Punjab National Bank (PNB) has provided major relief to its customers.
The bank has announced that it will no longer charge any penalty for not maintaining the minimum average balance in savings accounts.
This move will free customers from the stress of keeping a minimum balance in their accounts.
According to the bank, the purpose of this decision is to encourage financial inclusion and make banking services easier and more accessible for everyone. This new rule has come into effect from July 1, 2025.
It is expected to especially benefit women, farmers, and low-income families. Just last month, Canara Bank also removed the requirement of maintaining an Average Monthly Balance (AMB) from June for all its account holders.
Why Do Banks Ask for a Minimum Balance?
Banks require customers to maintain a minimum average balance in their accounts so they can cover their day-to-day expenses and offer various services such as online banking, ATM facilities,
and branch services. In some cases, customers who maintain the required balance also get extra benefits like higher interest rates and free ATM transactions.
On the other hand, if customers fail to maintain the required balance, banks charge a penalty. If this continues for a long time, the bank may even close the account.
In simple terms, banks work like businesses that rely on deposits and penalties to manage their expenses.
According to RBI guidelines, banks must ensure that a customer’s account balance does not turn negative because of penalty charges for not maintaining the minimum balance.
Banks Also Earn Through Other Sources
Sometimes, banks remove the minimum balance rule to make banking easier for people in remote areas and those with low income.
Even without penalty charges, banks manage their operating costs through other sources like SMS alert charges, service fees, transaction fees, and interest earnings.
