ICICI Bank increases minimum balance necessity for new metropolitan and urban bank accounts to Rs 50,000.
ICICI Bank Increases Minimum Monthly Average Balance Requirements
ICICI Bank, India's second-largest lender, has announced new minimum monthly average balance (MAB) requirements for its savings accounts, effective August 1, 2023. The new MAB rules vary depending on the location and type of customer.
In metro and urban areas, the minimum monthly average balance for new account holders has been raised to Rs 50,000, a significant increase from the earlier Rs 10,000. For those in semi-urban areas, the requirement is Rs 25,000, while it remains at Rs 10,000 for customers in rural areas.
The new MAB rules apply only to new savings accounts opened on or after August 1, 2023. Existing accounts maintain the previous lower MAB requirements: Rs 10,000 for metro/urban and Rs 5,000 for semi-urban/rural customers.
If the monthly average balance falls below the new thresholds, the bank charges a penalty of 6% of the shortfall amount or Rs 500, whichever is lower. There are some exemptions: pensioners and customers enrolled in family banking programs that meet combined balance conditions may avoid penalties.
The MAB is calculated as the simple average of day-end balances in the account during the calendar month. Customers are not required to maintain the MAB at all times, but the average must meet the minimum.
In addition to the MAB changes, ICICI Bank has introduced new charges for cash deposits and withdrawals. New account holders are allowed three free cash deposits per month, after which Rs 150 per transaction will be charged. Cash withdrawals and deposits beyond Rs 1 lakh per month may incur additional charges.
The move is aimed at expanding ICICI Bank's premium customer base. This strategy is in line with a trend among India's largest private lenders, as several banks are softening their penalty structures to attract more affluent customers.
State Bank of India, the country's largest lender, has already scrapped all minimum balance charges, signalling a shift in the banking industry.
[1] ICICI Bank's official website [2] Business Standard [3] The Economic Times [4] Livemint [5] ICICI Bank's MAB calculation guidelines
- ICICI Bank, a significant player in the banking-and-insurance industry, has increased the minimum monthly average balance (MAB) requirements for its savings accounts, hinting at an aim to expand its premium customer base.
- In the competitive finance market, ICICI Bank's move to raise the MAB for new account holders in metro and urban areas to Rs 50,000, a substantial leap from Rs 10,000, demonstrates a focus on attracting more affluent customers.
- The introduction of new charges for cash deposits and withdrawals by ICICI Bank is likely to impact its business model, particularly in the exchange of cash, a key aspect of traditional banking.
- TheDefi (decentralized finance) industry, which offers an alternative to traditional banking, might benefit from the MAB changes and new charges implemented by ICICI Bank, as users may begin to explore alternative, digital solutions for their financial needs.
