Banks Collected Rs 7,100 Crore as Minimum Balance Penalty in FY26
UPSC / SSC current affairs note · Economy
Why in news
The government informed Parliament that banks collected nearly Rs 7,100 crore in penalties for non-maintenance of minimum average balance (MAB) in FY26, up from Rs 6,800 crore in FY25. Private banks accounted for 70% of the charges, with HDFC Bank alone levying Rs 1,800 crore. Ten public sector banks have discontinued such penal charges.
Background
Banks require savings account holders to maintain a minimum average balance (MAB). Failure to do so attracts penalties. The RBI has advised banks to notify customers before applying charges. Over the years, these charges have been a significant source of fee income for banks, especially private ones.
Key facts
Banks collected Rs 7,100 crore as MAB penalties in FY26, up from Rs 6,800 crore in FY25.
Private banks collected Rs 4,948 crore (70% of total), a 17% increase from FY25.
HDFC Bank collected Rs 1,800 crore, Axis Bank Rs 1,081 crore, ICICI Bank Rs 353 crore, Kotak Mahindra Bank Rs 290 crore, Yes Bank Rs 195 crore, IDBI Bank Rs 175 crore.
Ten out of 12 public sector banks (PSBs) have discontinued MAB penal charges on savings accounts; two have rationalised them.
PSBs collected Rs 2,137 crore in FY26, down from Rs 2,775 crore in FY25.
Among PSBs, SBI collected Rs 477 crore (on current accounts), Bank of Baroda Rs 394 crore, Indian Bank Rs 299 crore, Canara Bank Rs 213 crore.
Since FY22, PSBs have collected nearly Rs 12,000 crore as MAB charges.
Private banks have cumulatively collected around Rs 16,000 crore since FY23 (data prior not maintained).
RBI has advised banks to notify customers via SMS, email, or letter before applying penal charges.
Prelims pointers
- Minimum Average Balance (MAB) penalty
- RBI advisory on customer notification
- Public Sector Banks (PSBs)
- HDFC Bank, Axis Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDBI Bank
- SBI, Bank of Baroda, Indian Bank, Canara Bank
Mains angles
- Discuss the impact of minimum balance penalties on financial inclusion and customer welfare.
- Critically examine the role of RBI in regulating bank charges and protecting depositor interests.
- Analyze the disparity between private and public sector banks in levying MAB charges.