SBI Removes Penalty on Average Minimum Balance of All Savings Account

Among other changes, State Bank of India has rationalised a flat interest rate of 3% on all savings bank account irrespective of account balance

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The State Bank of India (SBI) has announced to waive charges on maintenance of average monthly balance (AMB) for all savings accounts. Essentially, account holders will now have the option to maintain zero balance in their accounts without having to shell out a penalty.


This major initiative by the country’s largest bank will benefit its 44.51 crore account holders, as per the bank statement. “This announcement will bring in more smiles and delight to our valuable customers. We believe this initiative would empower our customers towards banking with SBI and boost their confidence in SBI," said Chairman Rajnish Kumar in a statement.

Currently, account holders in SBI have to maintain an average balance of INR 3,000, INR 2,000 and INR 1,000 in urban, semi-urban and rural areas, respectively. On defaulting, depending on the shortfall in AMB a penalty of INR 10-15, INR 7.5-12 and INR 5-10, with GST over and above the specified rates, is levied on accounts in urban, semi-urban and rural areas, respectively.

Jan Dhan accounts, pensioners, basic savings bank deposits (BSBD) accounts, beneficiaries of social benefits from the government and accounts of minors are excluded from the MAB requirements.

Among other changes, the bank has also revised annual interest rate on savings accounts to a flat 3 per cent across all savings bank account holders. Currently, savings accounts with a balance of less that INR 1 lakh earn 3.25 per cent a year, whereas those with balance of more than INR 1 lakh earn 3 per cent. Charges on SMS service that is levied quarterly has also been waived off.

SBI introduced penalty on AMB in April 2017 after a gap of six years and has made headlines several times since then.

Initially, the bank had set AMB at INR 5,000 with default penalty as high INR 100 per month. The move followed severe criticism from the industry as a major part of its customer base belongs to low income earners. Further, bank also faced flak after it was reported to have earned a hefty amount of INR 1,771 crore on penalties in just eight months, following which it finally slashed the AMB to INR 3,000-1,000 and charges to a maximum of INR 15.

Penalty Charged by Other Banks

Compared to SBI, major private banks like HDFC and ICICI have steep charges on minimum balance account.


Average Monthly Balance  (INR)

Penalty (INR)


10,000 for urban branches

5,000 for semi-urban branches

2,500* for rural areas




For 10,000-7,500: 150

7,500-5,000: 300

5,000-2,500: 450

2,000> : 600

5,000-2,500: 150

2,500> :300

2,500-1,000: 270

1,000> : 450


10,000 for urban branches

5,000 for semi-urban branches

2,000 for rural areas

1,000 for gramin locations



100 + 5% of the shortfall in required MAB

5% of the shortfall in required MAB


Source: Bank websites; These figures are for a regular savings account; *quarterly average balance.