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HomeMarket NewsICICI Bank’s new minimum balance rule could backfire in long run: Equirus Securities
Rohan Mandora, Associate Director at Equirus Securities, shared his outlook on State Bank of India’s first quarter results, saying public sector banks are likely to see less pressure from the second quarter as the repo rate impact has already played out for most of them.
ICICI Bank’s decision to increase the minimum account balance (MAB) requirement could have an adverse impact in the medium to long term, according to Rohan Mandora, Associate Director at Equirus Securities.
Mandora said, while most banks are targeting higher MAB customers, “explicitly shunning the smaller MAB customers may not be the right thing to do.”
Young customers, such as college students, often open their first bank account with low balances, but these accounts can become primary banking relationships over the next five to ten years. Missing such opportunities, Mandora noted, could affect a bank’s current and savings account (CASA) strategy.
He added that ICICI Bank has, in the past too, not made efforts to retain customers with balances in the ₹10,000–₹20,000 range if they were willing to leave. “Specifically calling it out that we don’t want to focus on a smaller segment… may not be the right thing to do,” Mandora said.
Also Read | ICICI Bank's sharp hike in minimum balance for savings accounts can raise margins and brows
Salary accounts will continue to have zero minimum balance requirements, but the self-employed segment, which also holds substantial balances, is a growth area.
Mandora also shared his view on State Bank of India's (SBI's) first quarter results. He said the quarter saw net interest margin (NIM) compression, but for the second quarter, PSU banks are expected to see less pressure as the repo rate impact has already played out for most of them. Private banks, however, may face more NIM pressure in the second quarter due to the timing of repo transmission. For SBI, he expects “the second half would see improvement in NIMs.”
Also Read | ICICI Bank minimum balance hike FAQ: Changes for savings accounts, charges and more
Mandora also flagged asset quality in smaller ticket secured segments such as commercial vehicles and small-ticket loans against property, as a monitorable. This could be linked to the MFIN 2.0 guidelines, which have made it harder for some customers to refinance existing loans, alongside broader concerns of over-leveraging and a weak economy.
For the full interview, watch the accompanying video
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