India's three largest private lenders—HDFC Bank, Axis Bank, and ICICI Bank—collected more in penalties for failing to maintain minimum average balances than all 12 public sector banks (PSBs) combined between fiscal years 2023 and 2026.
The disparity was highlighted in the Rajya Sabha by Minister of State Pankaj Chaudhary during the Monsoon Session of Parliament, drawing attention to the revenue models of India's dominant private financial institutions.
The revelation underscores a structural divergence in how private and state-owned banks monetize retail deposits.
While PSBs often rely on broader government mandates and lower-margin lending, private lenders have increasingly turned to fee-based income streams to bolster profitability.
The data suggests that penalties for low balances have become a significant, and perhaps disproportionate, component of revenue for HDFC, Axis, and ICICI.
This development arrives as India's largest private lenders face mounting pressure to justify their historical valuation premiums.