The Reserve Bank of India (RBI) dropped a big update in 2025 and it’s already sparking debates. The guideline says banks are free to decide their own minimum balance rule for savings accounts. Earlier many people assumed RBI is the one who fix how much money you need to keep in the account, but the governor cleared it, RBI don’t set those limits, its up to individual banks.
This is not just small change. For customers it can mean a lot. Because one bank may say keep 5,000 rupee, another might ask for 50,000. Suddenly saving account which used to feel simple now become like shopping around, comparing who wants what balance.
What RBI Actually Said
RBI governor Sanjay Malhotra made it clear in statement, minimum average balance (MAB) is not regulated by RBI. Every bank is free to set its own norms. Which mean if ICICI Bank decides new customers must keep 50,000, its their call. If SBI wants to keep lower balance for rural account, thats also fine.
It sounds like freedom for banks, but on the ground it hit customers. For middle class families, keeping 50k locked in just to avoid penalty is not easy. Especially when cost of living is rising in 2025. Many say this will discourage small savers who depend on normal savings account.
ICICI Bank Move Started the Debate
ICICI Bank announced that from August 1, 2025, new saving accounts in metro and urban branches need 50,000 minimum balance. Earlier it was 10,000. Thats a big jump, five times more. For semi urban and rural branches, also there is increase but little less harsh.
This rule apply only for new accounts. Old account holders don’t need to worry unless bank send fresh notice. But still, the message is clear, private banks want high balance customer. The backlash started when people compared it with average income levels. Not everyone can afford to keep such large balance idle.
Why Banks Doing This
Banks say maintaining account has cost. Technology, branches, ATM, customer service all cost money. So asking customer to keep higher balance help bank manage funds. Also banks prefer wealthy customer because they bring more business like loans, insurance, investments.
But from customer side, it looks unfair. Because many open savings account just to get salary credited, pay bills, or keep small savings. Forcing them to maintain 50k or else pay penalty sound like punishment.
Public Reaction
Social media exploded. People started calling it anti-middle-class move. Jay Kotak, yes son of Uday Kotak, openly criticized it saying 90% of Indians will be affected. Many said banks are forgetting financial inclusion, the whole idea that every Indian should have easy access to banking.
Some said it will push people back to cash economy. If banks start asking too much, small earners may prefer to keep money in hand instead of account. That is opposite of what government has been pushing since digital India started.
RBI Position – Neutral But Clear
RBI is not interfering. They are simply saying, we don’t control this, banks decide. Its like RBI washed its hands off the issue. They regulate interest rates, monetary policy, but when it comes to MAB they leave it free market.
This can be seen both ways. On one side, competition will decide. If one bank keeps 50k and people don’t like it, customer can switch to other bank who keeps 5k. On other side, big private banks often set trends. If ICICI does it, HDFC or Axis might follow. Then choices shrink and customers suffer.
What It Means For You
If you plan to open new savings account in 2025, don’t just sign form blindly. First ask what is the minimum balance requirement. Also ask what is penalty if you fail to maintain it. Some banks charge 500 or 600 per month, which is big dent.
For existing account holders, rules mostly stay same for now. But banks can change with notice. So always read SMS and email from your bank, don’t ignore thinking it’s spam. Because sometimes these updates hide inside those long messages.
Zero Balance Option Still Exist
There is one relief. RBI guideline still mandate Basic Savings Bank Deposit Accounts (BSBDA). These accounts are zero balance, no penalty. But they come with restrictions like limited number of withdrawals and no fancy features. Still, for many small savers this is safe option. Public sector banks like SBI and Bank of Baroda still offer these easily.
So if you don’t want to risk paying penalty, you can open zero balance account. Its not glamorous, but it works.
Impact on Middle Class
Middle class is feeling squeezed from all sides. Prices are up, EMIs up, and now banks asking higher minimum balance. For a family with income of 30-40k per month, keeping 50k idle in account is impossible. That money is needed for rent, school fee, medical expense.
So many argue banks are pushing away the very customers who built trust in them. Remember Jan Dhan Yojana accounts? They brought millions into banking. If private banks start such high rules, all that inclusion effort looks wasted.
What Experts Say
Experts are divided. Some say it’s natural step. Banks are commercial, they want profitable customer, so they set rules. Market will adjust. Others warn it can damage trust. If people feel cheated by hidden charges or penalty, they may move to digital wallets, UPI, fintech apps instead of banks.
Already we see trend where youngsters prefer UPI wallets like PhonePe or Paytm for daily transaction. If savings account become costly, this shift will accelerate.
Possible Future
If other banks follow ICICI, we may see industry standard rise in coming years. Metro branches might all ask 50k or more. Semi urban may settle around 25k. Rural maybe 10k. This create tier system in banking.
But also possible that public banks will resist. To attract mass customer they may keep balance low. This will create gap between private and public banks. Customers will choose based on what they can afford.
Tips For Customers
- Compare banks before opening account – Don’t just go with brand name, check minimum balance rule.
- Ask about penalty – Know how much they charge if balance goes below.
- Keep buffer money – If rule is 10k, try to keep 12k or 13k so you don’t drop below by mistake.
- Consider zero balance account – Especially if you only want simple account for small savings.
- Stay alert – Banks can change rule anytime with notice, so check messages.
Final Thoughts
RBI’s new guideline in 2025 is like double-edged sword. On paper it gives freedom to banks, but in practice it puts pressure on customer. Some will manage, many will struggle. The concept of savings account, which was meant to be simple and accessible for everyone, is slowly turning into premium product for wealthy.
At the end, choice is in your hand. If one bank ask too much, walk away. India still has many banks who value common customer. Don’t stick to one out of habit. Banking is service, and service should work for you, not the other way.
So before you sign next form for saving account, remember this – RBI won’t protect you from high balance rule, only you can protect yourself by choosing right bank.
