ICICI Bank Lowers Minimum Average Balance for New Savings Accounts Following Public Criticism -Find New Balance Thresholds in Rural and Urban Regions
ICICI Bank Reduces Minimum Average Balance Requirements for New Savings Accounts
In a move aimed at broadening its customer base and improving profitability, ICICI Bank has announced a reduction in the minimum average balance (MAB) requirements for new savings accounts in Metro and urban areas. The new MAB for these areas will be Rs 15,000, a significant decrease from the previous Rs 50,000.
The change also applies to semi-urban areas, where the MAB has been reduced from Rs 25,000 to Rs 7,500. Interestingly, the MAB for rural areas remains unchanged at Rs 2,500, a reduction from the initial Rs 10,000.
This shift in policy by ICICI Bank is part of a trend towards "premiumisation," focusing on wealthier customers. However, it has sparked criticism for potentially excluding lower-income customers. It's worth noting that other major banks like HDFC Bank and SBI maintain lower MAB requirements and have not followed such steep hikes recently.
The new MAB applies only to new savings accounts opened after August 1, 2025. If the balance falls below the required MAB, customers are charged a penalty of 6% of the shortfall or Rs 500, whichever is lower.
In contrast, HDFC Bank requires account holders to maintain a minimum balance of Rs 25,000 in urban and metro bank branches, with a penalty of 6% of the shortfall or Rs 600, whichever is lower, if the balance falls short. Major lenders such as SBI, PNB, and Canara Bank have removed the minimum balance requirement for savings accounts and also eliminated penalty charges for non-maintenance.
The RBI Governor, Sanjay Malhotra, has stated that the minimum balance limit for savings accounts is decided by banks, and the decision does not fall under any regulatory jurisdiction.
Here's a summary of the current MAB requirements for various banks in different areas:
| Bank | Area Type | New Minimum Average Balance (₹) | Previous/Other Banks' MAB (₹) | |---------------|----------------|-------------------------------|------------------------------------------| | ICICI Bank | Metro/Urban | 15,000 | 50,000 (earlier ICICI) | | ICICI Bank | Semi-Urban | 7,500 | 25,000 (earlier ICICI) | | ICICI Bank | Rural | 2,500 | 10,000 (earlier ICICI) | | HDFC Bank | Urban | 25,000 | Same since 2022 (or fixed deposits option) | | HDFC Bank | Semi-Urban | 5,000 | Same | | HDFC Bank | Rural | 2,500 | Same |
The steep increase by ICICI Bank could reshape customer segmentation but may also push lower-balance customers towards public sector banks that have not raised their requirements. The reduction in MAB requirements by some banks is a response to customer pushback and widespread outrage.
In light of ICICI Bank's decrease in minimum average balance for new savings accounts, an individual may find it more feasible to consider ICICI Bank for their personal-finance management, while those seeking lower minimum balance requirements might favour savings accounts in other banks like HDFC Bank or public sector banks.
Businesses might also consider this reduction as a move by ICICI Bank to focus on wealthier customers in the field of personal-finance, which could impact the banking landscape and consumer choices in the future.
