ICICI Bank Lowers Minimum Balance to ₹15,000 Following Customer Input

Quick Summary

• ICICI Bank has reduced the minimum average balance (MAB) requirement for savings accounts following customer feedback.
• The new MAB is Rs 15,000 for metro and urban areas (previously Rs 50,000), Rs 7,500 for semi-urban areas (previously Rs 25,000), and Rs 2,500 for rural areas (previously Rs 10,000).
• Customers failing to maintain the required balance will face penalties of either 6% of the shortfall or Rs 500, whichever is lower.
• RBI Governor Sanjay Malhotra confirmed that banks independently decide MAB requirements without regulatory intervention.
• HDFC Bank has kept its existing average monthly balance norms unchanged: Rs 10,000 for regular savings accounts and Rs 25,000 for Savings Max accounts.
• Several state-owned banks like SBI, PNB, Canara Bank, and Indian Bank have scrapped penalties altogether to boost financial inclusion.
• Private sector banks generally continue enforcing charges on non-maintenance of balances while reducing interest rates on savings deposits due to market pressures.

Image Credit: Reuters ICICI Bank

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Indian Opinion Analysis
ICICI Bank’s reduction in minimum average balance thresholds highlights an effort to adapt to consumer needs amid growing calls for inclusivity in India’s banking sector. By maintaining penalties despite lowered limits-contrasting with several public-sector banks removing them entirely-the move balances customer flexibility with institutional profitability challenges faced by private lenders during uncertain market conditions.

This decision underscores how Indian banking strategies diverge across state-owned institutions focused predominantly on widening access versus private players who remain cautious about eroding margins further amidst competitive pressures such as cuts in deposit interest rates.

RBI Governor Malhotra’s clarification that banks independently determine balance norms reinforces autonomy within the sector but calls attention to varied practices among financial institutions impacting consumer cost structures differently based on location type or service provider choice-a dynamic deserving informed evaluation by account holders given associated fees continuing across most private entities.