In a challenge to peers, Canara Bank waives minimum balance rule
India's fourth-largest public sector bank by assets expects to lose 'a few hundred crores' per year in penalty income due to the move but it hopes the move will encourage customers to shift funds into term or recurring deposits in the long term, executive director S K Majumdar said.
'Perhaps if we don't do this, we will lose deposits,' Majumdar told ET. 'This creates a feel good for the customer. At a time when the industry is facing a challenge of mobilising deposits, especially because capital markets are doing well, this gives customers an alternative,' he added.
The waiver, with effect from June 1, is across all savings accounts including salary accounts and NRI accounts. Minimum balance requirements in Canara Bank's savings bank accounts ranged from an average monthly balance of Rs 500 in rural branches to an average quarterly balance of Rs 1 lakh for their savings bank power plus accounts. Failure to maintain these balances resulted in penalties ranging from Rs 25 per month to Rs 60 per day excluding GST, information on the bank's website showed.
'We will lose a few hundred crores by waving these charges, but we hope to recoup these losses through increase in other deposits," Majumdar said. 'We expect others to do it as well as banks need to find ways to garner deposits.' He said the ease with which customers can shift funds to recurring or term deposits from SB accounts due to digital banking could mean that the bank may get inflows into those fixed term deposits.Canara Bank's annual presentation shows that the annual service charge fees it collected increased 4% year on year to Rs 3,561 crore in the fiscal ended March 2025 from Rs 3,417 crore a year earlier. The bank does not give a separate number for charges on non-maintenance of balances.
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