ICICI Bank Lowers Minimum Balance Requirement After Customer Backlash

ICICI Bank Ltd., India's second-largest private lender, has announced a reduction in the minimum average balance (MAB) requirement for its new savings accounts. Following widespread criticism from customers, the bank has lowered the MAB from ₹50,000 to ₹15,000 for accounts established in urban areas.

This change comes shortly after the bank had raised the minimum balance from ₹10,000 to ₹50,000 just days prior. The backlash from customers prompted ICICI Bank to reassess its policies. In a statement released on Wednesday, the bank acknowledged the feedback and expressed a commitment to adapt to customer expectations.

Under the new requirements, the minimum balance for new ICICI Bank customers is as follows:

Urban locations: ₹15,000

Semi-urban locations: ₹7,500 (down from ₹25,000)

Rural locations: ₹2,500 (previously ₹5,000)

Additionally, specific categories of customers, such as pensioners under 60 years and students from select institutions, are exempt from maintaining a minimum monthly balance.

Before this reversal, ICICI Bank's initiative to significantly raise the MAB had created concern among many consumers and financial commentators. The increase had been described as particularly burdensome for middle-income individuals. As stated by Shama Mohamed, a member of the Indian National Congress, "It's a blow to the middle-class. Now people will be penalised for not maintaining this huge amount."

This decision by ICICI Bank contrasts sharply with practices at other banking institutions in India. In 2020, the State Bank of India, the country's largest lender, had eliminated its minimum balance requirement entirely. Other banks typically maintain lower minimums, ranging from ₹2,000 to ₹10,000, making ICICI's initial hike particularly notable.

Financial analysts and customers alike had voiced concerns over the unrealistic expectation for many to keep a high minimum balance, especially given the financial pressures many households face. Commentators on social media reflected this sentiment, pointing out that even individuals with a moderate salary might struggle to meet such a requirement, given their everyday expenses and financial commitments.

Despite the backlash and subsequent policy change, ICICI Bank's shares experienced a minor decline of 0.07%, with stock trading at ₹1,421.15 on the Bombay Stock Exchange (BSE) on Wednesday. In contrast, the benchmark BSE Sensex rose by 0.38% to close at 80,539.91 points on the same day.

As banks continue to adapt to customer needs in an increasingly competitive environment, this incident underscores the importance of customer feedback in shaping banking policies. The recent adjustments by ICICI Bank may serve as a reminder to financial institutions regarding the necessity of aligning their services with customer expectations and socioeconomic realities.