‘Retrograde decision’: Civil society org writes to govt against ICICI Bank’s minimum balance hike

Civil society organisation 'Bank Bachao Desh Bachao Manch', expressing their strong opposition to ICICI Bank's decision to increase the minimum average balance (MAB) requirement for new savings accounts, has written to the Finance Ministry. In their communication with the Finance Ministry, they argued that this move contradicts the government's objectives of fostering inclusive banking and economic growth.

The organisation described ICICI Bank's decision as "unjust and regressive". Effective from August 1, 2025, ICICI Bank's new policy requires customers in metro and urban areas to maintain a minimum balance of Rs 50,000, a significant rise from the previous Rs 10,000 standard. For semi-urban and rural regions, the requirements have been raised to Rs 25,000 and Rs 10,000, respectively.

Joint conveners of the organisation Biswaranjan Ray and Soumya Datta criticised the new policy, stating, "This retrograde decision undermines the principle of inclusive banking." The organisation has called for the immediate reversal of this decision, urging the government to safeguard depositors' interests and promote wider financial inclusion.

Historically, public sector banks have maintained lower balance requirements, with some waiving them entirely for Jan Dhan accounts. Many of these banks, in contrast to ICICI, do not penalise customers for failing to maintain the minimum balance, reflecting their commitment to inclusivity.

Jay Kotak, son of veteran banker Uday Kotak, has also voiced his concerns about the implications of such a policy on India's middle class. He noted that 90 per cent of Indians earn less than Rs 25,000 a month, highlighting that a Rs 50,000 minimum balance would necessitate customers to lock away nearly all their monthly income with the bank, or face penalties. "Every Indian must access our financial sector," Kotak emphasised, pointing out the challenges this presents to financial accessibility.

Kotak further advocated for the shift towards digital banking solutions, stating, "For banks, the physical cost to serve is high, which is why digital-first banking is the future." Such platforms could offer more practical and cost-effective services to low- and middle-income customers.

The steep MAB increase by ICICI Bank now positions it as having the highest minimum balance requirement amongst Indian banks. In comparison, leading competitors like State Bank of India and HDFC Bank enforce significantly lower thresholds, maintaining their focus on cost management and customer inclusivity.

ICICI Bank's decision marks a sharp departure from industry trends where several banks have reduced operational costs by lowering deposit interest rates. Earlier this year, ICICI Bank cut its savings account interest rates, echoing similar moves by HDFC and Axis Banks, amidst RBI's rate reductions.