ICICI Bank's sharp raise in the minimum average balance (MAB) requirement for new savings accounts appears to be a deliberate repositioning of its retail banking focus. The change, which raises the threshold five-fold across segments, is designed to attract wealthier customers, reduce the share of low-value accounts, and strengthen the bank’s profitability in a highly competitive market.
The revision affects an estimated 8-10 percent of fresh account holders, particularly those who already maintain a primary account elsewhere and keep only small sums in secondary accounts. Salary account holders, pensioners, students, and Jan Dhan account customers remain unaffected. Banking sources suggest the bank is intentionally discouraging clients who generate low returns, as these accounts often fail to cover servicing costs.
For those meeting the new ₹50,000 MAB, ICICI Bank is offering a package of complimentary services, including free fund transfers and cheque facilities. The bank last altered its MAB requirement in 2015, and this significant upward revision signals a bet that customers will maintain larger balances in exchange for value-added features.
Market analysts view the move as part of a broader effort to refine the customer base. By concentrating on the mass affluent segment, the bank aims to deepen engagement with high-value clients and reduce exposure to less profitable categories. One domestic brokerage analyst described the policy as a “carefully calibrated” shift, while a senior private-sector banker emphasised that profitability and cost efficiency are taking precedence.
The economic logic behind higher balance requirements stems from the cost structure of retail banking. Maintaining low-MAB accounts has become increasingly expensive, especially as interest margins are squeezed by competition and higher funding costs. In contrast, customers who maintain larger balances are more likely to use premium services such as investment products, credit cards, and wealth management, which generate higher margins.
With the rapid growth of fintech platforms, UPI-linked wallets, and neo-banks offering zero-balance accounts, traditional banks are differentiating themselves by focusing on segments willing to pay for personalised services. Industry experts note that this is as much about refining deposit quality as it is about liquidity management.
A banking analyst described the revision as a “time correction” rather than a sudden policy departure, noting that thresholds had remained unchanged for years. Although some short-term disruption is likely, analysts believe the change could quickly become industry standard, just as lower savings interest rates have been widely accepted over time.
Observers expect ICICI Bank’s decision to influence competitors, given its position as one of the largest private sector banks. The strategy not only strengthens margins but also creates more opportunities to cross-sell products such as insurance and advisory services to a carefully segmented client base.
While no other private banks have announced similar changes yet, the direction is clear: in an era of thin margins, lenders are prioritising quality relationships over sheer account numbers. But the real test will be how effectively banks can turn these higher-value accounts into long-term, profitable relationships.