Why Are PSU Banks Like PNB, Canara, and Others Removing Minimum Balance Penalties?

Public sector banks are easing the burden on savings account holders by eliminating penalties on minimum average monthly balance (AMB). 

This significant move enhances customer convenience, promotes financial inclusion and offers flexibility across various savings accounts.

PNB Removes Penalty Based on Shortfall from Minimum Balance

In a move towards simplified customer banking, Punjab National Bank (PNB) lifted AMB-related charges on savings accounts. Previously, PNB calculated penalties based on the percentage shortfall from the required balance. The removal of such a penalty structure will undoubtedly improve banking convenience for millions of customers nationwide.

Why are PSBs Waiving off Minimum Balance Requirement? 

In a statement, PNB has mentioned that it has decided to remove penalties for not maintaining the minimum average balance (MAB) in all savings accounts, as part of its efforts to promote financial inclusion and empower customers.

This customer-friendly move, which came into effect on July 1, 2025, is mainly intended to benefit priority groups such as women, farmers, and low-income families. According to PNB, the aim is to make banking more accessible and stress-free by eliminating charges related to balance requirements.

Indian Bank Joins PSU Peers 

Indian Bank is the most recent to waive off minimum balance charges. Starting from July 7, 2025, customers will no longer face penalties for not maintaining the prescribed average monthly balance in their savings accounts. This applies to all types of savings accounts, encouraging users to maintain accounts without fear of penalties, especially beneficial for low-income account holders.

SBI Has Not Imposed AMB Penalties Since 2020

State Bank of India, the country’s largest lender, set a precedent by scrapping minimum balance requirements in 2020. All savings account types with SBI are exempt from any AMB penalties. This long-standing relief has set the stage for other public sector banks to adopt similar customer-friendly policies.

Canara Bank Waived AMB Charges Across All Savings Products

Effective May 2025, Canara Bank eliminated the AMB requirement for all savings accounts, including regular accounts, salary accounts and NRI accounts. This universal waiver simplifies banking for its diverse customer base and aligns with its mission to streamline customer engagement practices.

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Growing Accessibility Through Waiver of AMB Charges

With these 4 major public sector banks  SBI, PNB, Canara Bank and Indian Bank waiving AMB penalties, banking is increasingly accessible across income segments. This change supports the financial inclusion agenda by eliminating small hurdles that often discourage account usage and maintenance among lower-income groups and rural users.

Conclusion

The waiver of minimum balance charges by SBI, PNB, Canara Bank and Indian Bank ensures that savings account holders can operate their accounts without the burden of penalties. This customer-friendly policy supports increased financial participation and reflects a positive shift in public-sector banking practices.

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