Big private banks like HDFC Bank, ICICI Bank, and Axis Bank have collected huge amounts in penalties from customers. Data presented by Minister of State for Finance, Pankaj Chaudhary, in the Rajya Sabha shows a big gap. Between FY23 and FY26, these three private banks collected over ₹11,000 crore for non-maintenance of Minimum Average Balance (MAB). This amount is higher than what all 12 Public Sector Banks (PSBs) collected together in the same period.

The numbers are eye-opening for every bank officer. HDFC Bank alone collected over ₹5,600 crore. This is about 55% of the total collection of all 12 government-owned banks. While the total collection from all PSBs stood at around ₹10,230 crore, the private giants managed to exceed that figure with just three institutions. This highlights a major difference in how private and public banks handle service charges (fees for providing banking facilities).

For many years, the State Bank of India (SBI) has led the way in relief for small depositors. SBI waived off penal charges (fines) for not keeping a minimum balance in savings accounts back in March 2020. However, SBI still charges these fees for current accounts. Public sector banks have been moving toward a more 'customer-centric' model. This means they are focusing more on helping the customer rather than just collecting fees.

Currently, 10 out of the 12 PSBs have completely stopped charging penalties for low balances in savings accounts. The remaining two have 'rationalised' their charges, which means they have made them more logical and less burdensome. This change is part of the government's plan for inclusive banking (making banking accessible to everyone, including poor people).

Bankers must remember that no bank, public or private, is allowed to charge penalties on Basic Savings Bank Deposit Accounts (BSBDAs). This includes accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY). These are 'zero-balance' accounts meant for financial inclusion. There are about 73 crore such accounts in India today that remain exempt from any MAB penalties.

The Reserve Bank of India (RBI) has clear rules for banks that do charge these fees. Banks must ensure their charges are 'reasonable and transparent' (easy to understand and fair). Most importantly, banks cannot just deduct money without warning. They must notify the customer via SMS, email, or letter and give them time to put money back into the account to restore the balance.

For bank aspirants and staff, this news shows the changing landscape of Indian banking. While private banks rely heavily on fee-based income from service charges, public sector banks are prioritizing social goals. As a banker, you must stay aware of your own bank's Board-approved policy. You should also be ready to explain to customers the difference between regular savings accounts and BSBDA accounts to avoid complaints.

In the coming months, the industry will watch if private banks also feel pressure to reduce these charges. With the government highlighting these massive collection figures in Parliament, there could be more discussions on what 'reasonable' charges really look like. For now, the focus remains on protecting vulnerable and small depositors from high banking costs.