ICICI Bank's Big MAB U-Turn: What Went Down & What It Means

Have you ever seen a company make a big change, only to walk it back just days later? Well, that's exactly what just happened in the Indian banking world. ICICI Bank, one of the country's largest private banks, recently found itself in hot water after a decision that sent ripples of shock and frustration through its customer base, forcing a rapid and public U-turn.

Key Highlights

• ✓ After customer outrage, ICICI Bank slashed its new Minimum Average Balance (MAB) for urban areas from a staggering Rs 50,000 down to Rs 15,000.
• ✓ The initial hike represented a five-fold increase from the previous Rs 10,000 requirement for new accounts.
• ✓ MAB for semi-urban and rural locations were also revised downwards to Rs 7,500 and Rs 2,500 respectively.
• ✓ This move contrasts sharply with banks like State Bank of India (SBI), which completely scrapped MAB rules back in 2020.
• ✓ Certain accounts, including salary, senior citizen, and PM Jandhan Yojana accounts, are exempt from these new MAB rules.

The Initial Shock: A Staggering Five-Fold Hike

Let’s set the scene. On a Saturday, ICICI Bank quietly announced a major change for anyone looking to open a new savings account on or after August 1. For customers in urban areas, the required Minimum Average Balance, or MAB, was being jacked up from a reasonable Rs 10,000 to an eye-watering Rs 50,000. That's a 500% increase overnight, and it caught everyone by surprise.

It wasn't just city dwellers who felt the squeeze. For new customers in semi-urban locations, the MAB was hiked from Rs 5,000 to Rs 25,000. And in rural areas, it went from Rs 2,000 to a new requirement that was later revised. This move felt completely out of step with the rest of the industry, where the trend has been towards making banking more accessible, not less.

The Power of Pushback: When Customers Speak Up

Here's where the story gets really interesting. The reaction was immediate and intense. A "massive pushback" from customers erupted across social media and other channels. People were understandably frustrated by the sudden and steep increase, and they made their voices heard loud and clear. It was a powerful reminder that in today's connected world, customers hold a lot of sway.

To its credit, the bank listened. Acknowledging the "valuable feedback" from its customers, ICICI Bank quickly moved to reverse its decision. In a statement posted on its website, the bank said, "Following valuable feedback from our customers, we have revised these requirements to better reflect their expectations and preferences. We thank our customers for their continued trust and feedback, which help us serve them better." This was a direct admission that the initial move was a misstep.

💡 What's Interesting: Even after the rollback, the new MAB requirements represent a 50% hike across all segments compared to the pre-August 1 levels. For instance, the urban MAB went from Rs 10,000 to Rs 15,000.

The New Deal: Understanding the Revised MAB

So, where do things stand now? The bank performed a significant U-turn, but it didn't go all the way back to the old numbers. The revised MAB for new urban customers is now Rs 15,000. While that's a huge relief compared to Rs 50,000, it's still Rs 5,000 more than the original requirement.

Similarly, the MAB for new accounts in semi-urban areas has been reduced to Rs 7,500 from the proposed Rs 25,000. For rural locations, the new figure is Rs 2,500. It's crucial to note that for existing customers who opened their accounts before July 31, 2025, the old MAB rules still apply—Rs 5,000 for rural and semi-urban areas.

And what happens if you fail to meet this new MAB? The penalty is pretty clear: customers will be charged 6% of the shortfall in the required MAB, or a flat fee of Rs 500, whichever amount is lower. For context, the interest earned on the balance in an ICICI Bank savings account is currently 2.5% per annum.

The All-Important Exemptions

It's really important to know who isn't affected by all this back-and-forth. The bank has been clear that these revised MAB requirements are not applicable to everyone. If you have a salary account, you're in the clear. The same goes for senior citizens and pensioners over the age of 60.

Furthermore, accounts opened under the Basic Savings Bank Deposit Account (BSBDA) / PM Jandhan Yojana schemes are exempt, as are special accounts for people with special needs. And, as mentioned before, if your account was opened before July 31, 2025, these new rules don't apply to you. This is a key piece of information that brings relief to millions of existing customers.

The Broader Context: A Trend Toward Financial Inclusion

ICICI Bank's initial decision was so jarring because it flew in the face of a much larger trend in Indian banking. The country's largest lender, State Bank of India (SBI), made headlines when it completely scrapped the minimum balance rule back in 2020. This was a massive step towards promoting financial inclusion, making basic banking services accessible to more people without the fear of penalties.

Many other public sector banks (PSBs) have followed SBI's lead. Lenders like Punjab National Bank, Canara Bank, and Indian Bank have either waived off penal charges entirely or rationalised them significantly. The government has also taken note of this positive trend. Minister of State for Finance, Pankaj Chaudhary, even stated in the Lok Sabha on August 13, 2025, that PSBs have been removing these charges as a strategic business decision to help grow their deposit bases.

This is what made ICICI's move so puzzling. At a time when the public sector was moving towards zero-MAB accounts to encourage more people to join the formal banking system, a major private bank seemed to be moving in the opposite direction, creating higher barriers to entry. The subsequent rollback shows that the market—and the customers—have a clear preference for more inclusive policies.

Conclusion

The bottom line is this: customer voices were heard, and they made a real impact. The story of ICICI Bank's MAB hike and rapid reversal is a fascinating case study in corporate decision-making and public response. While the bank's U-turn from the staggering Rs 50,000 MAB was a necessary correction, the final landing spot of Rs 15,000 for urban accounts is still a notable increase from where things were before.

It serves as a powerful reminder that banking policies don't exist in a vacuum. They directly affect people's ability to manage their finances, especially as the industry continues to debate the best path toward greater financial inclusion for all. For now, customers have a clearer picture of the new rules, but the memory of this brief but intense chapter will likely linger for some time.