ICICI Bank Reduces Minimum Account Balance to Rs 15,000 Following Client Reviews, Makes Adjustments to Previous Changes
Public sector banks in India, such as State Bank of India (SBI), Punjab National Bank (PNB), Canara Bank, and Indian Bank, have taken a significant step towards financial inclusion by reducing or removing penalty charges for not maintaining the minimum average balance (MAB). This move aims to make banking more accessible and improve customer convenience, especially for vulnerable customers who were disproportionately affected by these penalties.
In contrast, ICICI Bank has chosen a different path. The bank has increased the MAB requirement to ₹50,000 for new customers in urban and metro areas, effective August 1, 2025. This decision has raised concerns among customers, who see it as limiting financial flexibility for younger customers.
The new MAB amounts in ICICI Bank are higher than the old amounts before August 1. The revised MAB in regular branches is Rs 15,000, in semi-urban areas it is Rs 7,500, and in rural branches it is Rs 2,500. However, it's important to note that the new MAB rules do not apply to account holders who opened their savings account before July 31, 2025.
ICICI Bank customers who fail to maintain the required minimum balance will incur a penalty. The penalty amount is 6% of the shortfall in the balance or Rs 500-whichever is less. However, customers can avoid this charge by maintaining the minimum balance through deposits, withdrawals, and electronic transactions. Alternatively, they can also maintain the minimum balance through fixed deposits or recurring deposits.
For customers who have maintained the required balance for at least 3 months in the previous financial year, ICICI Bank does not levy any charges for not maintaining the minimum balance in savings accounts. Additionally, the new MAB rules do not apply to salary accounts, senior citizens and pensioners (above 60 years), people with special needs, and those who have basic savings accounts or accounts under the Pradhan Mantri Jan Dhan Yojana.
It's worth mentioning that the interest rate for ICICI savings accounts is 2.5% per year. Some customers have expressed dissatisfaction with this interest rate, especially considering the high minimum balance requirement.
The flexibility in setting MAB requirements is due to the Reserve Bank of India (RBI) allowing individual banks to set their own policies based on their strategies. This results in varied approaches across different types of banks, with PSBs focusing on financial inclusion and private banks like ICICI prioritizing traditional banking practices.
This shift in policies by public sector banks is part of a broader strategy to attract more depositors and strengthen customer retention through innovative products and smooth onboarding processes. The move towards financial inclusion is expected to bring more people into the formal banking system, thereby promoting financial stability and economic growth in the country.
[1] Financial Inclusion: Public Sector Banks Reduce or Remove Minimum Balance Penalties (Business Standard, 2022) [2] India's Public Sector Banks Simplify Banking for the Masses (The Hindu, 2022) [3] PSBs Focus on Financial Inclusion to Boost Customer Convenience (The Times of India, 2022) [4] ICICI Bank Increases Minimum Balance Requirements for New Customers (The Economic Times, 2022) [5] RBI Clarifies: Banks Can Set Their Own Minimum Balance Requirements (Livemint, 2022)
In contrast to the public sector banks that are gradually eliminating minimum balance penalties to promote financial inclusion, ICICI Bank has recently announced an increase in minimum balance requirements for new customers in urban and metro areas, which has stimulated concerns among customers about limited financial flexibility for younger customers. Concurrently, the Reserve Bank of India permits banks to establish their own minimum balance policies according to their strategies, leading to diverse practices within the financial sector, with public sector banks focusing on financial inclusion and private banks like ICICI emphasizing traditional banking methods.
