(Image source from: hindi.moneycontrol.com)
ICICI Bank, the second-largest private bank in India, has revealed a significant rise in the minimum monthly average balance (MAB) needed for its savings accounts, starting from August 1, 2025. This update affects all new accounts opened after this date, establishing a new high for MAB requirements among domestic banks. According to the new rules, customers in city and urban locations must keep a minimum average balance of Rs 50,000, which is a big increase from the existing Rs 10,000. In semi-urban regions, the MAB requirement will go up from Rs 5,000 to Rs 25,000, and for rural accounts, it will shift from Rs 2,500 to Rs 10,000. ICICI Bank will charge a penalty of 6% of the shortfall in the required MAB or Rs 500, whichever is less. For instance, if there is a shortfall of Rs 10,000 in a city branch, typically this would lead to a Rs 600 penalty, but with the new guidelines, the fee will be limited to Rs 500.
The bank has also changed its rules for cash transactions. Customers will be allowed three free cash deposit transactions each month, up to a total of Rs 1 lakh. After that, there will be charges of Rs 150 for each additional transaction or Rs 3.50 for every Rs 1,000 deposited, depending on which charge is greater. If customers go over both the number of transactions and the total value limits at the same time, the higher fee will apply. For third-party cash deposits, the limit will be set at Rs 25,000 for each transaction. Fees for cheque returns have been established at Rs 200 for outward returns (cheques given by the customer) and Rs 500 for inward returns (cheques received by the customer) due to financial reasons.
This increase places ICICI Bank further apart from its competitors. HDFC Bank continues to require an MAB of Rs 10,000 in city and urban branches, Rs 5,000 in semi-urban branches, and Rs 2,500 in rural areas. The State Bank of India, the largest bank in India, removed its minimum balance requirement in 2020. Most other banks maintain their MAB requirements between Rs 2,000 and Rs 10,000. Banking experts indicate that this action shows ICICI’s intent to target wealthier clients, aiming at high-income and affluent customers who are more inclined to invest in extra financial products like insurance, investments, and brokerage services. Current customers of ICICI will not be affected for the time being, but these changes might inspire other banks to follow suit, especially as they vie for rich savers in light of India’s expanding economy and uneven wealth distribution. Banks are currently in tough competition with mutual funds, portfolio management firms, and private equity for attracting wealthy clients.
To provide basic banking access, RBI rules require that Basic Savings Bank Deposit Accounts (BSBDAs), including those opened under the Pradhan Mantri Jan Dhan Yojana, do not have any minimum balance requirement. Nonetheless, these accounts come with limits on transactions and lack the same features as standard savings accounts. The increase in MAB follows a recent cut in interest rates for savings accounts by ICICI Bank by 0.25 percentage points. Since April 16, 2025, balances up to Rs 50 lakh receive 2.75 percent interest, while those exceeding Rs 50 lakh earn 3.25%. The change came after HDFC Bank and Axis Bank made similar cuts to their rates, following the repeated rate decreases by the Reserve Bank of India.
