ICICI Bank Revises Minimum Balance Rules After Backlash

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Mumbai – ICICI Bank, the country’s second-largest private sector lender, has rolled back its recently announced steep hike in minimum average balance (MAB) requirements for new savings accounts, bringing down the metro and urban threshold from ₹50,000 to ₹15,000.

The decision comes less than a week after the bank announced the earlier increase, which had triggered criticism from customers and industry observers for being excessive and exclusionary. The revised rates now stand at ₹15,000 for metro and urban branches, ₹7,500 for semi-urban branches, and ₹2,500 for rural branches.

Background to the Hike

Earlier this month, ICICI Bank unveiled new MAB requirements for savings accounts opened after the change took effect. The structure had set the MAB at ₹50,000 for metro and urban locations, ₹25,000 for semi-urban, and ₹10,000 for rural areas.

Bank officials had cited the need to align deposit requirements with evolving customer segments and to strengthen the bank’s low-cost deposit base. However, the announcement quickly drew criticism on social media and from consumer groups, with many arguing that such high minimum balances would effectively push lower-income customers out of the banking system.

Details of the Rollback

In its revised communication, ICICI Bank confirmed that only new accounts will be subject to the updated rates. Existing savings account customers will continue under the old MAB requirements, avoiding any immediate impact on their accounts.

The new MABs are:

• Metro & Urban: ₹15,000
• Semi-Urban: ₹7,500
• Rural: ₹2,500

These figures represent a sharp reduction from the initial announcement, effectively restoring affordability for a broader range of customers while still introducing a moderate upward revision from older norms.

Strategic Considerations

From a business perspective, the original hike was aimed at increasing the bank’s current account savings account (CASA) ratio and ensuring higher balances per customer, which can improve net interest margins. However, the backlash underscored a reputational risk: alienating a large segment of potential customers, especially in rural and semi-urban areas, where competition from public sector banks and small finance banks remains strong.

The rollback signals that ICICI Bank is prioritising customer retention and public perception alongside its balance sheet objectives. It also reflects the growing influence of consumer feedback in shaping banking policy.

Industry Context

Other large private sector banks such as HDFC Bank and Axis Bank maintain MAB requirements in the range of ₹10,000 – ₹15,000 for metro branches, making ICICI’s initial ₹50,000 target a significant outlier. In rural banking, State Bank of India and other public lenders often keep MAB requirements at zero or nominal amounts to promote financial inclusion.

The episode highlights the tension in the Indian banking sector between pushing for higher deposit values and maintaining accessibility. As competition intensifies, especially with the growth of digital banking, large hikes in account maintenance requirements can trigger swift customer migration.

Outlook

While the immediate effect of the rollback is to defuse public criticism, the bank’s longer-term deposit mobilisation strategy will likely need recalibration. Analysts expect ICICI Bank to focus on targeted premium account products for high-balance customers while keeping standard savings products competitive.

The move could help preserve growth in customer acquisition while safeguarding the bank’s CASA ratio in the face of rising interest rate pressures and competitive deposit markets.