Canara Bank Offers Zero Balance To Saving Account Holders! Will Other Banks Follow Suit?

Canara Bank Minimum Balance: Canara Bank revealed that it has ended the requirement of minimum average monthly balance for all the savings bank accounts. This new rule is applicable from June 1 2025. 

Minimum Average Monthly Balance Requirement for Canara Bank

Canara Bank, a government owned bank, announced that effective from June 1, 2025, there is no requirement of minimum average monthly balance (AMB) for any type of savings bank accounts in Canara Bank. It means, now customers will not need to pay any penalty or charge if they fail to maintain the minimum balance in their savings accounts effective from June 1 2025. “With this new policy, all Canara Bank SB account holders will now enjoy true ‘no penalty on minimum balance’ for all SB accounts, free from any AMB-related penalties or fees,” said by Canara bank in an statement.

How Average Monthly Balance is Calculated?

A minimum average monthly balance is the lowest amount that a customer needs to have in his/ her account every month. If this balance is not maintained, penalty is charged by banks.
The average monthly balance is calculated by adding the daily closing balances and dividing it by the number of days in a month. This balance is compared with the minimum requirement of banks. The AMB is calculated by taking the closing balance of a saving account at the end of every day of a month. All the daily closing balances are added together and then it is divided by the total number of days in the particular month. This result is called the average monthly balance. It indicates the average balance kept in the account throughout the month. Different banks keep different AMB requirements for their customers, avoiding which attracts penalties or charges. 

Will Other Banks Follow Same Path?

There are some banks who are already offering zero balance requirements for saving accounts. One of them is India’s largest bank, SBI. Others are Kota, AU Small Bank, IndusInd Bank etc. At current, AMB for Axis Bank is ₹10,000; HDFC Bank and ICICI Bank both ask AMB ₹10,000 in urban and ₹5,000 in semi urban or rural areas. The banks, which provide zero balance maintenance facility, will attract more customers and hence other banks can also think of this or at least can reduce the AMB requirement.

Canara Bank announced zero balance facility for all the saving accounts effective June 1, 2025. There are already some banks that do not ask for the minimum average balance requirement. Other banks can consider either removal of AMB or reduction in AMB to attract more customers.