What the Numbers Revealed
Data presented to the Rajya Sabha on July 28, 2026, showed that Indian banks collected enormous sums from customers for failing to maintain a Minimum Average Balance (MAB). Private and public sector banks collected thousands of crores in penalties over
the last few financial years. For instance, from FY 2021-22 to FY 2025-26, banks like HDFC Bank, Axis Bank, and Bank of Baroda were top collectors of these charges. While the government has stated that 10 out of 12 public sector banks (PSBs) have discontinued MAB penalties on standard savings accounts, the practice is still prevalent, particularly among private banks which collected nearly 70% of the penalties in FY 2025-26. This data underscores a simple truth: small fees, when applied to millions of accounts, become a significant source of income for banks and a silent drain on your savings.
Why Your Savings Account Isn't Really 'Free'
Many people assume a basic savings account is a free service for parking their money. In reality, it’s a product, and banks have operational costs to cover. These costs are recovered through various fees and charges, some visible, others less so. The most talked-about fee is the penalty for not maintaining the MAB. Banks require you to keep a certain average amount in your account over a month or quarter, and if your balance dips below this, a penalty is automatically debited. Beyond MAB, there's a whole ecosystem of other charges that can eat into your balance. According to RBI guidelines, banks must be reasonable and transparent about these charges, but it’s up to you, the customer, to stay informed.
Your Step-by-Step Account Fee Audit
Feeling concerned? Good. Now, turn that concern into action with a simple five-step audit of your own account. 1. Gather Your Statements: Get the last six to twelve months of your bank statements. You can download these from your net banking portal. 2. Scan for Debits: Ignore the credits (money in) and focus only on the debits (money out). Look for small, recurring amounts that are not from your own transactions. They often have cryptic descriptions like 'MAB CHG', 'SMS ALERT FEE', or 'AMC' (Annual Maintenance Charge). 3. Find the 'Schedule of Charges': Every bank is required to have a detailed document listing all its fees. This is usually available on their website. Search for "Schedule of Charges" or "Service Charges" for your specific account type. 4. Match the Debits to the List: Compare the mysterious debits from your statement with the official fee list. This will tell you exactly what you're being charged for. 5. Question Everything: If you see a charge you don't understand or agree with, call or visit your bank. Ask for a clarification. Sometimes, charges can be applied by mistake.
Common Charges to Watch For
When you scan your statement, keep an eye out for these common charges that often go unnoticed: Minimum Balance Penalty: The most common penalty, charged if your average balance falls below the bank's requirement. ATM Transaction Fees: Banks offer a limited number of free transactions at their own and other banks' ATMs per month. Beyond that, you pay a fee for each withdrawal. Debit Card Annual Fees: Most debit cards come with an annual maintenance charge (AMC), which can range from a modest to a significant amount depending on the card type. SMS Alert Charges: While the RBI has urged banks to be reasonable, many still charge a quarterly fee for sending transaction alerts via SMS. Failed Transaction Fees: A penalty is often levied for bounced cheques or a failed ECS (Electronic Clearing Service) mandate due to insufficient funds. Cash Transaction Charges: Some banks limit the number of free cash deposits or withdrawals at a branch per month and charge a fee for additional transactions.
How to Minimize and Avoid Fees
You can significantly reduce your banking costs by being a proactive customer. Start by consolidating bank accounts if you have multiple ones you don't need; this makes it easier to maintain the minimum balance. If your bank requires a high MAB, consider switching to a zero-balance account, which many PSUs now offer, or to an account with a lower threshold. Always use your own bank's ATM to maximize free transactions. Go through your account services and opt out of any you don't need, like physical statements if you are comfortable with e-statements. Finally, set up alerts on your banking app to notify you if your balance is close to dipping below the minimum requirement, giving you time to add funds before a penalty is charged.
