Mumbai: Public sector banks (PSBs) are in talks with the Finance Ministry to review the rule of maintaining a minimum balance in savings accounts. According to a report by Times of India, this discussion is taking place due to the declining share of CASA (Current Account Savings Account) deposits in banks' total deposits.
The report states that the share of CASA deposits is shrinking, and during a recent meeting with the finance ministry, government officials raised a question: Why should customers be penalised for not maintaining a minimum balance, especially when CASA deposits are falling?
Significant policy shift linked to Jan Dhan accounts
Bank officials shared that data from Jan Dhan accounts show many of these accounts were initially dormant, but over time, balances have increased. They called this change an impact of policy reforms.
These banks have already removed the minimum balance rule
According to the Reserve Bank of India’s Financial Stability Report dated June 30, 2025, term deposits have grown and now hold a greater share than CASA deposits in banks.
As per reports, several public sector banks have already removed the minimum balance requirement for their customers:
- State Bank of India (in 2020)
- Bank of Baroda
- Punjab National Bank
- Indian Bank
- Most recently, Canara Bank (from June 1, 2025)
Now, customers of these banks will not be fined if they do not maintain the required minimum balance.
However, private sector banks like Axis Bank, HDFC Bank, and ICICI Bank still impose penalties for not maintaining the minimum balance.
Penalty higher than net profit in some cases
The report also revealed through an RTI (Right to Information) that sometimes the penalty collected by banks exceeds their net profit, which is often impacted by NPA (Non-Performing Asset) provisions. Following this, several PSU banks began removing the minimum balance condition.
Private banks, on the other hand, continue to offer zero-balance and salary accounts, which do not require any minimum balance. Similarly, accounts opened under the Jan Dhan Yojana have never required a minimum balance since the beginning.
