No regulation on minimum account balance, banks free to decide: RBI Governor on ICICI Bank hike
RBI Governor Sanjay Malhotra said banks can decide savings account minimum balances, after ICICI Bank raised requirements up to Rs 50,000 for new customers in metros, while penalties and deposit charges also increased, contrasting with SBI’s zero-balance policy
New Delhi: Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday said that the minimum balance limit for savings accounts will be decided by banks as the decision does not fall under any regulatory jurisdiction, after India’s second largest lender, ICICI Bank, raised the monthly minimum average balance requirement for all customer segments.
Asked on the sidelines of a financial inclusion programme in Gujarat about the RBI’s response to ICICI Bank’s new rules, Malhotra said the Central Bank has left it to the banks to decide the minimum average balance.
He further said that some banks have fixed this limit at Rs 10,000, while some banks have kept this limit at Rs 2,000 for customers. However, there are many banks that have completely removed it for their customers. “This decision does not fall under the regulatory domain,” he clarified.
According to ICICI Bank, customers at metro and urban locations who opened their savings accounts on or after August 1 have to maintain Rs 50,000 monthly average balance to avoid penalties. The minimum average balance for older customers remains Rs 10,000.
New customers in semi-urban locations will be required to maintain a minimum average balance of Rs 25,000, and rural customers will have to maintain Rs 10,000. The minimum average balance remains at Rs 5,000 a month for old customers in rural and semi-urban areas.
Customers who do not maintain the minimum average balance will be levied a penalty of 6 per cent of the shortfall or Rs 500, whichever is lower. The bank now allows three complementary cash deposits free of cost into a savings account, after which customers have to pay Rs 150 per transaction.
The hike in the minimum average balance by a large private lender is in contrast to other banks that have rationalised their penalties. The country’s largest lender, State Bank of India (SBI), had scrapped the minimum balance rule in 2020. The majority of other banks maintain significantly lower thresholds, typically between Rs 2,000 and Rs 10,000.
