A total of almost Rs 7,100 crore was collected by Indian banks as minimum balance penalties against customers who did not maintain minimum average balance (MAB) requirements in the last financial year, up from nearly Rs 6,800 crore in FY25. The figures were provided by the government in Parliament, providing a rare summary of the returns lenders are making in the non-compliance levy on savings and current accounts.

Key Highlights

• The total MAB penalties collected by banks rose to nearly Rs 7,100 crore in FY26 from Rs 6,800 crore in FY25.
• The total amount collected by private banks amounted to Rs 4,948 crore, while that of PSBs dropped to Rs 2,137 crore. 

Private Banks Account for Bulk of MAB Charges

In FY26, total penalties collected stood at Rs 4,948 crore with almost 70 percent of the amount collected by the private sector lenders on the back of a 17 percent increase over the previous year. HDFC Bank has the largest collections at nearly Rs 1,800 crore, followed by Axis Bank with collections of Rs 1,081 crore. Other big private lenders that collected Rs 353 crore, Rs 290 crore from Kotak Mahindra Bank, Yes Bank with Rs 195 crore and IDBI Bank with Rs 175 crore, respectively.

As data is available from FY23 onwards, the total MAB collections of private banks for the period since FY23 are roughly Rs 16,000 crore.

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Public Sector Banks See Decline After Policy Rationalization

In contrast, public sector banks (PSBs) reported a drop in MAB collections, falling to Rs 2,137 crore in FY26 from Rs 2,775 crore in FY25. The government noted that of the 12 PSBs, 10 have entirely discontinued penal charges for non-maintenance of minimum balance in savings accounts, while the remaining two have rationalised their charges based on board-approved policies and commercial considerations.

Among PSBs, State Bank of India — which levies charges specifically on current accounts — collected Rs 477 crore in FY26, the highest among public lenders. It was followed by Bank of Baroda (Rs 394 crore), Indian Bank (Rs 299 crore), and Canara Bank (Rs 213 crore).

Since FY22, PSBs have cumulatively collected close to Rs 12,000 crore in MAB penalties, even as several banks have moved toward reducing or eliminating such charges in recent years.

RBI Guidelines on Customer Notification

The government also reiterated that the Reserve Bank of India (RBI) has directed banks to inform customers about shortfalls in minimum balance through SMS, email, letters, or other suitable communication channels. Customers are typically given a window of time to restore the required balance before penal charges are levied, in line with RBI's customer protection framework.

The disclosure highlights the continuing divergence between private and public sector banks in their approach to minimum balance penalties, even as regulatory scrutiny around transparent fee practices continues to grow across the Indian banking sector.