SBI’s new minimum balance rule leaves OBC, UCO and PSB as only ‘free’ banks in India

SBI Chairman Arundhati Bhattacharya

With the country’s largest bank, State Bank of India, refusing to rollback service charges for customers who do not maintain a minimum balance in their accounts, only Oriental Bank of Commerce, UCO Bank and Punjab & Sind Bank remain as ‘free’ providers of savings bank services, according to an analysis of RBI data.

SBI said that its savings account holders will have to maintain an average quarterly balance of Rs 1,000 to Rs 5,000 –depending on their branch location — from Apr 1 to avoid paying service charges.

Rural branches require an average balance of Rs 1,000, while semi-urban branches require Rs 2,000, urban Rs 3,000 and metro branches requires Rs 5,000.

These are the highest minimum balance requirements among all 27 public sector banks in India, according to an analysis of the account and scheme details filed by various banks with the RBI.

Other than SBI, the only other public-sector bank that has such high balance requirements is IDBI Bank. Most other banks have minimum balance requirements of 500-1000 rupees.

If a user fails to maintain enough funds, SBI will charge Rs 50 per quarter for rural accounts, Rs 75 for semi-urban, Rs 80 for urban and Rs 100 for metro branches as service charges.

SBI Chairman Arundhati Bhattacharya said the bank needs to impose these charges to recover its cost of operations.

The move is likely to result in a reduction in the number of savings account with the bank as some are closed while others slip into negative balance due to the charges.


The move by the country’s largest bank has left only the Oriental Bank of Commerce, UCO Bank and Punjab & Sind Bank as the only providers of ‘free’ savings bank services.

RBI data shows that none of these banks have any minimum balance requirements, nor do they charge for non-maintenance of funds.

Besides the above three, Bank of India, United Bank and Indian Bank also offer nominal minimum balance requirements.

Bank of India, for example, requires savings bank customers to keep an average minimum balance of Rs 100 irrespective of whether they are in a metro or a village. The penalty for not doing so is also lower at only Rs 40 per quarter.

United Bank requires Rs 50 for rural branches and Rs 100 for all other branches. The penalty for failure is Rs 44 in rural and Rs 72 in others.

Rural Semi-Urban Urban Metro Rural Semi-Urban Urban Metro
UCO Bank 0 0 0 0 0 0 0 0
OBC 0 0 0 0 0 0 0 0
PSB 0 0 0 0 0 0 0 0
United Bank 50 100 100 100 44 72 72 72
Bank of India 100 100 100 100 40 40 40 40
Andhra Bank 100 250 250 250 50 100 100 100
IOB 100 100 500 500 45 45 45 45
Vijaya Bank 250 250 500 500 50 65 65 65
Indian Bank 250 250 250 250 100 100 100 100
Union Bank 100 250 500 500 22 22 43 43
BoB 500 500 1000 1000 100 100 200 200

Similar, Indian Bank requires a minimum balance of Rs 250 per quarter irrespective of location, and the penalty is Rs 100 per quarter.

Indian Overseas Bank and Syndicate Bank both require a minimum balance of Rs 100, but only for rural and semi-urban branches. In urban and metro areas, they have a requirement of Rs 500. IOB charges Rs 45 for failure to meet the requirement irrespective of location, while Syndicate charges Rs 40.

Private players already have balance requirements ranging from Rs 1,000-10,000 depending on branch location.