Government’s Stand on Bank Penalty Charges for Minimum Balance, ATM Usage and SMS Alerts

Background: Query Raised in Lok Sabha

A written reply was furnished in the Lok Sabha to Unstarred Question No. 1495 dated Monday, February 9, 2026 / Magha 20, 1947 (Saka), regarding “Penalty for not maintaining Minimum Balance”. Members SMT. MALA ROY and DR. M K VISHNU PRASAD sought information on:

  • Imposition of allegedly high charges by Public Sector Banks and Private Sector Banks on:
    • Non-maintenance of minimum balance
    • ATM transactions beyond free limits
    • SMS alert services
  • The revenue generated from such penalties and service charges over the past five financial years
  • Whether the Government intends to cap or regulate these banking charges in the interest of general customers

The response was provided by THE MINISTER OF STATE FOR FINANCE (SHRI PANKAJ CHAUDHARY).

Regulatory Framework for Bank Service Charges

Board-Approved Policies and RBI Instructions

The reply clarifies that bank charges in the following areas:

  • Non-maintenance of minimum balance in savings bank accounts
  • ATM transactions exceeding free usage limits
  • SMS alerts

are not arbitrarily fixed but are:

  1. Determined under each bank’s Board-approved policy, and
  2. Subject to the extant instructions of the Reserve Bank of India (RBI).

These RBI instructions mandate that:

  • Fees must be reasonable
  • The structure and quantum of charges must be transparent to customers
  • Charges should be aligned with the cost of providing the particular service

Note: RBI’s supervisory framework requires banks to ensure that the schedule of charges is not exploitative and is backed by internal approval at the Board level.

Zero-Balance Accounts as a Protective Mechanism

To safeguard common banking customers from penal charges related to minimum balance, the Government has highlighted the availability of zero-balance savings options. These include:

  1. Basic Savings Bank Deposit Accounts (BSBDAs)
  2. Accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY)

Key features of these accounts are:

  • No requirement to maintain any minimum balance
  • Provision of basic banking facilities such as:
    • Deposits
    • Cash withdrawals
    • ATM access
  • No penal charges for non-maintenance of minimum balance

Important: Customers who anticipate difficulty in maintaining minimum balance in regular savings accounts can opt for BSBDAs or PMJDY accounts to avoid penalty for shortfall.

Public Sector Banks’ Approach to Minimum Balance Charges

The reply further points out that Public Sector Banks (PSBs) have, over time, either:

  • Waived, or
  • Rationalised

charges relating to minimum balance in regular savings accounts.

This has been done:

  • In accordance with their Board-approved policies
  • Keeping in view commercial considerations and
  • With an objective of enhancing customer centricity