Worried about paying penalties for not keeping enough money in your bank account? You’re in the right place. The rules for minimum balance in Indian banks are changing in a big way. Many major banks have removed these charges, bringing relief to millions of customers.
This post will give you a simple guide to the latest minimum balance rules, penalties, and the best account options for you.
What is Minimum Average Balance?
Minimum Average Balance (MAB) is the average amount of money a bank wants you to keep in your savings account over a month. If the average amount drops below the bank’s limit, they charge you a penalty.
Good News: Many Big Banks Say NO to Minimum Balance!
To make banking easier for everyone, many government-owned banks have stopped charging penalties for low balances.
Here’s a list of major banks that have removed the minimum balance requirement for most of their savings accounts:
- State Bank of India (SBI): SBI was one of the first to remove the minimum balance requirement back in 2020.
- Bank of Baroda: Stopped charging penalties from July 1, 2025, for its standard savings accounts.
- Punjab National Bank (PNB): Also removed penalties to make banking more accessible.
- Canara Bank: Removed the requirement for all types of savings accounts in May 2025.
- Indian Bank: Scrapped the minimum balance rule for all its savings accounts from July 7, 2025.
- Bank of India: Also offers zero balance facilities on most of its savings accounts.
What About Private Banks?
The rules in major private banks are different, and they still require you to maintain a minimum balance.
ICICI Bank:
For new accounts opened from August 2025, the monthly average balance requirement has been updated. After initially announcing a higher amount, the bank has now set the limit for metro and urban areas at ₹15,000.[5] For semi-urban locations, it is ₹7,500 and for rural locations, it’s ₹2,500.
HDFC Bank:
If you have an account in a city or metro area, you need to keep a monthly average of ₹10,000. An alternative is to have a Fixed Deposit (FD) of ₹1 lakh. For semi-urban areas, the limit is ₹5,000, and for rural areas, it’s ₹2,500.
Axis Bank:
For most savings accounts, you need to maintain a monthly average of ₹10,000, or have a Fixed Deposit of at least ₹50,000.
What if You Don’t Maintain the Balance?
If your account balance drops below the required average, the bank will charge a penalty. For example, both ICICI and HDFC Bank may charge a penalty of 6% of the shortfall (the amount you are short by), or a fixed amount like ₹500 or ₹600, whichever is lower.
The Easiest Option: A Zero Balance Savings Account
If you want to avoid the stress of maintaining a minimum balance, a Zero Balance Savings Account is the perfect choice for you.
What is it? It’s a savings account where you don’t need to keep any minimum amount. There are no penalties for having a zero balance.
Key Benefits:
- No Fines: You won’t be charged any penalty for not maintaining a balance.
- Basic Banking Included: You still get important services like a free ATM/debit card, passbook, and access to internet and mobile banking.
- Great for Everyone: These accounts are especially helpful for students, low-income earners, and anyone who wants a simple, no-fuss bank account.
Many banks like SBI, HDFC Bank, Kotak Mahindra Bank (with its 811 account), and IndusInd Bank offer great zero balance accounts.
Keep in Mind: Some zero balance accounts might have a limit on the number of free transactions (like ATM withdrawals) per month.
Choosing the right bank account depends on your needs. By understanding these simple rules, you can avoid unnecessary fees and manage your money better.
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