In a challenge to peers, Canara Bank waives minimum balance rule

India’s fourth-largest public sector bank by assets expects to lose “a few hundred crores” per year in penalty income due to the move but it hopes the move will encourage customers to shift funds into term or recurring deposits in the long term, executive director SK Majumdar said.

“Perhaps if we don’t do this, we will lose deposits,” Majumdar told ET. “This creates a feel good for the customer. When industry is facing a challenge of mobilising deposits, especially because capital markets are doing well, this gives customers an alternative,” he added. The waiver, with effect from June 1, is across all savings accounts including salary accounts and NRI accounts.

Minimum balance requirements in Canara Bank’s savings bank accounts ranged from an average monthly balance of ₹500 in rural branches to an average quarterly balance of ₹1 lakh for their savings bank power plus accounts. Failure to maintain these balances resulted in penalties ranging from ₹25 per month to ₹60 per day excluding GST.