PSBs collected Rs 8,500 cr in customer penalties over FY 2020–24: Govt of India

Despite the State Bank of India's (SBI) decision to discontinue penalties for not maintaining minimum balances in accounts after FY 2020, public sector banks (PSBs) have seen greater than a 34 per cent increase in the amount collected for such penalties over the past five years, according to the ministry of finance.

Data provided by the minister of state for finance, Pankaj Chaudhary, in a written response to an unstarred question in the Lok Sabha shows PSBs collected around Rs 8,500 crore in penalties from FY 2020 onwards.

Of the 11 PSBs, Punjab National Bank (PNB), Bank of Baroda, Bank of India, Punjab and Sind Bank, Union Bank of India and UCO Bank imposed penalties for not maintaining a minimum quarterly average balance (QAB).

According to government data, Punjab National Bank collected Rs 633 crore in penalties, followed by Bank of Baroda with Rs 387 crore in penalties, over the past four financial years.

Reacting to these figures, Rahul Gandhi said in a post on X:

'The government that waived off Rs 16 lakh crore of its industrialists has collected Rs 8,500 crore from poor Indians, who are unable to maintain even the minimum balance,' said Gandhi.

'The penalty system is the door of Modi's chakravyuha, through which an attempt is being made to break the back of the common Indian,' he added. 'But remember, the people of India are not Abhimanyu, they are Arjun. They know how to answer your every atrocity by breaking the chakravyuha.'

Meanwhile, Indian Bank, Canara Bank, Bank of Maharashtra and the Central Bank of India also levy penalties for not maintaining a minimum average monthly balance (AMB).

Each PSB has its own mechanism for collecting these penalties.

According to the Punjab National Bank website, savings account customers must maintain a minimum QAB of Rs 2,000 in urban and metro areas, Rs 1,000 in semi-urban areas, and Rs 500 in rural areas. Failing to maintain these balances can result in penalties up to Rs 100, Rs 150 and Rs 250, respectively.

According to Canara Bank, savings account customers must maintain an AMB of Rs 2,000 in urban and metro areas, Rs 1,000 in semi-urban areas and Rs 500 in rural areas. Customers in all three geographies will incur a penalty between Rs 25 and Rs 45, plus GST, based on the shortfall amount, says the bank's website.

Chaudhary said that banks must also inform customers about the minimum balance requirement. “It should be ensured that savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance,” he added.