Indian Banks Charge Customers Billions in Low Balance Penalties, HDFC Bank Tops List

ndian banks collected more than ₹7,000 crore from customers in FY26 for failing to maintain minimum account balances. The government disclosed this figure in a written Rajya Sabha reply from Minister of State for Finance Pankaj Chaudhary. Private sector banks alone collected ₹4,948.71 crore, while public sector banks gathered ₹2,137.92 crore. HDFC Bank topped every lender nationwide, charging customers ₹1,798.14 crore in penalties during the fiscal year.

HDFC Bank and Axis Bank Dominate Private Sector Charges

HDFC Bank (NYSE: HDB) and Axis Bank (AXISBANK.NS) together accounted for the overwhelming majority of private sector penalty collections in FY26. Their combined total reached ₹2,879.47 crore during the fiscal year.

• HDFC Bank alone collected ₹1,798.14 crore, the highest figure among all 19 private banks.
• Axis Bank followed with ₹1,081.33 crore in minimum balance charges.
• Together, these two banks made up nearly 58% of total private sector collections.

This concentration highlights how disproportionately two large private lenders drive India’s overall minimum balance penalty revenue. RBI data on private banks only goes back to FY2022-23, with FY26 figures still provisional.

Other Private Banks Trail Far Behind the Leaders

Beyond HDFC Bank and Axis Bank, other private lenders collected far smaller sums during FY26. The gap between the top two and the rest remains substantial.

• ICICI Bank collected ₹353.50 crore in minimum balance penalties.
• Kotak Mahindra Bank charged customers ₹290.65 crore during the same period.
• Yes Bank, IndusInd Bank, and IDBI Bank collected ₹195.05 crore, ₹177.92 crore, and ₹175.15 crore, respectively.

These figures confirm that HDFC Bank’s ₹1,798.14 crore alone exceeds the combined total of ICICI Bank (NYSE: IBN), Kotak Mahindra Bank (KOTAKBANK.NS), Yes Bank (YESBANK.NS), IndusInd Bank (INDUSINDBK.NS), and IDBI Bank (IDBI.NS).

Public Sector Banks Show a Different Pattern

Public sector banks collected notably less than private lenders, reflecting years of policy shifts around minimum balance enforcement. SBI’s figure looks modest only because of a key historical decision.

• SBI collected ₹477.27 crore, the highest among public sector banks in FY26.
• That figure relates only to current accounts, since SBI waived savings account penalties in March 2020.
• Bank of Baroda collected ₹394.10 crore, followed by Indian Bank at ₹299.17 crore.

Canara Bank and Punjab National Bank rounded out the top public sector collectors, at ₹213.48 crore and ₹206.68 crore respectively.

Punjab National Bank’s Sharp Decline Stands Out

Punjab National Bank’s (PNB.NS) minimum balance collections dropped dramatically over recent fiscal years. That decline reflects a broader trend among public sector lenders scaling back penalty enforcement.

• PNB collected ₹674.04 crore in FY2023-24, a much higher figure than today’s.
• By FY26, that number had fallen to just ₹206.68 crore.
• Nine public sector banks beyond SBI have also eliminated or reduced similar penalty charges in recent years.

This decline aligns with the government’s broader push toward customer-centric banking policies across India’s public sector banking network.

Who’s Exempt From These Charges

Not every account holder faces minimum balance penalties under current RBI guidelines. Certain account categories remain fully protected from these charges.

• Basic Savings Bank Deposit Accounts (BSBDAs) face no penal charges whatsoever.
• Pradhan Mantri Jan Dhan Yojana accounts also remain exempt under RBI norms.
• Approximately 72 crore such zero-balance accounts exist across India’s banking system.

The government noted these charges represent only about 0.23% of public sector banks’ total income, a relatively small revenue stream despite the large headline figures.

Bottom Line

FY26’s ₹7,086.63 crore total shows minimum balance penalties remain a meaningful, uneven revenue stream. HDFC Bank’s ₹1,798.14 crore share reflects scale, not unusually harsh fees. The real story is public banks retreating from enforcement, seen in PNB’s decline and SBI’s waiver, a shift private lenders haven’t matched yet. 

Disclaimer:

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