Data presented by the Union Ministry of Finance to the Rajya Sabha on July 30, 2026, has revealed that debit card annual maintenance charges levied by Public Sector Banks (PSBs) have grown nearly 90% over the last five years — from roughly ₹3,905.5 crore in 2021-22 to ₹7,563.8 crore in 2025-26. Simultaneously, low-balance penalty charges collected by both PSBs and private banks rose 27% between 2022-23 and 2025-26, driven primarily by private sector banks even as PSBs actually reduced such charges. This data points to a structural shift in how Indian banks generate fee income, with direct implications for financial inclusion, consumer protection, and banking sector regulation.
This is a matter of serious economic policy concern because India’s banking system has, over the past decade, been the backbone of the government’s financial inclusion agenda through schemes like the Pradhan Mantri Jan Dhan Yojana (PMJDY). Rising ancillary charges on basic banking instruments like debit cards threaten to undermine the affordability gains achieved through digital banking penetration, disproportionately affecting low-and-middle-income account holders who may not always understand or track incremental fee escalation. For UPSC and SSC aspirants, this topic bridges banking regulation, consumer protection law, financial inclusion policy, and RBI’s regulatory oversight — a genuinely interdisciplinary economy topic.
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The Finance Ministry’s own data confirms that per-card charges by PSBs grew from about ₹61 in 2021-22 to ₹115.1 by 2025-26, an 88.8% increase — even after accounting for growth in the total number of cards issued, confirming this is a genuine cost escalation and not merely a statistical artefact of scale.
Background and Context
Since 2016, India has pursued an aggressive financial inclusion and digitisation agenda, anchored by the JAM trinity (Jan Dhan-Aadhaar-Mobile) and the Unified Payments Interface (UPI). Debit cards were central to early digitisation efforts, but as UPI has become the dominant free payment rail, debit cards have increasingly become a secondary product whose maintenance costs banks now seek to recover more aggressively through annual fees.
Five Important Key Points
- Debit card maintenance charges collected by Public Sector Banks rose from ₹3,905.5 crore in 2021-22 to ₹7,563.8 crore in 2025-26, a growth of 93.7%.
- The average per-card charge by PSBs increased from approximately ₹61 to ₹115.1 between 2021-22 and 2025-26, an 88.8% rise even after accounting for the increase in the number of cards issued.
- Low-balance penalty charges collected jointly by PSBs and private banks rose 27% from 2022-23 to 2025-26, reaching ₹7,086.6 crore, though this increase was driven almost entirely by private banks, since PSB charges for this category actually fell nearly 14%.
- Ten of twelve Public Sector Banks have discontinued penal charges for non-maintenance of minimum average balance in savings accounts, while two have merely rationalised such charges according to RBI-approved policies.
- The RBI has directed banks to notify customers via SMS, email or letter before penal charges are applied, and to provide reasonable time to restore minimum balances before penalties are levied.
Regulatory Framework and RBI’s Role
The Reserve Bank of India regulates bank service charges under the Banking Regulation Act, 1949, though it generally allows banks commercial freedom to set fees within a “reasonableness” framework rather than prescribing fixed caps, except for specific categories like Basic Savings Bank Deposit Accounts (BSBDA), including those opened under PMJDY, which are explicitly exempted from minimum balance and related penal charges. This light-touch regulatory approach reflects RBI’s broader philosophy of allowing market-based price discovery in banking services while retaining oversight through transparency mandates, such as mandatory customer notification before charge deduction.
Economic Implications for Financial Inclusion
The escalation in ancillary banking charges has a regressive character: since these charges are typically flat fees rather than percentage-based charges, they disproportionately burden account holders with smaller balances — precisely the demographic that financial inclusion schemes like PMJDY were designed to serve. While PMJDY accounts themselves are exempted from such charges, a large number of account holders who have since transitioned out of BSBDA status or hold regular savings accounts remain exposed to rising fee structures, potentially eroding the affordability gains of a decade of financial inclusion policy.
Governance and Consumer Protection Concerns
The data reveals a governance paradox: PSBs, which are majority government-owned and ostensibly oriented toward public service objectives, have increased debit card charges by nearly 90%, while simultaneously easing minimum balance penalties. This suggests banks are recalibrating revenue strategies — shifting from balance-based penalties (which invite public criticism, especially after past controversies over PSBs profiting from low-balance penalties on poor account holders) toward card maintenance fees, which are less visible and harder for ordinary consumers to contest or even notice.
Comparative and Global Perspective
Globally, several markets have moved toward free or heavily subsidised basic banking instruments as part of financial inclusion mandates — the UK’s “basic bank account” framework and the EU’s Payment Accounts Directive (2014) both mandate fee-free or low-cost basic accounts for vulnerable customers. India’s UPI ecosystem has effectively achieved near-zero-cost payments at the transaction level, but the recurring “ownership cost” of ancillary instruments like debit cards has not received comparable policy attention, representing a gap between transaction-level financial inclusion success and instrument-level cost transparency.
Way Forward
Policy responses should include mandating a standardised, RBI-published comparative fee disclosure format across all banks to enable genuine consumer choice, similar to fee-transparency mandates already used in mutual fund and insurance disclosures. The RBI could also consider capping annual debit card maintenance charges as a percentage of a customer’s average account balance rather than allowing flat fees, ensuring proportionality. Additionally, all BSBDA-equivalent protections should be extended to cover a wider population segment, particularly recently upgraded PMJDY accounts that have crossed the small-account threshold, to prevent inclusion churn. Finally, periodic parliamentary and RBI review of aggregate bank fee income trends, similar to the Rajya Sabha data disclosure exercise, should be institutionalised as an annual transparency requirement.
Relevance for UPSC and SSC Examinations
For UPSC GS-III (Indian Economy), this topic relates directly to “Inclusive growth and issues arising from it,” banking sector reforms, and RBI’s regulatory functions. It also connects to GS-II governance themes on consumer protection and financial inclusion policy delivery. For SSC exams, static facts include the Banking Regulation Act, 1949, PMJDY (launched 2014), BSBDA norms, and RBI’s regulatory architecture. Key terms to remember: JAM trinity, BSBDA, penal charges, UPI, and financial inclusion index (FI-Index).