If you think your savings account is just a safe place to park your money, think again. Banks have their own set of rules — and one of the most common is the minimum balance in savings account requirement. This little clause can quietly nibble at your funds if you’re not careful. But here’s the twist: while some banks are ditching it, others are making it even steeper.
- The Big Shake-Up
- Who Else Is Playing the No-Penalty Game?
- Private Banks Still Have a Sting
- What’s the AMB Anyway?
- The Current Bank-Wise Scene
- Interest Rates – A Small Comfort
- Why Banks Play This Game
- The Customer’s Dilemma
- Smart Moves to Avoid Penalties
- Why the Trend Is Shifting
- Private vs Public – The Showdown
- The Bottom Line
The Big Shake-Up
Let’s start with the biggest headline-grabber — ICICI Bank. India’s second-largest private lender has decided to increase the minimum balance in savings account for new customers in urban and metro areas to ₹50,000, effective August 1. Yes, you read that right. Fifty thousand. That’s double or even more than what many banks ask for.
Meanwhile, the State Bank of India (SBI) — the country’s largest bank — has gone the opposite way. It has completely removed the penalty for not maintaining any minimum balance. That means you can have an SBI savings account with as little as ₹10 (or ₹0 if you’re feeling bold) without worrying about charges.
Who Else Is Playing the No-Penalty Game?
Over the past three months, Punjab National Bank, Canara Bank, and Indian Bank have also joined the no-penalty club. They’ve waived fees for not meeting the minimum balance in savings account requirement, giving customers more breathing room.
Private Banks Still Have a Sting
If you’re banking with most private players, the story changes. Many still charge a fee for falling short — typically 6% of the shortfall in your required minimum average balance or a flat ₹500 (charged quarterly), whichever is lower.
Some, like HDFC Bank and Axis Bank, have even more specific rules:
- HDFC Bank: Penalty is 6% of the shortfall or ₹600, whichever is lower.
- Axis Bank: ₹6 per ₹100 of the shortfall or ₹600, whichever is lower.
What’s the AMB Anyway?
AMB stands for Average Monthly Balance — the average of your daily closing balances in a month. Miss it, and your bank may slap a penalty. It’s not about how much you have on the last day of the month but what you averaged over all days.
The Current Bank-Wise Scene
Here’s a quick summary based on recent figures:
| Bank | Minimum Balance Requirement | Interest on Savings | Penalty for Not Maintaining Balance |
|---|---|---|---|
| SBI | Nil | 2.5% | None |
| ICICI Bank | ₹50,000 (Metro/Urban), ₹25,000 (Semi-urban), ₹10,000 (Rural) | 2.5% | 6% of shortfall or ₹500, whichever is lower |
| HDFC Bank | ₹10,000 (Urban), ₹5,000 (Semi-urban), ₹2,500 (Rural) | 2.5% | 6% of shortfall or ₹600, whichever is lower |
| Axis Bank | ₹12,000 (Metro/Urban), ₹5,000 (Semi-urban), ₹2,500 (Rural) | 2.5% | ₹6 per ₹100 shortfall or ₹600, whichever is lower |
| Kotak Everyday | AMB ₹10,000 | 2.5% | 6% of shortfall or ₹500, whichever is lower |
| IDFC First Bank | AMB ₹10,000 | 3% | 6% of shortfall or ₹500, whichever is lower |
Interest Rates – A Small Comfort
Interest rates on savings accounts aren’t what they used to be. Most big banks hover around 2.5% per annum. A few like IDFC First Bank offer a slightly higher 3%.
Some banks give you a better deal on fixed deposits (FDs) — for example, 6.25% to 6.3% for a one-year FD. Still, it’s worth noting that these rates are significantly lower than inflation.
Why Banks Play This Game
Banks use the minimum balance in savings account rule to ensure they have a stable deposit base. It’s a way to keep money parked for lending and investment. Private banks, especially, argue that penalties cover the cost of maintaining accounts for low-balance customers.
The Customer’s Dilemma
Here’s where it gets tricky. If you’re a high-net-worth customer, keeping ₹50,000 or more parked might not bother you. But for many, that’s a significant sum that could be earning better returns elsewhere.
On the other hand, government banks eliminating penalties make them more attractive for people who want flexibility without the fear of losing money to charges.
Smart Moves to Avoid Penalties
If you want to stay penalty-free while keeping your savings account:
- Know Your Bank’s Rules – Every bank has different AMB requirements.
- Maintain a Cushion – Keep a little extra over the minimum to avoid accidental dips.
- Use Alerts – Set SMS or app alerts for low balances.
- Link Accounts – Some banks let you link your savings to an FD or another account to balance things out.
- Switch If Needed – If your bank’s requirement is too high, move to one with lower or no minimum balance rules.
Why the Trend Is Shifting
With digital banking on the rise, customers now have more choices. Many are opening accounts with zero-balance digital banks or payment banks for daily transactions, while keeping traditional accounts only for specific needs.
Government banks removing penalties is also a competitive move — it attracts customers frustrated with high minimum balance requirements elsewhere.
Private vs Public – The Showdown
- Public Sector Banks: Winning on flexibility. No minimum balance penalties, wider rural reach.
- Private Banks: Still winning on service quality, tech integration, and convenience — but at a cost.
The Bottom Line
Your minimum balance in savings account is more than a fine print detail — it’s a factor that affects your money’s flexibility and earning potential. The landscape is shifting, with some banks raising the bar while others are tearing it down completely.
If you value flexibility and don’t want to worry about penalties, public sector banks or no-minimum-balance accounts might be your best bet. But if you prefer the perks of private banking, just make sure you play by their rules.
In the end, your money should work for you — not the other way around.
