Two days after ICICI Bank sharply hiked the minimum monthly average balance (MAB) requirement in customer accounts to Rs 50,000, Reserve Bank Governor Sanjay Malhotra said the MAB requirement is “not under regulatory domain”.
“The RBI has left it to the banks to decide on the minimum balance. Every bank has its own minimum balance requirement. This is not under any regulatory domain,” Malhotra said on the sidelines of an event here. This means each bank is free to fix any amount it desires as the minimum monthly average balance in accounts.
The ICICI move has come at a time when public sector banks were scrapping the MAB requirement.
ICICI Bank, the country’s second-largest private lender, sharply increased the minimum monthly average balance from Rs 10,000 to Rs 50,000 for all accounts opened in metro and urban areas starting August 2025. For semi-urban branches, the new MAB requirement has increased to Rs 25,000 from Rs 5,000 earlier. In the case of rural branches, accounts will require a minimum balance of Rs 10,000, compared to the earlier Rs 2,500, according to the bank.
ICICI Bank has said if the minimum balance criteria is not met by the customer, there will be a penalty of 6 per cent of the shortfall in required MAB or Rs 500 whichever is lower. ICICI Bank is the first bank to go for a steep hike in MAB.
The country’s largest lender, State Bank of India, has not levied non-maintenance penalties since March 2020.
According to data shared by Minister of State for Finance Pankaj Chaudhary in response to a question in the Rajya Sabha, state-owned lenders collected Rs 8,932.98 crore as penal charges on non-maintenance of minimum Average Monthly Balance in the five years starting 2020-21 and up to 2024-25.
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The data shared by the finance ministry on Tuesday comes days after Union Bank of India joined a host of other PSBs in waiving off penalties on non-maintenance of minimum balances, an issue that has been a sensitive one for some time. Other PSBs that have ended these charges from the ongoing quarter include Canara Bank, Bank of Baroda, Punjab National Bank, Indian Bank, Bank of India, and Central Bank of India, the finance ministry said on Tuesday.
The finance ministry last week informed the Parliament that public sector banks (PSBs) collected almost Rs 9,000 crore as penalties as customers failed to maintain the MAB over a five-year period.
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