New Delhi, March 18: Raghav Chadha, a Member of Parliament from the Aam Aadmi Party (AAP), raised concerns in the Rajya Sabha regarding penalties imposed for maintaining minimum account balances. He urged the central government to abolish such fees on small bank accounts, emphasizing their disproportionate impact on the economically disadvantaged.
Chadha highlighted that over the past three years, banks have collected nearly ₹19,000 crore in penalties from customers unable to maintain the required minimum balance. Public sector banks accounted for approximately ₹8,000 crore, while private sector banks collected around ₹11,000 crore during this period.
He pointed out that these penalties are not levied on the wealthy or large borrowers but rather on the poorest account holders. Many ordinary citizens, including farmers, pensioners, and daily wage workers, face fines simply for failing to maintain the minimum balance.
Chadha illustrated the plight of these individuals: a farmer unable to keep the minimum balance incurs a penalty; a pensioner withdrawing money for medication faces a fine; and a daily wage worker finds their account short by a few hundred rupees and is penalized.
According to Chadha, such practices undermine the core objective of financial inclusion and discourage people from utilizing formal banking systems. He stated that the poor deposit money in banks for security, not to quietly pay fines due to their financial status.
He further explained that frequent bank charges often lead to negative account balances, forcing customers to pay more in penalties than their original deposits. In some cases, banks continuously add charges, resulting in negative balances. Occasionally, they collect more than the actual amount deposited under the guise of fees.
Chadha asserted that the purpose of bank accounts should be to provide financial security to citizens, yet they are increasingly becoming a source of financial stress. He stated, “The goal of financial inclusion should be to safeguard small savings, not to penalize people for having low balances. Bank accounts are meant to offer us financial security, but instead, they are causing financial stress for many.”
The AAP leader proposed in Parliament that penalties for not maintaining minimum balances should be eliminated, urging the banking system to stop penalizing individuals for their poverty.
My name is Bhupendra Singh Chundawat. I am an experienced content writer with several years of expertise in the field. Currently, I contribute to Daily Kiran, creating engaging and informative content across a variety of categories including technology, health, travel, education, and automobiles. My goal is to deliver accurate, insightful, and captivating information through my words to help readers stay informed and empowered.
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