PNB scraps minimum balance penalty for all savings accounts, follows SBI & Canara Bank’s lead

Great news for savings account holders, especially those with Punjab National Bank (PNB)! Starting July 1, 2025, the bank has officially waived all penalties associated with not maintaining a minimum average balance in savings accounts. This shift is part of a broader trend among Indian banks aimed at reducing the financial burden on account holders, particularly from low-income and underserved communities.

PNB’s decision mirrors the steps taken by other major banks like the State Bank of India (SBI) and Canara Bank. SBI made waves back in 2020 by eliminating the minimum balance requirement for all its savings accounts, a move that was well-received across the country. More recently, Canara Bank followed suit in May 2025, removing its average monthly balance (AMB) stipulation for every type of savings account it offers.

This policy change from PNB is being branded as a “customer-first initiative,” with the bank positioning itself as more supportive of vulnerable segments of society, including low-income households, women, and farmers. By lifting this burden, PNB hopes to make banking more inclusive, allowing its customers to access services without the fear of penalty charges when their account balances fall below a certain threshold.

Prior to this change, maintaining a specific average balance was a requirement for savings account holders, and falling short could result in hefty fines. These penalties were often based on the account type and the branch’s location, with some branches enforcing stricter balance limits than others. This latest move by PNB, alongside similar actions by SBI and Canara Bank, represents a significant shift towards customer-centric banking practices.

However, this change isn’t entirely without trade-offs. While the waiver of minimum balance penalties is a welcome relief for many, PNB has also announced a reduction in the interest rates it offers on savings accounts, effective from the same date.

Here’s how the new rates break down:

Balances below ₹10 lakh: The interest rate has been reduced from 2.70% p.a. to 2.50% p.a..

Balances between ₹10 lakh and less than ₹100 crore: The rate has also dropped from 2.75% p.a. to 2.50% p.a..

Balances ₹100 crore and above: The interest rate has decreased from 3.00% p.a. to 2.70% p.a..

While these rate changes may be disappointing for those with larger deposits, the move is still considered beneficial for many individuals, particularly those who struggled to maintain the minimum balance and incurred penalties in the past.

In summary, the elimination of minimum balance penalties is a progressive step that benefits a large portion of the population, especially the underserved. However, account holders should take note of the new interest rate structure, which may affect the returns on their savings.

Also Read: RailOne App Launched: Your One-Stop Solution for All Railway Services