ICICI Bank has raised the minimum balance requirement for new savings bank accounts in metro and urban branches by five times to Rs 50,000, a move which will set it apart from other Indian banks in terms of mass customer access and expose it to widespread criticism for positioning it as “an elite bank”.

The new rule will apply to customers opening accounts on or after 1 August. Customers who have opened accounts before 1 August need not bother as the old level of minimum balance continues as of now.

For semi-urban locations, the country’s second-largest private sector bank has also increased the minimum monthly average balance by five times to Rs 25,000. In rural branches, this has been hiked to Rs 10,000 compared to Rs 2,500 earlier. 

For non-maintenance of the required balance, customers will have to pay penal charges of 6% of the shortfall in required minimum balance or Rs 500, whichever is lower.

However, the interest earned from these accounts remains unchanged at 2.5% per annum, according to the updated service terms posted on the bank’s website.

Salary accounts or PM Jan dhan accounts and basic savings bank deposit account holders are exempt from this high minimum balance rule as these are zero balance accounts.

Account holders with higher minimum balance requirement will, however, get certain fee waivers such as free IMPS transactions and free cheque books. For cash deposits at branches and cash recycler machines, a customer will be allowed three free transactions per month. Thereafter, each transaction will be charged at Rs 150. 

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.