Minimum balance decided by banks, not regulated by RBI, says Governor Malhotra

Reserve Bank of India (RBI) Governor Sanjay Malhotra clarified that banks are free to set the minimum balance requirement for savings accounts, as it does not fall under the RBI's regulatory purview.

He made the comment while speaking to reporters on the sidelines of a 'Financial Inclusion Saturation Drive' event held at Gozaria village panchayat in Mehsana district.

Asked about a private bank increasing the minimum balance required for savings accounts, Malhotra said, "The RBI has left it to individual banks to decide on what minimum balance they want to set. Some banks have kept it at ₹10,000, some have kept ₹2,000, and some have exempted customers. It is not in the regulatory domain (of RBI)."

In a recent decision, private lender ICICI Bank increased the minimum balance requirement for those opening new savings accounts from August 1.

The minimum average monthly balance (MAB) has been increased five times to ₹50,000 from ₹10,000 on a savings bank account, as per the lender's website. Similarly, MAB for semi-urban locations and rural locations have been increased five times to ₹25,000 and ₹10,000, respectively.

Meanwhile, the State Bank of India has decided not to penalise savings account holders if they do not keep a minimum balance.

Traditionally, public sector banks have lower balance requirements compared to private lenders, with the requirement waived for Jan Dhan accounts. Several public sector banks have done away with the requirement, and customers who fail to maintain the minimum prescribed balance do not need to pay a penalty.