No Minimum Balance Required: These Government Banks Now Offer Zero-balance Accounts

Opening a savings account has always come with a few conditions, and maintaining a minimum balance was one of the most common. For decades, account holders had to ensure their accounts didn’t fall below a prescribed limit, failing which banks would impose penalties. This average monthly balance (AMB) requirement was seen as a tool to keep accounts active and generate steady revenue for banks. However, in a welcome move for millions of customers, several major public sector banks in India have now scrapped this rule. According to experts, this change is expected to enhance financial inclusion and ease of banking across the country.

Here’s what has changed and what it means for account holders.

What Does Minimum Balance Mean In Savings Accounts?

Minimum balance refers to the lowest amount of money that a bank requires an account holder to maintain in their savings account to avoid fines. This figure varies from one bank to another and often depends on the type of account you hold—regular, salary, premium, or NRI.

Historically, banks have justified this requirement as necessary for operational costs such as infrastructure, digital service maintenance, and customer service support. Additionally, a consistent balance helps banks manage their internal liquidity and reduces the risk of dormant or inactive accounts.

Major PSU Banks That Have Removed The Minimum Balance Rule

In recent months, several government-owned banks have revised their savings account policies to eliminate AMB-related penalties. Here are the key changes across some of the largest public sector banks in India:

Bank of Baroda (BoB)

Effective from 1 July 2025, Bank of Baroda has removed the penalty for not maintaining a minimum balance in its standard savings accounts. However, this change does not apply to premium account holders, who still have separate criteria.

Indian Bank

From 7 July 2025, Indian Bank joined the list by scrapping the minimum balance requirement across all types of savings accounts. This means customers will no longer be penalised for low balances, providing added convenience, especially for rural and small-town users.

Canara Bank

In May 2025, Canara Bank made its savings accounts even more customer-friendly by waiving the AMB condition. This includes standard, salary, and NRI accounts, covering a broad spectrum of customers.

Punjab National Bank (PNB)

Punjab National Bank, another leading PSU bank, has also removed the penalty associated with shortfalls in minimum balance. Earlier, the penalty was calculated based on the shortfall amount, but that model is now obsolete.

State Bank of India (SBI)

SBI was among the first movers in this direction, having removed the minimum balance requirement for all its savings accounts back in 2020. This proactive step had already set a precedent for customer-centric banking reforms.

Why This Move Matters For Everyday Bank Users

According to financial analysts, doing away with the minimum balance requirement helps promote banking access, especially in lower-income segments and rural regions where maintaining a fixed monthly balance may not always be feasible. It reduces the fear of penalties and encourages more people to keep their savings active and within the formal financial system.

For salaried employees, students, pensioners, and small business owners, the freedom to maintain a zero-balance account without fear of charges makes banking more accessible and flexible.

What You Should Still Watch Out For

While the AMB rule has been removed in many banks, customers should still read the fine print. Some specialised accounts, especially premium or wealth management products, may still carry balance conditions. Additionally, certain value-added services such as unlimited ATM withdrawals, chequebooks, or SMS alerts might be linked to minimum balances or may incur separate charges.

Therefore, even though the base penalties are gone, it is wise to remain informed about the overall fee structure of your account.

The decision by government banks to waive the minimum balance condition is a significant step towards more inclusive and people-oriented banking. It reduces the burden on account holders and supports the broader mission of financial inclusion. For millions of Indians, especially those who use savings accounts primarily for receiving government benefits or handling small personal savings, this change brings much-needed flexibility and peace of mind.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Account terms and banking policies may vary across institutions and are subject to change. For the latest and personalised guidance, it is recommended to contact your bank or a qualified financial advisor.