Minimum Balance Charges: The RBI Rules Your Bank Must Follow Before Debiting a Penalty

On a bank’s service desk, the first week of a new month or quarter brings a familiar kind of complaint: a debit of a few hundred rupees marked “non-maintenance of AMB” or “MAB charges”, often on an account the customer had nearly forgotten. Most of these customers assume the bank can charge whatever it likes once the balance dips. It cannot. Minimum balance charges on savings accounts have been governed since 1 April 2015 by an RBI circular that sets out when a bank may charge, how much, and what it must tell you first.

This guide walks through those rules, how banks work out your average monthly balance, which accounts carry no minimum at all, and how to get a wrong charge reversed.

The RBI rules on minimum balance charges

The RBI circular of 20 November 2014 on “Levy of penal charges on non-maintenance of minimum balances in savings bank accounts” added six conditions that every bank must follow before and while charging. In plain terms:

The circular also told banks to display these guidelines on their websites and to update customers’ mobile numbers and email IDs so that shortfall alerts actually reach them.

How the average monthly balance is worked out

Most banks set the requirement as an average monthly balance (AMB), and some use a quarterly average. It is not the balance on any one day. The bank adds up the closing balance of every day in the month and divides by the number of days.

Here is the example we will use through this guide. Ravi has a savings account at a private bank that requires an AMB of ₹10,000. In a 30-day month, his account holds ₹15,000 for the first 10 days. His rent goes out on the 11th, and the balance stays at ₹2,000 for the remaining 20 days.

Ravi’s average monthly balance is about ₹6,333, so the shortfall is about ₹3,667. Note that he was above ₹10,000 for a third of the month and still fell short, because the low balance lasted longer.

The same arithmetic works in his favour. To lift an average that has slipped, a smaller amount kept for more days does as much as a large amount kept for a few. If he had moved ₹6,000 back on day 21 and left it there, his average would have risen by ₹2,000 for the month.

What a proportionate charge looks like

Banks publish their own slabs in their schedule of charges, so the figures differ. The RBI only says the charge must be a percentage of the shortfall and reasonable. As an illustration, suppose a bank charges 6% of the shortfall, capped at ₹500 a month, plus GST at 18%:

This is an illustration, not any bank’s actual rate. A charge that is the same whether you are ₹500 short or ₹9,500 short is worth questioning, because it does not match the proportionality the RBI asks for.

The no-negative-balance rule matters most for accounts that sit idle. If Ravi’s balance were ₹150 and the charge came to ₹260, the bank could deduct only up to the available balance; it cannot push the account to minus ₹110 and recover the rest later from his salary credit.

Which accounts have no minimum balance?

Several kinds of savings account carry no minimum balance requirement at all, so no penalty can apply.

• Basic savings bank deposit account: RBI rules require banks to offer this account with no minimum balance. It comes with an ATM card and at least four free withdrawals a month. Our guide to SBI’s BSBD account charges covers the withdrawal limits.
• Jan Dhan accounts: these are basic savings bank deposit accounts and follow the same zero-balance rule.
• Salary accounts: usually zero-balance while salary is being credited. Once credits stop for a few months, many banks convert them to regular savings accounts with a minimum balance. The period varies by bank.
• Inoperative accounts: RBI’s January 2024 instructions say banks “are not permitted to levy penal charges for non-maintenance of minimum balances in any account that is classified as an inoperative account”, meaning an account with no customer-induced transaction for over two years.

Several public sector banks have also dropped the charge on regular savings accounts. SBI stopped levying it in 2020. In 2025, Canara Bank announced a waiver for all savings accounts from 1 June, and Punjab National Bank, Indian Bank and Bank of Baroda announced similar waivers from July, Bank of Baroda’s excluding premium schemes. Private banks generally still charge, and their requirements range widely by account variant and branch location.

How to contest a wrong minimum balance charge

From the desk side, the reversals that go through quickly have one thing in common: the customer names the specific rule that was broken. A general complaint that charges are “too high” rarely gets anywhere, because the bank’s schedule says what it says. A complaint that you never received the shortfall notice, or that the charge took your account below zero, points to a breach of the RBI circular.

1. Check the statement. Note the date and amount of each minimum balance charge and the GST debited with it.
2. Look for the notice. Search your SMS and email for a shortfall alert from the bank in the month before the charge. If none came, that is your strongest ground.
3. Work out your own average. Use the method in Ravi’s example. Banks occasionally apply the wrong slab or the wrong account variant.
4. Write to the bank. Use the bank’s grievance email or app and ask for reversal, citing the RBI circular of 20 November 2014. Keep the complaint number.
5. Escalate after 30 days. If the bank rejects the complaint or does not reply within 30 days, you can file with the RBI Ombudsman at cms.rbi.org.in.

Banks also reverse charges as a goodwill gesture for long-standing customers, especially for a first shortfall. It costs nothing to ask at the branch.

What the rules leave to each bank

The circular is clear on process but leaves the numbers to banks. It does not cap the percentage a bank may charge, does not set a minimum balance for any account type, and does not say how quickly a reversal must be made once a complaint is accepted. It also says nothing about whether a bank must close or downgrade an account that stays short for months, which is why practice varies: some banks keep charging up to the available balance, others offer to convert the account to a basic savings bank deposit account. For an account you rarely use, ask the branch about that conversion; if it is not offered, closing the account is often cleaner than letting charges accumulate. Before you close it, update any standing instructions, UPI handles and your KYC details elsewhere.

Before the next month begins, check three things: the AMB your account variant requires, whether your mobile number is registered for alerts, and whether you still need the account at all. An account you no longer need is better closed than left to collect minimum balance charges.

FAQs

Can a bank charge for minimum balance without informing me?

No. Under the RBI circular, the bank must first notify you by SMS, email or letter and give you at least one month from the notice to restore the balance. Charges can be recovered only after that.

Can minimum balance charges make my account balance negative?

No. The RBI says the balance must not turn negative solely because of minimum balance charges. If it has, ask the bank to reverse the excess debit.

Is GST charged on minimum balance penalties?

Yes. Banks add GST at 18% on service charges, including the penalty for not maintaining the average monthly balance.

Does the minimum balance rule apply to a basic savings bank deposit account?

No. A basic savings bank deposit account has no minimum balance requirement, so no penalty applies. Banks may limit free withdrawals in such accounts.

Will my CIBIL score fall if minimum balance charges go unpaid?

No. A savings account is not a loan, and unpaid minimum balance charges are not reported to credit bureaus. Your CIBIL report covers loans and credit cards only.

Disclaimer: This guide explains RBI rules on savings account charges as of 4 October 2026. Each bank sets its own minimum balance and charges within these rules; check your bank’s current schedule of charges.