Can RBI stop Banks from Fixing Minimum Balance Limit? What RBI Governor said?

Recently, ICICI Bank has increased minimum balance requirement to Rs.50,000 in savings account. If customers don’t maintain minimum balance, then they will have to pay penalty of upto 6% of the shortfall in required MAB or ₹500 whichever is lower. The new minimum balance limit set by ICICI Bank is as follows:

Branch Type	Earlier MAB	New MAB (Effective Aug 1, 2025)	Increase
Metro & Urban	₹10,000	₹50,000	₹40,000
Semi-Urban	₹5,000	₹25,000	₹20,000
Rural	₹2,500	₹10,000	₹7,500

This has led to a big debate and a lot of hue and cry. Why is Bank charging such huge amount for minimum balance and why is RBI not intervening?

Jay Kotak, son of banker Uday Kotak, has voiced strong concern over steep hikes in minimum average balance requirements for savings accounts, recently announced by ICICI Bank. Without naming the bank, Kotak said such rules ignore India’s income reality.

“Every Indian must access our financial sector. Ninety percent of India makes less than Rs 25,000 a month. A Rs 50,000 minimum balance implies a sum equal to around 94% of Indians’ monthly income is to be left with the bank at all times, else a fee!” he wrote on X.

He said that the middle class people earn below Rs 25,000 per month. He argued that requiring almost an entire month’s income to sit idle just to avoid charges was impractical.

The matter finally reached to RBI and RBI said that it does not have power to regulate the minimum balance limit set by banks.

The RBI Governor Sanjay Malhotra said that minimum balance requirements for saving accounts does not come under the regulatory domain of the Reserve Bank of India (RBI) and banks decide it as per their own business needs.

Malhotra said, “The Reserve Bank of India has left it to the banks to decide the minimum balance amount. Some banks have a minimum balance of Rs 10,000, while some have a minimum balance of Rs 2,000.”

The RBI had earlier asked Banks to inform customers about the changes in its service charges. RBI said that the changes should be brought to the notice of all customers apart from being disclosed on the bank’s website. All banks are advised to take immediate steps to update customer information so as to facilitate sending alerts through electronic modes (SMSs/emails etc) for effective implementation of the guidelines.

Click here to check ICICI Bank New Service Charges