Representative image showing Indian rupees.
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Hubballi: 11 public sector banks have collected a whopping Rs 8,872.98 crore from its customers over the last five years for not maintaining average monthly balance.
According to a written reply provided by the Ministry of Finance to a question by Leader of Opposition in Rajya Sabha Mallikarjun Kharge, the banks have collected this amount between 2020 and 2025 financial year.
Indian Bank has collected the highest penalties of Rs 1828.18 cr, followed by Punjab National Bank (Rs 1662.42 cr), Bank of Baroda (Rs 1531.62 cr) and Canara Bank (Rs 1152.92 cr) are others that have collected over Rs thousand crore in last five years.
Year after year the collection of penalties from banks has increased with the financial year 2023-24 witnessing the highest collection of Rs 2331.08 cr. In the finical year 204-25, the 11 banks had collected Rs 2175 cr.
Each bank, based on the Board approval, formulates policy regarding the minimum average monthly balance to be maintained and the percentage of penalty to be levied. This is as per the 2014 and 2015 circular issued by the Reserve Bank of India.
Between 2018 and 2020 the public sector banks had collected Rs 21.044.04 crore from its customers for not maintaining minimum balance.
State Bank of India, India's largest bank, has done away with collecting penalties since 2020. Seven other banks -- Canara Bank, Bank of Baroda, Punjab National Bank, Indian bank, Bank of India, central bank of India and Union Bank of India--have decided to stop collecting the penalties from the second quarter of FY 2025-26.
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, with specific emphasis on providing relief to customers in semi-urban and rural areas.
Experts say that those worst affected by the minimum balance are from the financially weaker section of the society, who cannot afford to maintain a balance of Rs 3,000 to Rs 10,000 per month in their savings bank accounts.
Banks Fine collected in 5 years
Indian Bank Rs 1828.18 cr
Punjab National Bank Rs 1662.42 cr
Bank of Baroda Rs 1531.62 cr,
Canara Bank Rs 1152.92 cr
Bank of India Rs 809.66 cr
Central Bank of India Rs 585.36 cr
Bank of Maharashtra Rs 535.2 cr
Union bank of India Rs 484.75 cr
UCO Bank Rs 119.91 cr
Punjab & Sind Bank Rs 100.92 cr
Indian Overseas Bank Rs 62.04 cr
Sources: Ministry of Finance reply to Rajya Sabha