ICICI Bank's new Rs 50,000 balance rule: Minimum balance norms up to individual banks, says RBI governor

The RBI has elucidated that decisions regarding Minimum Average Balance (MAB) requirements for savings accounts are within the purview of individual banks. During a financial inclusion conference in Gujarat on Monday, RBI Governor Sanjay Malhotra confirmed that this matter is outside the central bank's regulatory scope."The Reserve Bank of India has left it to the banks to decide the quantum of minimum average balance," Malhotra said on the sidelines of financial inclusion event in Gujarat, as reported by Economic Times. "Some banks have capped it at Rs 10,000, others at Rs 2,000, and some have done away with it altogether. This issue does not fall under the regulatory domain," he added.Also read: New rules: ICICI bank raises minimum balance for new customers - Here are the detailsRecent attention has focused on ICICI Bank's decision to increase the MAB requirement to Rs 50,000 for new customers in urban and metro regions, beginning August 1.

Non-compliance with this requirement will result in a penalty of 6% of the shortfall or Rs 500, whichever is less.This change occurs as numerous public sector banks are adopting a contrasting approach by removing penalties for non-maintenance of minimum balance to enhance financial accessibility.SBI initiated this trend by removing penalties for non-maintenance of minimum balance, enabling customers to access banking services without balance requirements.

Subsequently, Punjab National Bank, Canara Bank, and Indian Bank have implemented similar measures over the past three months.Private sector banks generally maintain their fee structure, charging 6% of the shortfall in required minimum average balance or Rs 500 per quarter, whichever is less. Additionally, numerous banks have decreased their savings deposit interest rates recently to safeguard their profit margins in response to market conditions.