Are Banks Now Free to Set Minimum Account Balances? RBI Governor on ICICI Bank's Increase
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Synopsis
In a significant shift, RBI Governor Sanjay Malhotra has confirmed that banks can set their own minimum balance requirements for savings accounts. This follows ICICI Bank's recent increase in its average balance requirements, raising questions about the future of banking fees in India. Discover how this affects customers across various regions.
Key Takeaways
- RBI empowers banks to set their own minimum balance requirements.
- ICICI Bank's new requirements vary by customer segment.
- Failure to maintain the balance incurs penalties.
- Some banks have eliminated minimum balance requirements altogether.
- Stay informed to avoid unnecessary fees.
New Delhi, Aug 11 (NationPress) The Governor of the Reserve Bank of India, Sanjay Malhotra, stated on Monday that banks are empowered to determine the minimum balance requirements for savings accounts, as this matter is outside any regulatory framework. This announcement follows India's second largest lender, ICICI Bank, raising the monthly minimum average balance requirement across all customer categories.
During a financial inclusion event in Gujarat, Malhotra was asked about the RBI's stance on ICICI Bank's recent changes. He clarified that the central bank has delegated this authority to individual banks.
Some banks have set the minimum balance limit at Rs 10,000, while others have opted for Rs 2,000 for their customers.
Interestingly, several banks have entirely eliminated this requirement for their clientele.
"This decision is not under the purview of regulation," he emphasized.
Per ICICI Bank's policy, customers in metropolitan and urban areas who opened savings accounts on or after August 1 must maintain a Rs 50,000 monthly average balance to avoid incurring penalties.
For existing customers, the minimum average balance stays at Rs 10,000.
New customers in semi-urban areas will need to maintain a minimum average balance of Rs 25,000, while those in rural locations must keep Rs 10,000. Existing customers in rural and semi-urban regions continue to have a Rs 5,000 monthly average balance requirement.
Failure to maintain the minimum balance will result in a penalty of 6 percent of the shortfall or Rs 500, whichever is less. The bank permits three complimentary cash deposits into a savings account, after which a fee of Rs 150 is charged per transaction.
The increase in the minimum average balance by a major private bank contrasts with others that have reduced their penalty structures. Notably, the country's largest lender, State Bank of India (SBI), abolished the minimum balance requirement in 2020. Most other banks typically set lower thresholds ranging from Rs 2,000 to Rs 10,000.
Point of View
My perspective remains aligned with the national interest. This move by the RBI grants banks greater autonomy, which could benefit some customers while challenging others. It's vital for consumers to stay informed about these changes to make wise financial decisions.
NationPress
20/08/2025
Frequently Asked Questions
What is the new minimum balance requirement for ICICI Bank?
ICICI Bank now requires customers in metro and urban areas to maintain a minimum average balance of Rs 50,000, with varying requirements for semi-urban and rural customers.
Can banks set their own minimum balance limits?
Yes, RBI Governor Sanjay Malhotra confirmed that banks have the authority to decide their own minimum balance limits without regulatory oversight.
What penalties apply if the minimum balance is not maintained?
Customers failing to maintain the required minimum balance will incur a penalty of 6% of the shortfall or Rs 500, whichever is lower.
Has SBI removed the minimum balance requirement?
Yes, State Bank of India (SBI) abolished its minimum balance requirement in 2020, setting a precedent that some other banks have followed.
Are there banks that have eliminated minimum balance requirements?
Yes, several banks have completely removed minimum balance requirements for their customers.
