Overview

• Canara Bank eliminated minimum balance penalties on June 1, followed by Bank of Baroda, Punjab National Bank and Indian Bank on July 1.
• State Bank of India pioneered the trend in 2020 after a right-to-information request showed penalty collections had outstripped its net profit.
• The Reserve Bank of India’s June 2025 Financial Stability Report reported CASA deposits fell to 36.8% of total funding, signalling a shift toward higher-cost term deposits and certificates of deposit.
• Finance ministry officials have questioned remaining state lenders on the need for low-balance fines and are discussing extending zero-balance policies across the public sector.
• Banks plan to offset lost penalty income by expanding revenue from debit card fees, transaction charges beyond free limits and other service levies.