Raghav Chadha Slams Bank Penalties on Poor

March 17, 2026

New Delhi: Raghav Chadha on Tuesday raised the issue of minimum account balance penalties in the Rajya Sabha, urging the Union government to end such charges on small bank accounts, saying they disproportionately affect the poor and financially vulnerable.

The poor are bearing the heaviest burden

Speaking in the Rajya Sabha, Chadha said that over the past three years, banks have collected approximately ₹19,000 crore in penalties from customers for not maintaining a minimum balance. He said that public sector banks collected approximately ₹8,000 crore, while private banks collected approximately ₹11,000 crore.

He said, “These penalties are not levied on the rich or large borrowers, but on the poorest accounts in the system.”

Common people are facing hardship

Chadha explained that people like farmers, pensioners, and daily wage laborers are being penalized simply because they fail to maintain a minimum balance.
Citing examples, he said, “Farmers face penalties if they maintain a low balance, pensioners face penalties if they withdraw money for medicine, and laborers face penalties if they fall short by a few hundred rupees.”

Impact on the objective of financial inclusion

He said that this type of banking system undermines the objective of financial inclusion and drives people away from the formal banking system.
“Poor people keep money in banks for safety, not to be quietly penalized,” he said.

The Problem of Negative Account Balances

Chadha also pointed out that recurring charges have led to negative balances in many accounts. Banks often charge customers more in penalties than the amount they deposited.

Demand to abolish penalties

He said that bank accounts are meant to provide financial security to people, but today they have become a source of stress for many.

“Financial inclusion should mean protecting small savers, not punishing them,” Chadha said.

He proposed in Parliament that the minimum balance penalty be abolished so that the banking system stops charging fees from the poor.