RBI leaves it to banks to decide minimum balance rule:What it means for you

After ICICI hiked minimum balance for new accounts, RBI says banks can set their own rules, making it crucial for customers to compare terms before opening a savings account.

Reserve Bank of India (RBI) Governor Sanjay Malhotra clarified on Monday that banks are free to decide their minimum account balance requirements for savings accounts as it does not fall under “regulatory domain”.

 

Speaking informally to journalists on the sidelines of a financial inclusion saturation drive in Mehsana district, Gujarat, Malhotra said, “RBI has left it to the banks to decide on the minimum balance. Every bank has its own minimum balance requirement. This is not in the RBI’s regulatory domain.”

 

The remark follows ICICI Bank’s recent decision to sharply increase the minimum monthly average balance (MAB) for new savings accounts. 

 

 

ICICI Bank’s revised rules

Effective 1 August 2025, ICICI Bank has raised the minimum balance threshold for new customers by five times:

 

-Urban/metro branches: From Rs 10,000 to Rs 50,000

 

-Semi-urban branches: From Rs 5,000 to Rs 25,000

 

-Rural branches: From Rs 2,000 to Rs 10,000

 

The changes apply only to accounts opened on or after 1 August. Existing customers continue under the earlier limits unless the bank announces otherwise.

 

Variations across banks

Malhotra noted that there is no uniform standard:

 

-Some banks keep the minimum balance as low as Rs 2,000.

 

-Others set it at Rs 10,000 or more.

 

Several public sector banks (PSBs) have waived the requirement entirely for certain account types.

 

Accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) and basic savings bank deposit accounts (BSBDAs) are exempt from MAB rules, ensuring financial access for low-income households.

Why does this matter to you?

For customers, the MAB is the average balance that must be maintained during the month. Falling short typically attracts non-maintenance charges, which can vary by bank and location. 

 

If you are opening a new account:

 

-Check the bank’s MAB rules before signing up.

 

-Compare across lenders to find one that fits your budget and usage.

 

-Consider PSBs or BSBDAs if you prefer a zero-balance option.

 

With the RBI leaving it to market forces, banks will continue to set minimum balance thresholds in line with their business models, making it important for consumers to shop around and avoid avoidable penalties.