In a significant policy change, ICICI Bank has increased the minimum monthly average balance (MAB) requirement for new savings bank accounts opened on or after August 1, 2025. The new MAB has been hiked fivefold in metro and urban locations, rising to ₹50,000. For customers in semi-urban areas, the MAB is now set at ₹25,000, while rural customers must maintain a minimum balance of ₹10,000.
Penalties for Falling Below MAB
Customers who fail to maintain the required MAB will face penal charges. The penalty is calculated as 6% of the shortfall amount or a fixed ₹500, whichever is lower. This change puts considerable pressure on new account holders, especially those with limited liquidity. Meanwhile, the annual interest rate on savings account balances remains at 2.5%, unchanged despite the hike in balance requirements.
Exemptions for Certain Accounts
It’s important to note that not all accounts are affected by this revision. Salary accounts, accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY), and basic savings deposit accounts remain exempt from the MAB requirement, as these are classified as zero-balance accounts. These exemptions reflect ICICI Bank’s intention to protect low-income and salaried customers while encouraging higher balances in regular savings accounts.
Benefits for Higher MAB Holders
ICICI Bank is incentivising customers who maintain the higher MAB by offering certain benefits. These include free NEFT (National Electronic Funds Transfer) transactions and three complimentary cash withdrawals or deposits per month without incurring extra charges. Such benefits aim to reward customers who keep substantial funds in their accounts, fostering customer loyalty and transaction volume.
Contrast with Public Sector Banks
The move by ICICI Bank stands in sharp contrast to recent trends among India’s public sector banks (PSBs). Major lenders like State Bank of India (SBI), Punjab National Bank (PNB), Canara Bank, and Indian Bank have recently either waived or substantially reduced penalties related to minimum balance shortfalls. These banks are focusing on customer convenience and financial inclusion by relaxing balance norms, especially in the post-pandemic economic environment.
ICICI Bank’s decision to sharply hike the MAB for new savings accounts appears aimed at improving its deposit base and managing operational costs amid evolving market conditions. However, this move may also risk alienating a segment of retail customers who prefer low-maintenance accounts.
Customer Impact and Industry Implications
For prospective customers in metros and urban areas, the ₹50,000 MAB could be a significant barrier, potentially limiting ICICI Bank’s ability to attract new account holders in these regions. The semi-urban and rural thresholds, while lower, also represent an increase from previous requirements, potentially affecting financial accessibility for smaller towns and villages.
The penalty structure further reinforces the need for customers to actively monitor their account balances to avoid fees. While the benefits for maintaining higher balances are attractive, not all customers may find them sufficient to justify the increased holding requirements.
ICICI Bank’s revision of the minimum monthly average balance is a strategic step that diverges from the more customer-friendly policies of some public sector competitors. While it may strengthen the bank’s deposit base and profitability, the higher thresholds and penalty framework will require customers to be more vigilant about their account balances. Prospective savers should carefully evaluate the implications before opening new accounts with ICICI Bank after August 1, 2025.
