ICICI Bank’s higher minimum balance: Here's how to make your idle money work for you

How to park your idle money?

ICICI Bank’s decision to hike the minimum average balance (MAB) for new savings account customers in metro and urban areas from Rs 10,000 to Rs 50,000 starting August 1, is more than just a tweak to account rules. It’s a nudge — or perhaps even a shove — for people to rethink how they treat “idle money”.

If new customers fail to maintain the higher balance, they face penalties. While the change applies only to new account holders, for now, financial experts see it as sign of where the industry is headed. Banks want you to keep more money parked with them but give only modest returns.

A savings account offers undeniable benefits: safety, quick access, and deposit insurance of up to Rs 5 lakh. But with interest rates averaging 2.5 percent–3.5 percent, your money is barely working. At these rates, even a Rs 50,000 balance won’t earn enough in a year to cover two dinners at a mid-range restaurant.

“Keeping a large chunk of money in a savings account just because it feels safe is a missed opportunity,” said Viral Bhatt, Founder of Money Mantra. “It’s important to differentiate between money you need for emergencies and money that can be put to work.”

Also read: ICICI Bank minimum average balance now Rs 50,000 — How to calculate MAB, penalty and more

That’s where liquid funds enter the conversation for very short term needs.

These debt mutual funds invest in ultra-short-term instruments such as treasury bills, certificates of deposit, and commercial paper. Historically, they’ve delivered returns in the 6 percent–7 percent range, almost double the average savings account yield.

"Liquidity is hardly an issue. Most liquid funds allow redemption in a single day and some offer instant withdrawal facilities of up to Rs 50,000 per day," Bhatt said.

Of course, liquid funds aren’t without risk. There’s no formal capital guarantee and returns can fluctuate. But for surplus funds that don’t need to sit idle, they strike a better balance between accessibility and growth.

Also read: ICICI Bank’s Rs 50,000 MAB move: A bold bet or a blunder? Let the market decide

“For short-term money like funds earmarked for expenses in the next few months, liquid funds can be a smart choice,” Bhatt said. “They’re not meant to replace your emergency savings but to supplement them.”

The ideal approach, according to Bhatt, is layered. First, maintain the MAB to avoid penalties. Then, keep one to two months’ worth of expenses in your savings account as a readily accessible emergency buffer. Anything above that can move into liquid funds, where it can earn higher returns without being locked away. “Review this setup every quarter,” he advises. “Your expenses, interest rates, and goals will change — your allocation should too.”

ICICI’s move is a reminder that idle money has an invisible cost. Inflation chips away at its value and the opportunity to earn more quietly slips away. The choice isn’t between a savings account or a liquid fund — it’s about using both strategically. The savings account for instant needs, the liquid fund for surplus growth.

“Your money should always be working even when you’re not,” said Bhatt.