Minimum Balance Policies: The criteria of minimum balance is a huge concern for those individuals who are having saving accounts in banks. Though some banks are now eliminating theminimum balance criteria for their clients. Union Bank of India is also included in the list of such banks. Let us see the list of 7 such banks which have removed the requirement of maintaining Average Monthly Balance (AMB) in savings accounts. Union Bank of India Union Bank of India has recently issued a press release informing about this. In the press release it is stated that the the general savings account now does not have a minimum balance requirement since the general savings accounts no longer have that restriction since the September quarter of the previous fiscal year. Bank of Baroda Bank of Baroda says that effective 1st of July, 2025, there shall be no penalties for the maintaining of minimum balances in all standard savings accounts. This policy will not be applicable for premium savings accounts. Indian Bank Indian Bank has also completely removed the minimum balance charge for all its savings accounts. This has been in effect since the 7th of July, 2025. Customers will no longer be concerned about their account balances.Canara Bank Canara Bank announced in May 2025 that all savings accounts will be free from AMB rules, including regular, salary, and NRI accounts. The bank is focused on making life easier for its customers. PNB Punjab National Bank has also eliminated the minimum balance maintenance penalties for all savings accounts. Previously, PNB imposed a penalty that was a fraction of the balance shortfall. This will no longer be the case. SBI SBI, the largest bank in the country, has also lifted the minimum balance requirement for all savings accounts effective 2020. The bank also permitted zero balance accounts and no fee is charged for maintaining a low balance. Bank of India Bank of India has also removed the penalties for minimum balance and released a press note informing the public about this policy. The note states that the aim of these changes is to adapt to market realities, strengthen the bank’s finances, and offer enhanced services to all categories of customers.What is minimum balance?It is common practice in banking to require maintaining a minimum balance in the account. If the balance falls below the required minimum, then some form of penalty is charged. This charge may vary for different banks.People get stuck in the minimum balanceMany people often get trapped in the minimum balance issue. The primary reason is the lack of understanding of how these numbers are computed. Every bank has its own ways of calculating these figures. If you understand how these figures are computed, then penalties cannot be imposed.Know how the calculations are doneBesides the penalties people incur for sticking to a minimum balance, individuals often face severe penalties for maintaining the account. There is a common misconception about maintaining a balance, people often think that minimum has to be met daily. In simple terms, no other bank is going to keep you on daily minimum. The calculation for minimum balance is done monthly. The average balance must be, at the very least, equal to the predefined minimum.Let us clarify this with an example.In our example scenario, assume your bank has set the minimum balance policy at Rs 10,000. In this case, you will not need to maintain that 10,000 balance every single day, instead you will need to maintain an average balance. For example, if you kept 3 lakh in your account for the whole day on the first day of the month, your daily average for that month of 3 Rs 3 lakh would average to Rs 10,000, thus no penalties would be incurred.Can account balance be negative? Have you ever wondered that in the event that you’re penalized for having all your money withdrawn, your balance gets locked and you can no longer access your balance? Technically, this is not the case. The Reserve Bank of India has mandated rules to ensure that every account holders balance remain static and cannot go negative. The central bank has in place several measures to ensure this is the case.Banks earn a lot from minimum balanceәш Though it appears that all profits made by a bank come from interests charged on loans, a considerable amount of profits come from minimum balance penalties, which most customers are not aware of. There was a recent report from 2024 that in the financial year 2023-24, 11 government banks charged a total of Rs 2331 crore in minimum balance penalties. Over the span of three years, from 2021-2024, these banks made a total of Rs 5614 crore in minimum balance penalties.
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