Rs 8,621.12 crore as penalty for not maintaining minimum balance by PSU banks in 5 years: Parliamentary panel

New Delhi: Public sector banks collected Rs 8,621.12 crore as penalty from account holders for not maintaining minimum balance between 2020-21 and 2024-25 with Uttar Pradesh, Tamil Nadu and Maharashtra topping the list, statistics placed before a Parliamentary panel showed.

Karnataka is placed fourth in the list of states and union territories from where the largest amount of penalties were collected followed by Bihar, Lok Sabha’s Committee on Petitions, which urged banks to do away with collecting penalties for not maintaining minimum balance in savings accounts, said.

The highest amount of penalty was collected from Uttar Pradesh at Rs 1,233.97 crore in the five fiscals while Tamil Nadu came second with Rs 1,21.38 crore and Maharashtra Rs 1,088.18 crore. Karnataka was a distant fourth with Rs 529.20 crore while Rs 464.53 crore were collected by PSU banks from Bihar.

An analysis showed that the collection of penalties were increasing between 2020-21 and 2023-24 but it declined in 2024-25.

Despite SBI withdrawing the penalty on savings bank accounts in March 2020, the penalties rose from Rs 1,148.71 crore in 2020-21 to Rs 1,415.65 crore, Rs 1,785.90 crore and Rs 2,225.10 crore in the next three fiscals. However the figures decreased in 2024-25 with penalties pegged at Rs 2,045.74 crore.

While the national trend saw a decline in 2024-25, six states and three union territories saw an increase compared to 2023-25. Tamil Nadu saw the highest growth of Rs 43.22 crore - from Rs 233.12 crore to Rs 276.34 crore in 2024-25.

Except Karnataka, all south Indian states saw an increase in collection of penalties by banks. Banks collected Rs 65.19 crore from Karnataka in 2020-21 followed by Rs 103.75 crore, Rs 104.53 crore, Rs 133.29 crore and Rs 122.41 crore in the next fiscal.

Incidentally, Uttar Pradesh saw the biggest decline of Rs 51.84 crore in collection of penalties – from Rs 339.10 crore in 2023-24 to Rs 287.87 crore in 2024-25. Madhya Pradesh, Bihar, Rajasthan and Punjab also saw decline in the collection of penalty.

The Parliamentary committee said it was of the firm view that the decision of some banks to waive penalty on non-maintenance of minimum balance on savings bank accounts is in the best interest of all stakeholders.

The committee also wants public and private sector banks to look at micro-entrepreneurs, self employed and small traders, who maintain current accounts, in a positive manner and not trouble them with repeated penalties for not maintaining minimum balance.