The story so far: Both public sector and private banks have been charging customers fees for various services they provide, such as the use of debit cards, ATM facilities, and account maintenance charges. While some of these charges have now been withdrawn, especially by public sector banks (PSBs), some others have seen an increase over the years.
What is a debit card charge?
The Ministry of Finance, in a reply to a question in the Rajya Sabha, had provided Parliament data on the various charges public sector banks collect from customers. The largest of these is the ‘debit card charge’. Debit card charges are “annual maintenance charges for debit cards”.
These charges come in the form of annual maintenance charges and are meant to help banks pay for the maintenance and upkeep of debit card services and related infrastructure. This charge helps cover the cost of card issuance, management, replacements, backend infrastructure, and customer support.
Further, the fees also go some way in defraying the cost of security systems meant to ensure safe debit card transactions and to monitor fraud, systems to facilitate online payments using debit cards, the point-of-sale terminals, and card management services such as renewal of expired cards and maintenance of card services.
“This nominal charge ensures you continue to enjoy uninterrupted and secure banking convenience,” Bank of Baroda says on its website.
The data presented by the Ministry of Finance shows that the 12 PSBs collected ₹3,905.5 crore as debit card charges in 2021-22. This amount increased to ₹7,563.8 crore by 2025-26, a 93.7% growth over 2021-22.
On a per card basis, this increased from about ₹61 per debit card in 2021-22 to ₹115.1 per card by 2025-26, an increase of 88.8%.
What are the other charges banks levy?
The Rajya Sabha answer provides data on two other charges levied by banks — ATM charges and account maintenance charges.
ATM charges constitute the income earned by a bank on account of ATM cash withdrawal charges collected from customers and the interchange fees they earn from other banks.
Basically, an interchange fee is the fee that banks have to pay other banks when a card issued by them is used in an ATM of another bank. For example, when a customer uses a State Bank of India debit card at a Bank of Baroda ATM, then the State Bank of India has to pay Bank of Baroda an interchange fee.
The amount that a bank earns annually from these ATM charges is the net of what it earns from customers and other banks minus what it has to pay other banks. According to the data, this figure is negative for most public sector banks except the State Bank of India.
This means that most of the PSBs end up paying more to SBI and private banks for the use of their ATMs than they earn from their own ATMs. This stands to reason, since SBI has the largest ATM network in the country, and the private banks are more prevalent in urban areas where ATM transactions are more frequent.
The second charge that banks levy are account maintenance fees. This, however, has been discontinued by most public sector banks, with only SBI charging this fee and that too only from current accounts, which are predominantly held by businesses.
Why do banks levy low-balance penalties?
A low-balance penalty is levied when a customer’s average balance in their account is lower than a particular threshold over a period of time. It is not levied if your balance falls below that threshold just once and then recovers to a higher level soon after.
These charges are levied to cover operational costs, fund lending activities, and manage overall liquidity. That is, they constitute yet another income source for banks.
The Reserve Bank of India’s rules say that banks can levy charges for non-maintenance of the minimum average balance in accordance with their Board-approved policies, as long as such charges are reasonable, transparent, and commensurate with the cost of providing the services.
According to the Finance Ministry’s reply in Parliament, 10 out of the 12 public sector banks have discontinued penal charges for non‑maintenance of minimum average balance in savings accounts, while the remaining two have rationalised such charges.
The data shows that all 12 of the banks still collected these charges in 2025-26. However, 11 of them collected lower amounts than in the previous year, with only SBI seeing an increase. Private banks continue to collect such charges.
While the 12 public sector banks collected ₹10,230.75 crore of low-balance charges from customers over the last four financial years, the 21 private banks collected ₹15,939.62 crore over the same period.
Published – July 31, 2026 11:26 am IST
