Middle class under fire? Jay Kotak slams Rs 50,000 bank minimum balance rule, warns of impact on 90% of Indians

Jay Kotak, son of veteran banker Uday Kotak, has voiced strong concern over steep hikes in minimum average balance requirements for savings accounts, recently announced by ICICI Bank. Without naming the bank, Kotak said such rules ignore India’s income reality.

“Every Indian must access our financial sector. Ninety percent of India makes less than Rs 25,000 a month. A Rs 50,000 minimum balance implies a sum equal to around 94% of Indians’ monthly income is to be left with the bank at all times, else a fee!” he wrote on X.

Kotak described the middle class as those earning below Rs 25,000 per month, noting that anyone above that earns more than 90% of the country. He argued that requiring almost an entire month’s income to sit idle just to avoid charges was impractical. He also promoted digital-first banking, saying, “For banks, the physical cost to serve is high, which is why digital-first banking is the future.”

Every Indian must access our financial sector. 90% of India makes less than ₹25,000 a month. A ₹50,000 minimum balance implies a sum equal to ~94% of Indians monthly income is to be left with the bank at all times, else a fee!

Implication: physical cost to serve may be high.… pic.twitter.com/x2lzrzgBD7

— Jay Kotak (@jay_kotakone) August 9, 2025

What changes from 1 August 2025
ICICI Bank has announced that new customers opening savings accounts from 1 August 2025 will face higher monthly average balance requirements.

• Metro and urban branches: Rs 50,000 (previously Rs 10,000)
• Semi-urban branches: Rs 25,000 (previously Rs 5,000)
• Rural branches: Rs 10,000 (previously Rs 5,000)

The revised rules do not apply to existing customers unless the bank notifies them. Salary accounts and Basic Savings Bank Deposit Accounts will continue to have zero-balance terms.

Penalties and fees
For those who do not maintain the new minimum, ICICI Bank will charge 6% of the shortfall or Rs 500, whichever is lower.

The bank has also revised cash transaction limits. Customers get three free deposits a month; each extra deposit costs Rs 150. Monthly deposits over Rs 1 lakh will attract Rs 3.5 per Rs 1,000 or Rs 150, whichever is higher. Third-party deposits and withdrawals are capped at Rs 25,000 per transaction.

Cash deposits through machines outside business hours, if above Rs 10,000 in a month, will incur an extra Rs 50 fee on top of standard charges.

ATM use at non-ICICI machines in Mumbai, Delhi, Chennai, Kolkata, Bengaluru, and Hyderabad will cost Rs 23 per financial transaction and Rs 8.5 per non-financial transaction beyond the first three free transactions.

RBI leaves decision to banks
Reserve Bank of India Governor Sanjay Malhotra has clarified that the central bank does not regulate minimum balance requirements.

“The Reserve Bank of India has left it to the banks to decide the quantum of minimum average balance,” he said at a financial inclusion event in Gujarat. “Some banks have capped it at Rs 10,000, others at Rs 2,000, and some have done away with it altogether. This issue does not fall under the regulatory domain.”

Industry split on approach
ICICI Bank’s move comes as several public sector banks, including SBI, Punjab National Bank, Canara Bank, and Indian Bank, have dropped penalties for non-maintenance of minimum balance to widen access. SBI started the trend by removing such charges entirely.

Private sector banks have largely retained penalty structures, typically charging 6% of the shortfall or Rs 500 per quarter. Many have also reduced interest rates on savings deposits in recent months to protect margins.

This divergence signals a growing gap between private and public sector strategies on financial inclusion and customer retention.

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