Private sector major ICICI Bank is facing public backlash for steeply raising the minimum monthly average balance (MAB) requirement for new Savings Bank (SB) deposit customers with effect from August 1, 2025. The lender has hiked its MAB requirement for new depositors in metro & urban and semi-urban locations by up to five times to ₹50,000 and ₹25,000, respectively. For customers in rural locations, the MAB has risen four times to ₹10,000. businessline explains the rationale of the move, whether this will lead to material business impact, why it is drawing the public ire and will it prompt other banks to follow suit.

What is the rationale behind this move?

According to sources, ICICI Bank’s SB customers with less than ₹50,000 average MAB are very few. The SB customers with lower account balances tend to treat ICICI as secondary bank account, but continue to receive services on par with other customers, who keep higher float with the bank. This leads to a rise in the bank’s fixed costs. Many cases of mule accounts also appear in SB accounts with less balances. If the bank focuses on customers with higher balances, it can provide such customers even better services, save costs which could then be used for business growth, upgrade tech and launch more fee generating products. In a nutshell, the bank’s move aims to save costs and to prompt sticky customers to keep higher float with the bank, at a time when customers are increasingly turning to equity market to earn higher returns.

Will it lead to material business impact?

No, it will not have a material business impact, both in terms of the bank’s existing SA ratio and on margins, experts say. In fact, if customers do not maintain the MAB, the lender stands to gain on account of penalty charges. It is important to note that the new guidelines will come into effect from a prospective manner, meaning rules do not change for existing customers. Only a few SB customers currently do not maintain ₹50,000 MAB with ICICI Bank as this rule is also not applicable to Basic Savings Bank Deposit Account (BSBDA) holders, pensioners’ account, salary account customers, and customers who maintain savings plus fixed deposit amount of up to ₹2 lakh with the bank.

Why is the bank’s move drawing large-scale public ire?

To begin with, this move forces premium customers to park more money in a low-yielding product. Many metro and urban customers may not earn ₹50,000 per month, and the bank by raising the ceiling by five times, shows its interest towards serving only premium set of customers, de-railing the goal of financial inclusion. Public sector banks (PSBs), meanwhile, are guided by the central government to have zero to modest MAB. Unlike some other mid and small sized lenders, ICICI Bank also levies various charges on ATM, IMPS, RTGS transactions exceeding certain limit. Some mid-sized banks offer SA rates of up to 7 per cent and simultaneously waive off fees for basic banking transactions, and also provide free airport lounge access if a customer keeps MAB of ₹25,000 balance in their SB account.

Will other banks follow suit?

Unlikely. As mentioned above, the government has guided PSBs to not dictate high MAB for SB customers. Country’s largest private lender HDFC Bank is in a hunt for deposit since its absorbed erstwhile HDFC, while Kotak Mahindra Bank’s Jay Kotak has criticised ICICI Bank’s move publicly on X. “Every Indian must access our financial sector. 90 per cent of India makes less than ₹25,000 a month. A ₹50,000 minimum balance implies a sum equal to ~94 per cent of Indians monthly income is to be left with the bank at all times, else a fee! Implication: physical cost to serve may be high. Digital first is the way. If banks don’t do it, fintechs will. Banking should be for all Indians,” he said. Going by the negative sentiment on social media and public forums against ICICI Bank’s move, even Axis Bank isn’t likely to change its MAB requirements and other mid, small sized banks are already scrambling for deposits, making such move even more unsustainable, industry sources say.

Published on August 11, 2025