ICICI Bank slashes minimum balance requirement after backlash

Private sector lender ICICI Bank has rolled back its controversial decision to sharply raise minimum balance requirements, following widespread criticism from customers and industry observers.

The bank, in a statement issued on Wednesday, announced that it has withdrawn the Rs 50,000 minimum balance rule for new savings accounts opened by metro and urban customers. The revised requirement now stands at Rs 15,000, a significant drop aimed at aligning with customer expectations.

Changes for semi-urban and rural customers

In a parallel move, ICICI Bank has also eased rules for semi-urban and rural customers. For new semi-urban account holders, the earlier planned Rs 25,000 requirement has been cut to Rs 7,500. In rural areas, the threshold has been slashed from Rs 10,000 to Rs 2,500.

These changes mark a quick reversal of the bank’s earlier weekend announcement that sought to raise minimum average monthly balance requirements to Rs 50,000 for metro and urban accounts — a move that was seen as targeting the premium customer base.

Exemptions for specific account holders

The latest revision will not apply to:

• Salary accounts

Additionally, pensioners below the age of 60 and students from 1,200 select institutions will be fully exempt from any minimum balance requirement.

Penalty for non-compliance remains

While the minimum balance thresholds have been lowered, ICICI Bank clarified that penalties will still apply to accounts that do not meet the required balance. The penalty will be 6% of the shortfall or Rs 500, whichever is lower.

Why ICICI Bank faced criticism

The weekend announcement of a Rs 50,000 minimum balance for metro and urban customers drew swift backlash on social media and among banking customers. Critics argued that such a steep increase would exclude middle-class account holders and push customers towards rival banks with more relaxed requirements.

Industry analysts noted that while ICICI Bank’s earlier strategy was aimed at capturing a high-value, premium banking segment, it overlooked the risk of alienating a large portion of its existing base.

Some customers expressed concern that the policy could have been a step towards “premiumisation” at the expense of inclusivity, a trend seen in certain private sector banks attempting to boost profitability per customer.

ICICI Bank’s clarification

In its Wednesday statement, ICICI Bank said the revised minimum balance requirements were made to “better reflect customer expectations and preferences”. The bank added that it remains committed to offering a wide range of account types catering to different customer needs.

The lender did not explicitly state whether the backlash directly influenced the decision, but banking insiders suggest the speed of the revision — within days of the earlier announcement — was an acknowledgment of the negative public response.

Industry impact and market positioning

With this rollback, ICICI Bank has moved closer to the policies of other major private lenders such as HDFC Bank and Axis Bank, which typically require minimum balances in the range of Rs 10,000 to Rs 15,000 for metro customers.

The revised structure also ensures that ICICI Bank remains competitive in the retail banking segment, particularly at a time when fintech platforms and small finance banks are offering zero balance savings accounts to attract first-time customers.

Banking experts believe this move may help ICICI Bank stem potential customer attrition and maintain goodwill, especially in smaller towns and rural markets where banking relationships often last for decades.