Public Sector Banks Reconsider Minimum Balance Penalties
Why in the news
State-run banks began rethinking penalties for low savings balances as cheap CASA deposits shrank.
Key facts
- Scrapped by Canara Bank, Bank of Baroda, PNB, Indian Bank: no penalty for non-maintenance.
- The Finance Ministry questioned penalising customers while low-cost deposits fall.
- SBI removed it in 2020; RTI replies had shown penalties exceeding net profit in some years.
- PMJDY experience: even dormant accounts slowly built balances.
Banking economics
- Savings funds once cross-subsidised free services; digital banking cut costs.
- Banks now lean on debit card charges and fees beyond free transaction limits.
- Private banks often waive the rule for salary accounts and high relationship value customers.
Exam angle
- CASA = Current Account and Savings Account.
- Report cited: Financial Stability Report, June 2025.