Minimum Balance Rule Becomes A Revenue Window For Private Banks

Minimum Balance Rule Becomes A Revenue Window For Private Banks

Private banks have turned a basic savings-account rule into a fee stream, with customers paying heavily when monthly balance slips below prescribed limits.

Not maintaining the minimum balance in a bank account is proving costly for depositors and profitable for lenders. Data shared in Lok Sabha and reported by The Economic Times on 10 March 2026 showed banks collected around Rs 19,000 crore from such charges during FY23 to FY25. 

Private banks alone accounted for about Rs 11,000 crore, while public sector banks collected Rs 8,093 crore. That puts the spotlight on how a routine account condition is now generating sizeable non-interest income for banks.

How Private Banks Are Earning From Balance Shortfalls?

The biggest takeaway is simple. A missed balance target is no longer just a penalty for the customer. It is a recurring earnings channel for private banks. The Economic Times and Times of India, both on 10 March 2026, reported that HDFC Bank collected Rs 3,872 crore in FY23-FY25, the highest among private lenders. 

Read More - Canara Bank Minimum Balance 
 

Axis Bank collected over Rs 2,700 crore, while ICICI Bank collected over Rs 1,200 crore in the same period.

Before looking at the wider trend, here is the three-year split reported in Parliament.
 

That pattern continued in FY25 as well. ThePrint reported on 12 February 2026 that banks earned Rs 4,817.96 crore in minimum-balance penalties in FY25 alone. 

Of this, private banks contributed Rs 2,772.2 crore, while public sector banks contributed Rs 2,045.7 crore. 

What Happened Earlier?

The pressure on this issue grew after the 4th Report of the Committee on Petitions was tabled in Lok Sabha in February 2026. Moneylife reported on 17 February 2026 that banks across India collected Rs 28,495 crore over 5 years as penal charges linked to minimum-balance rules. The report flagged the impact on low-income account holders and questioned whether such charges were excessive. 

A few days later, Business Standard on 12 February 2026 and Deccan Herald on 13 February 2026 reported that the parliamentary panel had urged banks to move away from penalties and consider incentives instead, such as fee waivers or rewards for maintaining balances. LoansJagat on 19 February 2026 said the panel had pushed for a more uniform no-penalty approach across banks.

Here is the recent timeline behind the controversy.
 

The numbers show this is not a one-off spike. It is a long-running fee model built into ordinary banking.

Also Read -  Bank of India Minimum Balance

What Stakeholders Are Saying?

The parliamentary committee said these penalties place undue stress on weaker depositors and suggested incentives instead of punishment. 
 

The finance ministry data, cited by ET, confirmed that the collections are substantial. Reports across ThePrint, Moneylife and LoansJagat show growing scrutiny over whether banks are using balance rules as a revenue tool.

Conclusion

For private banks, a customer’s inability to maintain minimum balance has become a clear money-making opportunity. For depositors, it remains a repeated deduction hidden inside routine banking.