So far five government banks have removed the fee on minimum deposit, more banks can announce in future

Government banks have now started the process of eliminating the penalty charged for not maintaining the minimum average balance in an account each month. In 2023-24, these banks earned Rs 2,331 crore from customers from this fee. So far, five government banks have decided not to charge any fee for not maintaining the minimum deposit. As a result, other government banks may also follow suit in the future.

However, this exemption applies only to savings accounts where banks offer interest rates ranging from 2.50 percent to 6 percent or higher. Recently, RBI reduced the repo rate by one percent, which has led banks to experience a decline in deposits. Consequently, banks might face cash flow issues in the future. The five banks that have abolished the minimum deposit fee are Punjab National Bank, Bank of Baroda, Indian Bank, Canara Bank, and SBI. 

Public sector banks recovered Rs 1,855 crore from customers for not maintaining the minimum deposit in 2022-23, with a 26 percent increase in 2023-24. Over three years, these banks recovered a total of Rs 5,614 crore. According to RBI rules, banks must inform customers about the minimum balance requirement when opening an account, and account holders should also be updated about any changes afterward.