In a significant move, several major publicly listed banks in India have abolished the requirement of maintaining a minimum balance in savings accounts, thereby removing penalties for non-maintenance of the Average Monthly Balance (AMB). Banks such as Punjab National Bank (PNB), Bank of Baroda, Indian Bank, and Canara Bank have waived off the minimum balance criteria for most of their savings accounts. This decision is expected to benefit a large number of customers who previously had to worry about maintaining a minimum balance to avoid penalties.
The Average Monthly Balance (AMB) is the minimum balance that customers are required to maintain in their bank accounts. If the balance falls below the required amount, banks levied a penalty, which varied depending on the type of savings account. With the removal of the AMB requirement, customers will no longer incur any charges for not maintaining the minimum balance.
Bank of Baroda has announced that it will waive charges on non-maintenance of minimum balance in all standard savings accounts from July 1, 2025. Similarly, Indian Bank has also waived off the minimum balance criteria across all savings bank accounts, effective from July 7, 2025. Canara Bank had earlier announced a waiver of the average monthly balance requirement for all types of savings bank accounts in May 2025.
Punjab National Bank (PNB) has also joined the list of banks that have removed the minimum balance requirement. Previously, PNB charged penalties for failing to maintain the minimum average balance, which was directly proportional to the extent of the shortfall. However, with the new rules, customers will no longer have to worry about maintaining a minimum balance.
State Bank of India (SBI) had already waived off the requirement for maintaining a minimum balance in all savings accounts since 2020, and there is no penalty if the minimum balance is not maintained. The interest rates for savings accounts vary across banks, with PNB offering 2.50% interest rate for balances below Rs. 10 lakh and 2.70% for balances above Rs. 100 crore.
Overall, the removal of the minimum balance requirement is a significant move that is expected to benefit a large number of customers. It will provide relief to those who had to maintain a minimum balance to avoid penalties and will also make banking more accessible and convenient for all.