Public Sector Banks Might Scrap The Minimum Balance Fines

A few public sector banks will soon cancel penalties for failing to keep the minimum balance in savings accounts. This follows after the finance ministry asked banks to offer more customer-friendly services, stated a news report by the Times of India. Banks are being directed by the finance ministry to concentrate on increasing financial inclusion and easing the burden on common account holders.

As per a news report by the Times of India, the ministry suggested the public sector banks to review such fees and consider exempting them, particularly for small or low-income account holders. The move is part of an initiative to make banking simpler and more affordable for the common man.

Banks Likely To Follow The Suggestion

Banks like Canara Bank, Punjab National Bank, SBI, and Bank of Baroda have already removed the fees levied upon not maintaining the minimum balance, some with effect from July 01, 2025. Other public sector banks such as Union Bank, UCO Bank, Bank of Maharashtra, are requested by the ministry to abolish these charges. 

Indian Bank stated that it will remove the minimum balance requirement and will completely do away with the penalties when a savings account holder is unable to maintain the minimum account balance from July 07, 2025.

Dropping such charges would not only benefit account holders but will also build customer confidence and prompt more saving. A couple of banks are already in an advanced stage of internal deliberations, and official announcements will follow in the next few weeks, said the news report by the Times of India.

SBI Set The Trend In 2020

The State Bank of India (SBI), the largest public sector bank in the country, had done away with minimum balance penalties in March 2020. It does not require savings account holders to keep a minimum balance, and no penalty is levied even if the account balance goes down to zero.

SBI’s move was widely appreciated and seen as a major shift towards inclusive banking. Since then, other banks have also faced nudges to follow the same approach.

Banks That Have Already Removed These Charges

Here are some public sector banks that have already removed penalties for non-maintenance of minimum balance in savings accounts:

• State Bank of India (SBI)

• Punjab & Sind Bank

• Punjab National Bank

• Bank of Baroda

• Canara Bank

Why This Change Matters

Public sector banks have witnessed a fall in low-cost deposits, particularly in current accounts and savings (also referred to as CASA). Exemption from minimum balance charges would serve to keep small account holders on board and motivate more individuals to maintain money in the banking system.

This consumer-friendly step, if adopted on a large scale, would be a significant paradigm shift in retail banking policies and may set the trend for private banks too.