The What and Why of Minimum Balance
A minimum balance is the least amount of money a bank requires you to keep in your account, usually calculated as an Average Monthly Balance (AMB) or Quarterly Average Balance (QAB). To find your AMB, a bank adds up the closing balance of your account for
each day of the month and divides it by the number of days in that month. Banks justify these requirements to cover the operational costs of maintaining your account and providing services like debit cards, cheque books, and branch access. According to the Reserve Bank of India (RBI), banks are permitted to set their own policies for these charges, as long as they are reasonable and transparent. This autonomy is the primary reason for the wide variation in rules across the sector.
Public vs. Private: A Widening Gap
A significant divide exists between public sector banks (PSBs) and private banks. In the financial year 2025-26, Indian banks collected around ₹7,100 crore in penalties for non-maintenance of minimum balance. Notably, private banks accounted for nearly 70% of these charges, collecting over ₹4,948 crore. Many major public sector banks have moved to eliminate these penalties on savings accounts altogether. For instance, SBI has waived these charges for its savings accounts, though they may still apply to certain current accounts. Similarly, Punjab National Bank (PNB) also waived these fees on all its savings accounts from July 2025 to promote financial inclusion. In contrast, private banks often have stricter requirements. Recent data from Parliament revealed that HDFC Bank and Axis Bank were among the top collectors of these penalties.
Location and Account Type Matter
The rules don't just vary by bank; they also change based on your branch's location and the type of account you hold. For a standard HDFC Bank savings account, the AMB requirement might be ₹10,000 in a metro or urban area, but only ₹5,000 in a semi-urban branch and ₹2,500 in a rural one. Axis Bank follows a similar tiered structure. ICICI Bank also differentiates, with revised requirements for new accounts set at ₹15,000 for metro locations, ₹7,500 for semi-urban, and ₹2,500 for rural branches. Premium or 'privilege' accounts, which offer more benefits, naturally come with higher balance requirements, sometimes reaching ₹25,000 or more.
Finding Shelter: The Exempt Accounts
The good news is that not all accounts are subject to these rules. The most prominent exception is the Basic Savings Bank Deposit Account (BSBDA), including those opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY). These accounts are specifically designed for financial inclusion and have a zero-balance requirement, though they may come with limits on transactions. Salary accounts are another common exemption. As long as your employer regularly credits your salary, most banks waive the minimum balance requirement. Other special accounts, such as those for students, pensioners, or minors, may also be exempt or have very low balance requirements, depending on the bank's policy.
Your Step-by-Step Account Audit
Taking a few minutes to audit your account can prevent fees from eroding your savings. First, identify your exact account type—is it a regular savings account, a premium variant, or a special account? Next, visit your bank's website and find the most recent 'Schedule of Charges' document. This will detail the AMB or QAB for your specific account and location. Review your statements for the last few months to see if your average balance consistently stays above this threshold. If you find you're frequently dipping below the required amount and incurring charges, it's time to act. Consider switching to a BSBDA or a zero-balance digital account, which many banks now offer. Alternatively, if you have multiple accounts, consolidating your funds into one may help you meet the requirement effortlessly.
