In a move that has sent ripples through the banking sector, ICICI Bank has announced a substantial increase in its minimum monthly average balance (MAB) requirement for new customers. Effective August 1, 2025, individuals opening fresh savings accounts in metro and urban areas will now have to maintain a minimum balance of ₹50,000—a significant leap from the earlier requirement of ₹10,000.
This change represents a staggering 400% increase for urban customers, while semi-urban and rural account holders will also feel the impact. For semi-urban branches, the MAB requirement will jump from ₹5,000 to ₹25,000, and for rural branches, from ₹2,500 to ₹10,000.
The policy shift applies only to new customers, meaning existing savings account holders will continue to operate under the current MAB rules—at least for now. However, the scale of the hike is raising questions about the bank’s long-term strategy and its implications for financial accessibility in India.
Why ICICI Bank Made This Change
From a strategic standpoint, this decision signals a pivot toward attracting higher-value customers. By setting a steep minimum balance, ICICI is positioning itself to serve more affluent account holders who can maintain larger deposits.
This may help the bank reduce the administrative and operational costs associated with servicing low-balance accounts while increasing revenue through higher average deposits. For example:
- Higher liquidity for the bank: Larger deposits mean ICICI has more funds to invest or lend.
- Reduced servicing costs: High-balance customers often require fewer, more premium services.
- Targeted customer base: The bank can tailor its products toward wealth management, premium credit cards, and investment services.
While this makes business sense, critics argue that the move risks alienating middle- and lower-income customers, particularly in a country where a significant portion of the population still struggles with daily financial stability.
Impact on Financial Inclusion
The banking industry has, in recent years, moved toward inclusivity. Several public sector banks, including State Bank of India (SBI), Punjab National Bank (PNB), and Canara Bank, have eliminated or drastically reduced minimum balance requirements to encourage more people to open accounts.
ICICI’s decision appears to buck this trend. By raising the bar to ₹50,000 for urban accounts, the bank effectively excludes a large segment of the working-class population and students, who may not have the capacity to maintain such balances consistently.
This change could widen the gap between private and public sector banking accessibility, pushing budget-conscious customers toward institutions that offer zero-balance or low-maintenance savings accounts.
Penalties for Falling Short
Under the new rules, if your account balance drops below the required MAB, ICICI will levy a penalty of 6% of the shortfall or ₹500—whichever is lower.
While the cap of ₹500 may seem small, the frequency with which such penalties could occur makes it a substantial deterrent. For example, if you are required to maintain ₹50,000 and your monthly average balance drops to ₹40,000, the shortfall is ₹10,000. Six percent of this is ₹600, but you’d be charged the capped penalty of ₹500. Even one such slip could cost you significantly over time.
Who Is Exempt from the Rule?
Not all accounts will be subject to the new MAB requirements. Exemptions apply to:
- Salary accounts: Linked to employer payroll agreements.
- Jan Dhan accounts: Created under the Pradhan Mantri Jan Dhan Yojana for financial inclusion.
- Basic Savings Bank Deposit Accounts (BSBDA): Designed for minimal service charges and requirements.
For those who qualify for these categories, the policy change won’t have an immediate effect. However, anyone considering opening a standard savings account post-August 2025 should plan their finances accordingly.
Public Response: A Wave of Criticism
Since the announcement, social media platforms have been buzzing with disapproval. Many users have criticized ICICI for creating barriers to banking access and catering primarily to the wealthy.
Common sentiments include:
- “₹50,000 is not a ‘minimum’ in a country where millions earn less than that in a year.”
- “Private banks have the right to choose their market, but this feels exclusionary.”
- “This will push customers to other banks with more reasonable terms.”
The backlash isn’t just emotional—it’s strategic. Competitor banks offering lower MAB requirements could gain new customers as a result of this move.
Comparison with Other Banks
ICICI’s revised minimum balance requirements now stand well above the industry average. Here’s a quick comparison for urban accounts:
- HDFC Bank: ₹10,000 MAB
- Axis Bank: ₹10,000 MAB
- SBI, PNB, Canara Bank: Zero balance for most savings accounts
- Kotak Mahindra Bank: Offers zero-balance 811 digital accounts
This makes ICICI one of the most expensive banks for new urban customers in terms of account maintenance. Unless ICICI introduces premium benefits to justify the high requirement, customers may opt for these alternatives.
What New Customers Should Do Before Opening an Account
If you’re considering opening a new ICICI savings account after August 1, 2025, here are key steps to take:
- Evaluate Your Financial Capacity
- Can you consistently maintain ₹50,000 as a monthly average without compromising daily needs?
- Consider seasonal expenses or income fluctuations before committing.
- Understand the Penalty System
- Even a brief shortfall in your account balance could trigger the ₹500 penalty.
- Track your monthly balance averages closely.
- Explore Alternative Accounts
- Public sector banks and some private banks offer accounts with little to no minimum balance requirements.
- Digital-only banks often provide similar services without such high thresholds.
- Check Eligibility for Exemptions
- If you are salaried, a student, or eligible for Jan Dhan or BSBDA accounts, you could bypass the high MAB requirement.
- Look at Value-Added Services
- ICICI may offer perks like higher interest rates, better online services, or exclusive benefits for high-balance accounts.
- Compare these perks to see if they offset the higher deposit requirement.
The Bigger Picture: Banking in India’s Future
The shift in ICICI’s policy may signal a broader trend among private banks to prioritize profitability over accessibility. With operational costs rising and competition from digital fintech players, traditional banks may increasingly cater to customers who can maintain higher balances and use premium services.
However, this raises important questions about financial inclusion, especially when rural and low-income populations are still underbanked. If more private banks follow ICICI’s lead, it could undo years of progress made through government initiatives like Jan Dhan Yojana, which brought millions into the formal banking system.
In a developing economy, access to basic banking services is more than a convenience—it’s a gateway to credit, insurance, savings security, and financial literacy. Policies that make entry harder risk leaving vulnerable populations behind.
Final Thoughts
ICICI Bank’s decision to raise its MAB for new customers is undeniably bold. From a business perspective, it aligns with a strategy to focus on wealthier, more stable account holders. But from a social and customer-experience standpoint, it’s a controversial move that could alienate a significant portion of the population.
For potential customers, the choice comes down to value versus accessibility. If you can comfortably maintain the required balance and value ICICI’s services, the account may still be a good fit. But if the high requirement feels restrictive, there are numerous alternatives—both private and public—that offer similar services without the heavy financial commitment.
