A few days after ICICI Bank hiked the average minimum balance for new savings accounts five-fold to Rs 50,000, Reserve Bank of India Governor Sanjay Malhotra has cleared the air stating that this matter does not fall under regulatory domain. The decision on minimum balance is up to the banks.

"The RBI has left it to individual banks to decide on what minimum balance they want to set. Some banks have capped it at Rs 10,000, others at Rs 2,000, and some have done away with it altogether. This issue does not fall under the regulatory domain," Malhotra said on the sidelines of an event in Gujarat.

ICICI Bank’s decision to sharply raise the minimum monthly average balance requirement for savings accounts opened from 1 August has drawn flak from social media users, 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 bank.

Civil society organisation 'Bank Bachao Desh Bachao Manch' has written to the Finance Ministry urging it to intervene and reverse “this retrograde decision” as it “undermines the principle of inclusive banking.” 

The country’s second-largest private sector bank has raised the minimum monthly average balance requirement for new savings accounts opened in metro and urban areas on or after 1 August by five times to Rs 50,000 from Rs 10,000.

For semi-urban locations and rural locations, the balance requirement has been increased five times to Rs 25,000 and Rs 10,000, respectively.

Customers who fail to maintain the minimum balance criteria will be charged a penalty of 6% of the shortfall in the required balance or Rs 500, whichever is lower.

ICICI Bank’s move has come at a time when public sector banks are doing away with the minimum balance requirement. Even earlier, they had lower minimum balance requirements compared to private lenders, with the criteria waived for Jan Dhan accounts. 

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

In recent months, several public sector banks have waived off penalties on non-maintenance of minimum balance. These include Canara Bank, Bank of Baroda, Punjab National Bank, Indian Bank, Bank of India and Central Bank of India. 

According to data provided by Minister of State for Finance Pankaj Chaudhary in Parliament last month,  public sector banks collected Rs 8,932.98 crore as penal charges on non-maintenance of minimum monthly average balance in the last five financial years ending 2024-25.