Beyond Minimum Balance: You Might Not Know About The 'Hidden Charges' Banks Levy On You

Maintaining a minimum balance in a bank account is crucial, as every account holder knows. Like private banks, government banks also impose hefty charges for not maintaining the minimum balance. Over the past five years, government banks have earned approximately ₹8,500 crore from various fines, penalties, and other charges—an amount close to $100 million. Here’s a look at the different charges banks levy and why they are important.

Top Government Banks Charging the Most

India's largest public sector bank, SBI, stopped charging for non-maintenance of minimum balance after 2019-20. Despite this, other government banks continue to make significant earnings from various charges. According to data presented in the Lok Sabha by the Ministry of Finance, the top five government banks that have made the most from these charges are:

Punjab National Bank (PNB)
Bank of Baroda
Indian Bank
Canara Bank
Bank of India

Additionally, 11 other government banks, including Union Bank of India, Punjab & Sind Bank, UCO Bank, Bank of Maharashtra, and Central Bank of India, also impose these charges.

Types of Charges Levied by Banks

Government banks charge account holders for the following:

Minimum Balance Charges: Many banks charge fees on a quarterly or monthly basis for not maintaining the average minimum balance. For savings accounts, this fee can range from ₹100 to ₹250, while for current accounts, it can be between ₹400 to ₹600.

Documentation Charges: Fees charged during the loan process or when opening an account for handling documentation.

Statement Charges: Fees for requesting copies or duplicates of bank statements.

Default Payment Charges: Penalties imposed for defaulting on any payments.

Overdraft Limit Charges: Fees for withdrawing more money than the overdraft limit allows.

Loan Charges: Charges for not submitting balance sheets or for not renewing papers related to loans.

The policy of imposing fines for not maintaining the minimum balance is a significant revenue source for banks. It is essential for account holders to understand their bank's terms and conditions and maintain their accounts accordingly. Being aware of bank charges and taking steps to avoid them is the responsibility of every account holder.