Maintaining a minimum balance in your savings bank account is important since many banks charge customers in case they fail to maintain a minimum balance. This requirement ensures that account holders maintain a certain level of funds, which helps cover the cost of account servicing and related operational expenses. Failing to adhere to these requirements often results in penalties.
From the State Bank of India (SBI) to Punjab National Bank (PNB), whether you’re an existing account holder or considering opening a new account, gaining insight into these policies can help you make informed decisions and optimise your banking experience. Here’s an overview of the minimum balance requirements and charges for major Indian banks.
What is the minimum balance for a savings bank account?
The minimum balance requirement varies across banks and savings accounts. It is influenced by the bank’s policies and the free services offered. Banks communicate the required minimum balance to customers, and if the balance falls below this threshold, the bank may levy charges to cover the additional costs of maintaining the account.
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What is the average monthly balance (AMB)?
The average monthly balance (AMB) refers to the average amount of money that must be maintained in a savings account to avoid incurring non-maintenance charges. To calculate AMB, banks sum up the closing balances for all days in a month and divide this total by the number of days in the month.
If the AMB falls below the specified requirement, banks typically notify customers within two months, after which a penalty for non-maintenance may be deducted from the account.
Minimum balance requirements and charges for major banks
Here’s a list of the minimum balance requirements and associated charges for some of India’s leading banks, effective as of August 12, 2024 according to an ET report:
State Bank of India (SBI)
SBI does not impose a penalty for non-maintenance of Average Monthly Balance in savings accounts. This policy has been in effect since 2020.
HDFC Bank
For HDFC Bank, the average monthly balance requirements are:
- Metro and Urban Areas: Rs 10,000 or a fixed deposit of Rs 1 lakh for a minimum of one year and one day.
- Semi-Urban Areas: Rs 5,000 or a fixed deposit of Rs 50,000 for a minimum of one year and one day.
Non-maintenance charges are 6% of the shortfall from the average balance requirement or Rs 600, whichever is lower.
ICICI Bank
ICICI Bank requires a minimum average monthly balance of Rs 5,000. If this requirement is not met, the charges include Rs 100 plus 5% of the shortfall in the required balance.
Punjab National Bank (PNB)
PNB’s minimum balance requirements and charges are:
- Rural Areas: Rs 400
- Semi-Urban Areas: Rs 500
- Urban/Metro Areas: Rs 600
Yes Bank
Yes Bank’s charges for non-maintenance of balance are structured as follows:
- If the balance is less than or equal to 100% of the requirement: No charges.
- If the balance is more than 50% but less than 100% of the requirement: 5% of the shortfall.
- If the balance is 50% or less of the requirement: 10% of the shortfall, with an additional 5% for Savings Value accounts.
The financial impact
Over the past five years, public sector banks have accumulated Rs 8,495 crore from penalties related to non-maintenance of minimum balance requirements. According to an earlier TOI report, the SBI has eliminated these charges, resulting in Punjab National Bank collecting the highest fines, totaling Rs 1,538 crore. Indian Bank, Bank of Baroda, and Canara Bank follow with collections of Rs 1,466 crore, Rs 1,251 crore, and Rs 1,158 crore, respectively.
