Banks collected nearly ₹11,500 crore as minimum balance penalties in 5 years: Centre

New Delhi: Public sector banks collected nearly ₹11,535.99 crore as penalties for non-maintenance of minimum balance in savings bank accounts between 2020 and 2025, the Centre informed the Lok Sabha on Monday.

Replying to an unstarred question by All India Trinamool Congress MP Mala Roy and Tamil Nadu Congress MP Dr MK Vishnu Prasad, Minister of State for Finance Pankaj Chaudhary said banks earned ₹2,889.05 crore from minimum balance shortfall charges in 2024–25, slightly lower than ₹2,909.10 crore in 2023–24, but sharply higher than ₹1,637.41 crore in 2020–21. Revenue from SMS alert charges stood at ₹1,218.60 crore in 2024–25, while income from ATM usage, after netting off interchange fees paid to other banks, remained negative.

The data showed that banks earned a cumulative ₹14,634.34 crore from customer service charges during the five-year period. This included ₹11,535.99 crore from minimum balance penalties and ₹5,715.42 crore from SMS alert charges, while ATM-related charges recorded a net loss of ₹2,617.07 crore.

The government said the levy of service charges, including penalties for minimum balance shortfall, ATM transactions beyond free limits and SMS alerts, is governed by banks’ board-approved policies and Reserve Bank of India guidelines, which mandate that charges be reasonable, transparent and aligned with service costs.

The minister also noted that banks offer zero-balance savings accounts, including Basic Savings Bank Deposit Accounts and accounts under the Pradhan Mantri Jan Dhan Yojana, which require no minimum balance and provide basic services such as deposits, withdrawals and ATM access free of charge. Public sector banks, he added, have either waived or rationalised minimum balance charges in regular savings accounts to improve customer centricity.

While the RBI does not maintain consolidated data on service charge revenues of both public and private sector banks, inputs from public sector banks show that minimum balance penalties have steadily increased over the past five years, even as income from SMS alerts has fluctuated.

On whether the government plans to cap or regulate banking charges, the minister said safeguards such as zero-balance accounts, prescribed free limits for basic services and RBI’s supervisory oversight are already in place. He added that the government continues to engage with banks, in consultation with the RBI, through digital banking expansion and financial inclusion initiatives to ensure affordable access to banking services.