Banks Waive Minimum Balance Rule as Customers Shift Funds Elsewhere, Says Chidambaram

New Delhi, July 7, 2025: Former Finance Minister and senior Congress leader P. Chidambaram on Monday lauded a consumer-driven shift that has forced at least five banks to waive the controversial minimum balance requirement on savings accounts. He noted that while reason had failed to sway banks, market economics had finally succeeded.

In a post on X, Chidambaram criticized the “obnoxious” minimum balance rule, stating that several banks had profited by penalizing customers who failed to maintain a minimum balance. “Some banks earned hundreds of crores of rupees a year under this obnoxious rule,” he wrote, emphasizing that banks had long ignored customer complaints.

“Customers have hit back with looking beyond banks at other avenues to place their savings. Banks have caved in. At least five banks have waived the minimum balance requirement. What reason could not do, economics has achieved! Hurrah!” the veteran leader posted.

The development comes amid reports of a dip in bank deposit growth, as consumers increasingly explore alternatives such as mutual funds, fixed-income instruments, and digital financial platforms offering better returns.

According to RBI guidelines, Basic Savings Bank Deposit (BSBD) accounts, including those under the Pradhan Mantri Jan Dhan Yojana (PMJDY), are exempt from minimum balance requirements. However, for other types of accounts, banks can impose charges in accordance with board-approved policies, provided they are reasonable and clearly communicated.

The RBI has emphasized that banks must ensure transparency and prior customer notification when revising service charges. It has also urged banks to identify essential services and establish principles to ensure fairness in cost structures.

Chidambaram’s remarks underscore growing public resistance to hidden or punitive banking fees, especially as competition grows from fintech platforms and non-bank financial services that offer more flexible account conditions.