ICICI's bold move could enthuse other pvt banks

Strategic Shift

- MAHESH NAYAK

ICICI BANK'S RECENT decision to raise the minimum average balance (MAB) for new savings accounts by five times across segments marks a significant shift in the retail banking strategy — focus on customer profitability.

Banking industry sources said this move will impact around 8-10% of its new customers. "Currently, ICICI Bank (as well as other private sector banks) has 50% of its customers as salary accounts which are not impacted, neither are pensioners or students or people with Jan Dhan accounts. So, the impact will be on new customers who already have a primary account in another bank, and are looking to open another account in which they keep smaller amounts," said the source, adding that ICICI Bank is basically discouraging such customers because it is not profitable.

In addition, new customers who maintain the ₹50,000 MAB will be assured of many free facilities — no charges on their fund transfer, free cheque and others. Of course, the last time ICICI Bank had increased the MAB was in 2015. So it is betting that customers will be willing to keep a higher amount with the bank for services.