ICICI Bank has recently revised its minimum average monthly balance requirement for new savings accounts opened on or after Aug. 1. Following public outcry over an abrupt increase, the bank reduced the minimum balance amount for urban and metro branches from Rs 50,000 to Rs 15,000.
Amid the uproar over ICICI Bank's hike and the subsequent revision, the minimum account balance could be a cause of concern for all savings account holders.
A minimum monthly average balance is the minimum amount every account holder should maintain in the savings account to prevent penalties. Banks finalise the limit based on the type of account and branch location. Although it may appear easy to have a bank account, going below this limit could lead to several financial implications.
Banks enforce minimum balance conditions to control operating expenses and provide banking facilities effectively. Current accounts require higher minimum balances, whereas savings accounts have lower requirements.
Consequences Of Falling Below The Minimum Balance
If the balance dips below the specified limit, banks typically charge a penalty. The penalty could be an absolute fee or a percentage of the deficit, and consecutive penalties could mount, eating into one's savings.
Moreover, falling below the minimum balance may temporarily limit certain facilities. Free cheque books, demand drafts, or debit card facilities could be withheld until your account is restored to normal status.
Ways To Avoid Penalties
Monitoring your account on a regular basis is the most important thing. Most banks will send SMS or mobile app notifications when your balance is nearing the minimum requirement. Automatic transfers from another account can also be set up in order to maintain the required balance at all times.
Savings accounts that fall below the minimum monthly balance for a long time might be temporarily frozen or become dormant. Such accounts cannot be operated until they are revived, typically after further verification.
Maintaining more than the minimum balance limit isn't a technicality. It helps you steer clear of penalties, allows continuous access to bank services and keeps your account active. Frequent checks, banking notifications, and being aware of your account's terms and conditions are necessary measures to manage your money more effectively.
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