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ICICI Bank’s Minimum Balance Hike: A Brazen Bet on Elitism

Posted on 11 August 202511 August 2025 by Pradeep Jayan

ICICI Bank’s recent decision to raise the minimum average balance (MAB) for new savings accounts in metro and urban areas from ₹10,000 to a staggering ₹50,000, effective August 1, 2025, is nothing short of a calculated pivot toward elitism. This fivefold increase, the steepest among India’s domestic banks, exposes a troubling trend in private banking: prioritizing profit over accessibility.

While the bank claims this move targets premium customers, it effectively alienates the middle and lower-income segments, undermining financial inclusion in a country where economic disparity is already stark. This policy is not just tone-deaf; it’s a deliberate step toward transforming banking into a luxury service for the affluent.

The numbers speak for themselves. For new urban customers, maintaining ₹50,000 as an average monthly balance is a high bar, especially when juxtaposed against India’s per capita income, which hovers around ₹2 lakh annually. For many, locking up such a sum in a low-yield savings account—offering a paltry 2.75% interest for balances up to ₹50 lakh—is an opportunity cost they can ill afford.

Compare this to mutual funds or fixed deposits, which often yield higher returns, and the policy seems designed to penalize the average saver. Add to that the penalty for non-compliance—6% of the shortfall or ₹500, whichever is lower—and ICICI is essentially taxing those least equipped to bear it. This isn’t banking; it’s a financial trap for the unwary.

ICICI’s strategy reeks of premiumization, a thinly veiled attempt to court high-net-worth individuals while sidelining the mass market. By setting the highest MAB requirement among peers—HDFC Bank demands ₹10,000, and SBI scrapped minimum balance rules in 2020—ICICI is betting on wealthier clients who might cross-sell into lucrative products like wealth management or premium credit cards. This shift aligns with a broader trend among private banks, but it’s a risky gamble. India’s growing middle class, not its ultra-rich, drives banking volume.

By raising barriers to entry, ICICI risks pushing customers toward competitors or no-frills Basic Savings Bank Deposit Accounts (BSBDAs), which lack the features of regular accounts.

The timing couldn’t be worse. With inflation biting and disposable incomes stretched, a ₹50,000 minimum balance feels like a slap in the face to urban customers already grappling with rising costs. Social media reflects the outrage calling it “daylight robbery” and mocking ICICI’s disconnect from India’s economic reality.

The backlash isn’t just noise; it signals a potential exodus to banks with more reasonable thresholds or digital platforms offering zero-balance accounts.

Defenders might argue that ICICI is merely optimizing for profitability in a competitive landscape. Banks face operational costs, and high-value depositors generate better margins. Yet, this logic falters when you consider the broader social contract of banking in India, where financial inclusion is a stated priority. Public sector banks like Canara Bank and Bank of Baroda have waived MAB penalties, recognizing that accessibility drives long-term growth.

ICICI’s move, by contrast, feels like a step backward, reinforcing a two-tiered banking system where private banks cater to the elite, and public banks serve the masses. In the end, ICICI’s decision isn’t just about numbers; it’s a statement of intent. By hiking the MAB to ₹50,000, the bank is doubling down on exclusivity, betting that India’s affluent will offset the loss of its broader customer base.

It’s a bold but shortsighted move, one that risks alienating the very demographic that fuels India’s urban economy. For a bank of ICICI’s stature, this isn’t just a misstep—it’s a betrayal of the inclusive banking ethos India desperately needs.

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