faced pressure on their current account, savings account ratios, which are the cheapest source of funds for banks. In its most recent Financial Stability Report, released in June, the Reserve Bank of India (RBI) noted that 'banks' liability profile is changing with the share of higher-cost term deposits and CDs (certificates of deposit) growing compared to low-cost current account and savings account (CASA) deposits.'
State Bank of India, which has not been levying these non-maintenance charges for more than five years, has seen its move aid first-time account holders.
Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy.
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