What is the minimum balance penalty and how can I avoid it?
Updated · CardKhoj Editorial Team
Short answer
Many banks charge a fee if your average monthly balance falls below a set level, such as ₹10,000 in a metro branch. RBI rules require banks to notify you first, give you a month to restore the balance, keep charges proportional to the shortfall, and never let fees push your balance below zero. SBI and several public sector banks have removed this charge on regular savings accounts.
How it is calculated
Most banks use the average monthly balance (AMB): the sum of each day's closing balance divided by the number of days in the month. Dipping below the limit for a few days is fine if the average stays above it.
Ways to avoid it
- Convert to a Basic Savings Bank Deposit Account (BSBDA) — every bank must offer one with no minimum balance.
- Choose a zero balance digital account.
- Close accounts you no longer use instead of leaving them below the limit.
- Link a sweep-in FD so balance is maintained automatically.
Your rights
A bank cannot make your balance negative through minimum balance charges. If that happens, ask for a reversal and escalate to the RBI Ombudsman if needed.
This answer is general information, not personalised financial or tax advice. Rules, rates and limits change — confirm with your bank, the RBI or a qualified adviser before making decisions.