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Key Points

The Reserve Bank of India has declared that banks have full autonomy in setting minimum account balance requirements. RBI Governor Sanjay Malhotra confirmed that ICICI Bank's recent balance rule changes are within their rights as a financial institution. The new rules impose different minimum balance thresholds for urban, metro, rural, and semi-urban customers, with penalties for non-compliance. This move highlights the growing trend of personalized banking policies across different customer segments.

Key Points: RBI Governor Sanjay Malhotra Defends ICICI Bank Balance Rules

  • RBI leaves minimum balance decision to individual banks
  • ICICI Bank raises monthly average balance requirement
  • Penalties apply for not maintaining minimum balance
  • Different thresholds for urban and rural customers
2 min read

Banks free to decide on minimum account balance: RBI Governor on ICICI Bank hike

RBI confirms banks can set minimum account balance, ICICI Bank raises threshold to Rs 50,000 for urban customers

"This decision does not fall under the regulatory domain - Sanjay Malhotra, RBI Governor"

New Delhi, Aug 11

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday said that the minimum balance limit for saving accounts will be decided by banks as the decision does not fall under any regulatory jurisdiction, after India’s second largest lender ICICI Bank raised the monthly minimum average balance requirement for all customer segments.

Asked on the sidelines of a financial inclusion programme in Gujarat about the RBI's response to ICICI Bank's new rules, Malhotra said the central bank has left it to the banks to decide the minimum average balance.

He further said that some banks have fixed this limit at Rs 10,000, while some banks have kept this limit at Rs 2,000 for customers.

However, there are many banks that have completely removed it for their customers.

"This decision does not fall under the regulatory domain," he clarified.

According to ICICI Bank, customers at metro and urban locations who opened their savings accounts on or after August 1 have to maintain Rs 50,000 monthly average balance to avoid penalties.

The minimum average balance for older customers remains Rs 10,000.

New customers in semi-urban locations will be required to maintain a minimum average balance of Rs 25,000, and rural customers will have to maintain Rs 10,000. The minimum average balance remains at Rs 5,000 a month for old customers in rural and semi-urban areas.

Customers who do not maintain the minimum average balance will be levied a penalty at 6 per cent of the shortfall or Rs 500, whichever is lower. The bank now allows three complementary cash deposits free of cost into a savings account, after which customers have to pay Rs 150 per transaction.

The hike in the minimum average balance by a large private lender is in contrast to other banks that have rationalised their penalties. The country’s largest lender, State Bank of India (SBI), had scrapped the minimum balance rule in 2020. The majority of other banks maintain significantly lower thresholds, typically between Rs 2,000 and Rs 10,000.

- IANS

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Reader Comments

P
Priya S
As a small business owner, I understand banks need to maintain profitability. But such steep hikes will push many customers towards digital payment banks and fintech startups. Traditional banks should be more careful.
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Aman W
RBI is right to let banks decide - that's how free market works. If you don't like ICICI's terms, vote with your feet! There are plenty of other options available with lower requirements.
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Shreya B
This move will hit students and young professionals the hardest. Many of us opened ICICI accounts for their good service, but ₹50k MAB is too much for someone just starting their career. Time to reconsider my banking options.
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David E
Interesting to see the contrast between private and public sector banks in India. While ICICI hikes limits, SBI removed them completely. Shows the different priorities - profits vs financial inclusion.
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Nisha Z
ICICI should at least grandfather existing customers properly. Changing rules for new accounts is understandable, but increasing requirements for loyal customers who've been with them for years is poor customer service.
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Karthik V
This is why Jan Dhan accounts and small finance banks are important. Not everyone can maintain such high balances. Banks should have different account types for different income groups.

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