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Keeping ₹50,000 Minimum Balance in Bank Now Mandatory – RBI Governor’s Big Statement, New Rule Effective from August 1

A major change in the country’s banking sector has caught the attention of millions of customers. Leading private sector lender ICICI Bank has made a big amendment to its savings account rules. Now, customers living in metro and urban areas will have to maintain a minimum average balance (MAB) of ₹50,000 in their savings accounts. Earlier, this limit was just ₹10,000, which means it has now been increased five-fold.

This new rule came into effect on August 1, 2025, and for now applies only to new savings accounts. The bank has not yet clarified when or how it might impact existing account holders. However, ever since this announcement, debates have intensified among the public, civil organizations, and financial experts.

What is the New Rule?

ICICI Bank has announced that:

  • Metro and urban area customers opening new savings accounts must maintain a Minimum Average Balance (MAB) of ₹50,000.

  • Previously, this limit was only ₹10,000.

  • The new rule became effective from August 1, 2025.

  • For now, existing customers will continue with the old MAB limit, but changes in the future are possible.

What is Minimum Average Balance (MAB)?

The Minimum Average Balance means the average amount you must maintain in your account over a month.

For example:
If your MAB is ₹50,000 and the month has 30 days, your daily closing balance averaged over 30 days should be ₹50,000.
If your balance is lower on some days, you can keep a higher balance on other days to meet the monthly average.

What Happens if You Don’t Maintain MAB?

If you fail to maintain the required MAB, the bank will charge a penalty fee.
This fee varies according to the bank’s policy and can be anywhere between ₹500 to ₹1,000 per month in ICICI Bank’s case.

Public Reaction – Rising Opposition

Many organizations have voiced their opposition to this decision.
A civil society group called ‘Bank Bachao Desh Bachao Manch’ (Save Bank, Save Country Forum) has written to the Finance Ministry urging it to intervene.

They argue that:

  • This move goes against the principle of inclusive banking.

  • Poor and lower-middle-class people will be pushed away from banking services.

  • This decision could further widen financial inequality.

The forum’s joint conveners, Biswaranjan Ray and Soumya Dutta, have called it “unjust” and demanded immediate withdrawal of the rule.

Why Public Sector Banks are Different

In public sector banks, the minimum balance requirement is generally lower, and in Jan Dhan accounts, it is completely waived off.

For example:

  • State Bank of India (SBI) Jan Dhan accounts have no minimum balance requirement.

  • Many regional rural banks also offer zero-balance savings accounts.

RBI Governor’s Statement – Bank’s Own Jurisdiction

On August 11, 2025, the Reserve Bank of India (RBI) Governor Sanjay Malhotra commented on ICICI Bank’s move to increase MAB for non-salary accounts:

“This does not come under any regulatory jurisdiction. It is purely a commercial decision of the bank.”

This means RBI will not directly intervene. However, if any banking rule violates customer rights, customers can approach the Banking Ombudsman for redressal.

Possible Impact of the Decision

1. Burden on Middle and Lower-Income Groups

For people struggling to meet their monthly expenses, keeping ₹50,000 idle in an account is almost impossible.

2. Minimal Impact on Rural and Semi-Urban Customers

Since the rule is currently for metro and urban areas only, rural customers will not be directly affected.

3. Pressure on Other Private Banks

If ICICI’s model proves successful, other private banks might follow suit with similar rules.

Why Has the Minimum Balance Been Increased?

According to experts, there may be several reasons:

  • Boosting Bank Deposits – Larger balances give the bank more funds for lending and investment.

  • Targeting High-Net-Worth Clients – Higher balance requirements attract wealthier customers.

  • Reducing Service Costs – Accounts with low balances are costlier to maintain; this policy reduces such operational expenses.

Options for Customers

If you think maintaining a ₹50,000 MAB is too difficult, you have alternatives:

  1. Open an Account in a Public Sector Bank – Lower or no MAB requirements.

  2. Jan Dhan Account – No MAB requirement at all.

  3. Digital Banking/NBFC Accounts – Some fintech banks offer zero-balance facilities.

Conclusion

ICICI Bank’s decision marks a major shift in the banking sector. While the bank justifies it as a strategic move for better financial management and customer profiling, civil society groups see it as a step toward financial exclusion.

RBI Governor’s clear statement confirms it is a commercial decision by the bank, leaving customers free to choose banking options that suit them best.

In the coming months, it will be interesting to see whether this decision sets a new trend in the banking industry or is rolled back under public pressure.

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