Banks waived off fines, but earned Rs 90000000000, which bank earned the most? Not SBI, PNB, HDFC, ICICI
Public sector banks (PSBs) have collected a penalty of about Rs 9,000 crore (Rs 8,932.98 crore) from customers for not maintaining the 'Minimum Average Monthly Balance' (MAB) in the last five years (from 2020-21 to 2024-25), Minister of State for Finance Pankaj Chaudhary informed Rajya Sabha.
Which banks have stopped collecting fines?
According to the Finance Ministry, Canara Bank, Bank of Baroda, Punjab National Bank, Indian Bank, Bank of India and Central Bank of India have also waived off this penalty from this quarter. The country's largest bank, State Bank of India (SBI), was not charging this penalty since March 2020.
The Minister of State for Finance also informed that the Department of Financial Services (DFS) has asked banks to consider reducing or waiving this penalty, especially to provide relief to customers in semi-urban and rural areas.
How have banks changed their stance?
This disclosure comes at a time when recently Union Bank of India also joined several other public sector banks in announcing the waiver of this penalty. The bank said that this move is to 'ensure equality, fairness and better access to basic banking services for customers'.
Which bank earned the most?
According to a report, Indian Bank collected the highest fine in five years. One-fifth of the total amount i.e. Rs 1,828.18 crores. Punjab National Bank came in second place (Rs 1,662.42 crores) and Bank of Baroda came third (Rs 1,531.62 crores). It was followed by Canara Bank, which earned Rs 1,212.92 crores. Bank of India earned Rs 809.66 crores, Central Bank of India Rs 585.36, Bank of Maharashtra Rs 535.20, Union Bank Rs 484.75, Punjab and Sind Bank Rs 100.92 and Indian Overseas Bank Rs 62.04 crores.
Detailed break up of how fines have been increased? 2020-21: Rs 1,142.13 crore
2021-22: Rs 1,428.53 crore, up 25% from last year
2022-23: Again increased by 30% to Rs 1,855.43 crore
2023-24: Again increased by 26% to Rs 2,331.08 crore
2024-25: This year there was a slight decline of 7% and the amount stood at Rs 2,175.81 crore
What banks are being pressurised?
The decision of banks to abolish this penalty has come at a time when there is pressure on their current account and savings account (CASA) ratio. These accounts are the cheapest source of raising money for banks. In its latest Financial Stability Report released in June, the Reserve Bank of India (RBI) had said that the share of expensive fixed deposits and deposit certificates (CDs) is increasing in the liabilities of banks instead of cheaper CASA.
State Bank of India (SBI), which has not been charging this penalty for the last five years, says the move has greatly benefited first-time bank account openers.
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