In October 2025, leading banks in India, notably the State Bank of India (SBI), Punjab National Bank (PNB), and HDFC Bank, rolled out significant changes to their minimum balance requirements and penalty regulations for savings and current accounts.
These changes empower millions of customers to manage their finances more flexibly, promoting financial inclusion and reducing avoidable banking fees.
This article provides an in-depth look at the updated minimum balance rules, actionable tips to avoid penalties, and a detailed comparison table for quick reference—all tailored to Indian banking practices and terminology.
Minimum Balance Rules: October 2025 Update
State Bank of India (SBI): Zero Balance for All
SBI remains the leader in customer-centric banking by retaining a zero minimum balance policy for regular savings accounts.
This means that account holders, regardless of branch location—urban, semi-urban, or rural—are not obligated to maintain any minimum monthly or quarterly balances.
Notably, SBI abolished all non-maintenance penalties back in March 2020 and has re-affirmed this commitment with renewed clarity in 2025.
- All regular savings accounts: No minimum average monthly balance (AMB)
- No penalty for not maintaining a balance
- Basic Savings Bank Deposit Accounts (BSBDA), PMJDY, student, minor, pension, and government benefit accounts: Always zero-balance, penalty-free
Punjab National Bank (PNB): Penalty-Free from July 2025
In line with wider sector reforms, PNB announced in July 2025 that it has eliminated all penalties related to non-maintenance of minimum average balance (MAB) in savings bank accounts.
This customer-first initiative is aimed particularly at women, farmers, and low-income customers, thus enhancing accessibility and comfort across PNB’s expansive network.
- All PNB savings accounts: Zero minimum balance requirement, no penalties
- Past penalties accrued before July 2025 remain payable
- Encourages greater rural and small-town participation in formal banking
HDFC Bank: Tiered Balance System Still Applies
Unlike SBI and PNB, HDFC Bank continues to require a minimum balance in savings accounts. The threshold depends on the branch’s location, and the bank has updated these limits to reflect market realities and customer demand.
| Branch Location | Average Monthly/Quarterly Balance Required | Non-Maintenance Penalty |
| Metro/Urban | ₹10,000 (monthly) | 6% of shortfall, or ₹600 (whichever lower) |
| Semi-Urban | ₹5,000 (monthly) | 6% of shortfall, or ₹150 |
| Rural | ₹2,500 (quarterly) | 6% of shortfall, or ₹150 |
- Alternatively, maintaining a fixed deposit (FD) of ₹50,000 or ₹1,00,000 (as per location) can substitute the minimum balance requirement for some account types.
Comparison Table: Minimum Balance Rules (October 2025)
| Bank | Metro/Urban Minimum | Semi-Urban Minimum | Rural Minimum | Zero Balance Option | Penalty for Shortfall* |
| SBI | None | None | None | Yes (for all savings) | No penalty |
| PNB | None | None | None | Yes (for all savings) | No penalty (after July 2025) |
| HDFC | ₹10,000 (monthly) | ₹5,000 (monthly) | ₹2,500 (quarterly) | Yes (salary, student, etc.) | 6% of shortfall or ₹600/₹150 (lower) |
| ICICI | ₹15,000 (monthly) | ₹7,500 (monthly) | ₹2,500 (monthly) | Yes (special accounts) | As per bank schedule |
| Axis | ₹12,000 (monthly) | ₹5,000 (monthly) | ₹2,500 (monthly) | Yes | As per bank schedule |
*HDFC penalty is calculated as 6% of the shortfall from the required average balance, subject to a cap.
Understanding Monthly/Quarterly Average Balance (MAB/QAB)
The Average Monthly Balance is computed by adding each day’s closing balance for the month and dividing it by the number of days.
For quarterly balance, the window extends over three months. Consistently dipping below the stated average triggers penalties for accounts that are not under zero-balance provisions.
Penalty-Free Banking: Who Is Eligible?
Many banks, including SBI and PNB, exempt special accounts from minimum balance regulations:
- Basic Savings Bank Deposit Accounts
- Jan Dhan (PMJDY) accounts
- Minor and pensioner accounts
- Salary accounts, student accounts
- Government scheme beneficiary accounts
HDFC and private banks extend similar benefits to salary, pension, and student account holders, who receive automatic zero-balance or preferential terms.
Why These Changes? Analysing the 2025 Reforms
The sweeping removal of penalties by big public sector banks such as SBI and PNB reflects a larger movement towards financial inclusion in India.
As the number of first-time account holders rises, especially in rural parts of the country, flexible banking ensures greater engagement, reduces inadvertent charges, and strengthens trust in the formal financial system.
Conversely, private banks like HDFC, while reducing penalty amounts and simplifying structure, still maintain balance requirements to ensure efficient account management and incentivise relationship balances.
Tips to Avoid Minimum Balance Penalties
- Choose a zero-balance account if eligible (salary, student, BSBDA, or PMJDY).
- Set up mobile or net banking alerts to monitor average balances.
- Where minimum balances apply, plan regular deposits to avoid dips below the threshold.
- For HDFC and similar banks, consider substituting with an appropriate fixed deposit.
- Check for account upgrades that offer relaxed minimum balance norms.
Expected Outcomes for Bank Customers
The reforms bring widespread relief, especially to low-income and rural families, students, pensioners, and seasonal earners.
Zero balance provisions ensure active participation without the risk of unexpected deductions. Urban and affluent segments, however, should be alert to the nuanced penalty regime of private sector banks.
Frequently Asked Questions (FAQs)
1. Is there any minimum balance rule in SBI or PNB savings accounts after October 2025?
No. Both banks offer zero minimum balance requirements on savings accounts and impose no penalties for non-maintenance.
2. How is HDFC Bank’s penalty for not maintaining a minimum balance calculated?
HDFC charges 6% of the shortfall from the average balance requirement, or ₹600 (or ₹150 for semi-urban/rural), whichever is lower per cycle.
3. Can I maintain a fixed deposit instead of minimum balance in HDFC saving accounts?
Yes. HDFC allows certain customers to maintain a linked fixed deposit (of up to ₹1,00,000 as per branch type) to meet minimum balance requirements.
4. Are special accounts like salary or student accounts exempt from minimum balance rules?
Yes. Most banks, including SBI, PNB, and HDFC, offer salary, student, pension, and government-benefit accounts with zero balance requirements.
5. What should I do if I received a penalty before July 2025 in PNB?
Penalties incurred before July 2025 remain payable, even as the bank has scrapped charges prospectively. Check your statement for any outstanding dues.
