A civil society organisation, ‘Bank Bachao Desh Bachao Manch’, has slammed ICICI Bank’s decision to sharply raise the minimum balance requirement for new savings accounts to Rs 50,000 and written to the Finance Ministry urging it to intervene and reverse “this retrograde decision”.

The private lender’s decision goes against the government’s vision of inclusive banking and economic growth, according to the organisation.   

In a letter to the finance secretary, 'Bank Bachao Desh Bachao Manch' has said ICICI Bank’s decision is "unjust and regressive".

The country’s second-largest private sector bank has raised in metro and urban areas the minimum monthly average balance for new savings accounts opened on or after 1 August by five times to Rs 50,000. For semi-urban locations, the minimum balance has also been raised five times to Rs 25,000. And in rural branches, this has increased to Rs 10,000 from Rs 2,500 earlier.

Joint conveners of the organisation Biswaranjan Ray and Soumya Datta criticised the policy and said “this retrograde decision undermines the principle of inclusive banking”.

The organisation has called for the immediate withdrawal of the decision and urged the government to protect depositors' interests and ensure wider financial inclusion.

Social media users have also been critical of ICICI Bank’s decision, with some calling it as an attempt to becoming an “elite bank” while others criticising the move as “ridiculous” and “the worst decision” taken by the lender. 

“Brilliant move, raise the minimum balance so you can proudly exclude the very customers a ‘savings account’ was meant for. A true CFO-level innovation in turning banking into an exclusive club for the privileged while calling it financial inclusion,” one user wrote.

Historically, public sector banks have maintained lower minimum balance requirements compared to private lenders.

The objective behind ICICI Bank’s move may have been to differentiate itself from its other private sector peers and also reduce pressure on operating costs. Besides, account holders with higher minimum balance requirement would enjoy certain fee waivers such as free IMPS transactions and free cheque books. 

ICICI’s decision to hike the minimum balance requirement comes at a time when public sector banks have been waiving off penal charges. The lenders who have recently waived off penalties on non-maintenance of minimum balance include Canara Bank, Bank of Baroda, Punjab National Bank, Indian Bank, Bank of India and Central Bank of India. 

State Bank of India, the country’s largest lender, has not levied non-maintenance penalties since March 2020.