Public sector banks have recovered Rs 8,621.12 crore from customers over the past five financial years for failing to maintain the stipulated minimum balance in their accounts, according to figures submitted to the Lok Sabha’s Committee of Petitions, Deccan Herald reported.

The data, covering the period from 2020-21 to 2024-25, has prompted the parliamentary panel to call for a review of the practice.

The parliamentary panel has urged banks to do away with the penalty for not maintaining minimum balance. State-wise data show that Uttar Pradesh, Tamil Nadu and Maharashtra account for the highest collections, followed by Karnataka and Bihar.

Uttar Pradesh has topped the list with a collective penalty of Rs 1,233.97 crore in the five fiscals followed by Tamil Nadu with Rs 1,21.38 crore. Maharashtra ranks third with Rs 1,088.18 crore penalty collected. PSU banks in Karnataka and Bihar collected penalties to the tune of Rs 529.20 crore and Rs 464.53 crore, respectively.

The Deccan Herald report added that while the collection of penalties were increasing between 2020-21 and 2023-24 but it declined in 2024-25. Notably, the State Bank of India (SBI) had withdrawn the penalty on savings bank accounts in March 2020.

But the penalties still increased from Rs 1,148.71 crore in 2020-21 to Rs 1,415.65 crore, Rs 1,785.90 crore and Rs 2,225.10 crore in the next three fiscals. This figure decreased in 2024-25 with penalties estimated to be around Rs 2,045.74 crore.

Despite the national trend of a decline in penalties in 2024-25, six states and three Union territories registered an increase compared to 2023-25. Tamil Nadu saw the highest growth of Rs 43.22 crore – from Rs 233.12 crore to Rs 276.34 crore in 2024-25, reported the newspaper.

All south Indian states apart from Karnataka while Uttar Pradesh registered the biggest decline of Rs 51.84 crore in collection of penalties – from Rs 339.10 crore in 2023-24 to Rs 287.87 crore in 2024-25.

The Parliamentary panel said it was of the firm view that the decision of some banks to waive penalty on non-maintenance of minimum balance on savings bank accounts is in the best interest of all stakeholders.

It added that it wants both public and private sector banks to favourably look at micro-entrepreneurs, self employed and small traders, who maintain current accounts, instead of troubling them with repeated penalties for not maintaining minimum balance.