ICICI Bank’s Minimum Balance Hike May Boost Liquidity But Risk Middle-Income Customer Churn: SEBI Analysts

ICICI Bank shares slipped on Monday, after the private lender increased its minimum average balance (MAB) requirements.

On Saturday, ICICI Bank announced a significant hike in its MAB requirements effective August 1. In metro and urban areas, the MAB has been raised from ₹10,000 to ₹50,000. In semi-urban areas, the MAB requirement has increased from ₹5,000 to ₹25,000, and in rural areas, from ₹2,500 to ₹10,000.

Customers failing to maintain the required balance will face a penalty of 6% of the shortfall or ₹500, whichever is lower. Pensioners are exempt, and charges can be waived under the Family Banking program if the collective balance meets 1.5 times the eligibility criteria.

What Is The Street Verdict?

The move signals a shift toward premiumization, aiming to attract affluent customers, improve cross-selling potential, and strengthen low-cost deposit inflows, said Vishal Trehan, a SEBI-registered analyst at Aauriga Quantrade.

It also supports liquidity management and net interest margin (NIM) protection as savings deposit rates have eased to 2.75% for balances up to ₹50 lakh, he added.

With a CASA ratio of around 45% and 35 crore savings accounts, ICICI could see a significant boost in average balances for new urban accounts, potentially doubling from the current ₹25,000 - ₹30,000 range.

However, this strategy comes with trade-offs. The steep hike may drive customer attrition, particularly among middle-income users, who might switch to PSU banks offering zero-balance accounts or private peers, like HDFC Bank and Kotak, with lower thresholds. Social media feedback already hints at churn risk, Trehan noted.

From a broader perspective, the policy raises financial inclusion concerns, as ₹50,000 represents nearly twice the monthly income of many urban households, potentially pushing them toward fintech and PSU options.

The bank is prioritizing high-value customer monetization and balance sheet optimization. Success will hinge on its ability to cross-sell premium products, retain profitable customers despite churn risk, and adapt quickly if rivals undercut with more inclusive offerings.

For ICICI Bank, the move aims to secure higher customer deposits, strengthening liquidity and supporting growth while aligning with a strategy to target more affluent customers and premium services, said SEBI RA Ujvin Nevatia.

In contrast, several public sector banks have removed MAB penalties altogether, making their services more accessible to a broader customer base. This divergence underscores a clear shift in the industry, private banks focusing on high-value clients, while PSUs push for inclusivity, Nevatia added.

RBI Fines Bank For Non-Compliance

In other news, the Reserve Bank of India (RBI) levied a ₹75 lakh penalty on ICICI Bank for failing to comply with regulatory guidelines on property valuation and the opening of current accounts.

Q1 Earnings Snapshot

ICICI Bank reported a 15% rise in Q1 net profit to ₹12,768.21 crore, surpassing estimates, with NII rising 8.4% to ₹21,634.46 crore. The gross NPA ratio declined to 1.67% from 2.15% while the net NPA ratio also fell to 0.41% from 0.43%.

Retail Still Bearish

Retail sentiment on Stocktwits has been ‘bearish’ for a while. It was ‘neutral’ a month ago.

YTD, the stock has gained over 11%.

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