In a bold and controversial decision, ICICI Bank, India’s second-largest private lender, has raised the minimum average balance (MAB) requirement for new savings accounts opened after August 1, 2025, to a whopping ₹50,000 in urban areas—a five-fold increase from the previous ₹10,000. This move, which bucks the trend of public sector banks scrapping minimum balance rules, has sparked widespread criticism and left customers and analysts scratching their heads.

The new requirements don’t stop at urban branches. For semi-urban areas, the MAB has jumped from ₹5,000 to ₹25,000, while rural branches now require ₹10,000, up from ₹2,500. This marks the bank’s first MAB hike in over a decade, a period during which India’s per capita income has more than doubled, according to ICICI’s updated criteria on its website.

Failing to maintain the required balance will hit customers with a penalty of 6% of the shortfall or ₹500, whichever is lower. For instance, if your balance in an urban branch falls ₹10,000 short, you’d face a ₹500 penalty, as it’s capped below the calculated ₹600 fine.

Why the Big Change?

The decision has raised eyebrows, especially since public sector banks like State Bank of India eliminated minimum balance requirements in 2020. Some bankers suggest ICICI is aiming to filter out low-value customers, a strategy more common among multinational banks with limited branch networks. Critics argue this move could alienate middle- and lower-income account holders, pushing them toward banks with lower or no MAB requirements.

Under CEO Sandeep Bakhshi, who took charge in 2018, ICICI Bank has focused on risk management, product innovation, and digital expansion while keeping a low profile. This high-profile change seems out of character, but sources say it’s designed to boost the share of current and savings account (CASA) balances and ease operational costs. As a silver lining, new savings accounts come with perks like free IMPS transactions and free cheque books, with some previous charges now waived.

Who’s Exempt?

Thankfully, existing customers are unaffected, and statutory accounts like basic savings accounts and salary accounts will continue to have no minimum balance requirement, ensuring access for low-income customers.

What’s the Buzz?

The move has ignited heated discussions online. Social media posts reflect frustration, with some calling it a burden on the middle class and others suggesting it’s a tactic to prioritize high-net-worth clients. “ICICI Bank doesn’t want saving bank account holders,” one user fumed, while another urged switching to public sector banks like SBI.

With this steep hike setting a new benchmark among domestic banks, all eyes are on whether competitors like HDFC Bank or Axis Bank will follow suit—or if customers will flock to banks with lighter requirements.