‘Up to banks, not in our regulatory domain’: RBI Gov Malhotra on ICICI Bank’s minimum balance hike

RBI Governor Sanjay Malhotra said that the minimum balance of a bank does not come under the regulatory domain of the central bank. He said the decision of minimum balance is up to the banks.

Governor Malhotra, speaking to reporters, said, "RBI has left it to banks to decide what minimum balance limit they want to keep." "Some banks have capped it at Rs 10,000, some have it at Rs 2,000 and some have even waived it. This is not in the RBI's regulatory domain,” he added.

This comes after ICICI Bank hiked the minimum balance in a bank account in the metro and urban areas at Rs 50,000, while it has been hiked to Rs 25,000 for accounts in semi-urban areas and Rs 10,000 in rural areas.

Customers who fail to maintain the minimum average balance requirements will be charged a penalty of 6 per cent of the shortfall in the required balance or Rs 500 as per the bank’s website.

Despite the decision, ICICI Bank stayed unfazed, settling the day flat at Rs 1,436.70 on BSE after trading in a narrow range of Rs 1,419.85-1,438.80. The stock declined 3.49 per cent in the past two weeks against a 0.6 per cent drop in the BSE Bankex and a 0.35 per cent fall in the BSE Sensex during the same period.

Meanwhile, civil society organisation 'Bank Bachao Desh Bachao Manch' has written to the Finance Ministry urging it to intervene and reverse the decision. "This retrograde decision undermines the principle of inclusive banking,” said joint conveners of the organisation Biswaranjan Ray and Soumya Datta.

Jay Kotak said most of India earns less than Rs 25,000 a month, which means they will have to lock away nearly all their monthly income with the bank or face penalties.

ICICI Bank’s minimum average balance is now the highest among Indian banks, which sets it apart from other major banks in the country. In contrast, State Bank of India and HDFC Bank continue to enforce lower minimum balance requirements to keep costs manageable for customers and promote inclusivity.