Economics Triumphs: Banks Waive Minimum Balance Rule Amid Customer Pushback

In a significant policy shift, a number of banks have scrapped the contentious minimum balance requirement for savings accounts, a move lauded by Congress leader and former Finance Minister, P. Chidambaram. This decision came amid mounting pressure as frustrated customers explored alternative savings avenues.

Chidambaram pointed out the economic impact of the rule, describing it as 'obnoxious' and criticizing banks for ignoring customer feedback. For years, savings account holders contested the government's mandate, which penalized them for low balances. Despite these protests, banks accrued substantial revenue from the charges.

With deposit growth declining, customers have begun to invest elsewhere, prompting at least five banks to capitulate. According to the Reserve Bank of India guidelines, basic savings accounts under the Pradhan Mantri Jan Dhan Yojana remain unaffected by such requirements. Chidambaram hailed this development as a triumph of economics over policy inertia.

(With inputs from agencies.)