Can RBI ask ICICI Bank and other lenders to reduce minimum balance requirement?

No, the RBI cannot ask ICICI Bank or any other lender to reduce their minimum balance requirement for savings accounts.

The Reserve Bank of India (RBI) on Monday, August 11, confirmed that it is up to individual banks to set their own minimum balance requirements. This was reiterated by RBI Governor Sanjay Malhotra on Monday.

The Governor told reporters that setting a minimum balance for savings accounts is not within the central bank's regulatory purview.

This statement comes as ICICI Bank, a private sector lender, has implemented significant changes to its minimum balance policy. For new savings accounts opened on or after August 1, 2025.

"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," the RBI Governor said.

What has ICICI Bank changed?

The minimum monthly average balance (MAB) for savings bank accounts till July 31, 2025 for ICICI Bank customers was ₹10,000.

Similarly, MAB for semi-urban locations and rural locations have been increased five times to ₹25,000 and ₹10,000, respectively, according to information available on the ICICI Bank website.

A question was recently raised in the Rajya Sabha regarding penalties for not maintaining a minimum average monthly balance (MAB) in bank accounts. In response to a question by Mallikarjun Kharge, Minister of State for Finance Pankaj Chaudhary provided the following details.

RBI guidelines on minimum balance penalties

RBI has issued several circulars, most notably on November 20, 2014, and July 1, 2015, which provide banks with guidelines on this issue.

Banks are allowed to set their own policies for penal charges, as long as these policies are approved by their Board of Directors.

The penalty must be a fixed percentage of the difference between the actual balance and the minimum required balance.

Banks are required to inform customers about the minimum balance requirement and any changes to it.

If a customer's balance falls below the minimum, banks must notify them before levying a penalty.

Meanwhile, several public sector banks have done away with the requirement, and customers who fail to maintain the minimum prescribed balance do not need to pay a penalty.