Private lender, HDFC Bank has raised the minimum balance requirement for its customers of savings accounts. The bank has hiked the floor level to Rs 10,000 for those having accounts in metro cities while people staying in the semi-urban areas are required to keep a minimum of Rs 5,000 in their saving accounts.

However this change is applicable only to the new customers of the bank where as the existing ones will continue to maintain the earlier minimum balance. "We have not changed our minimum balances for quite some time. Over the time, the income levels of customers have gone up substantially. For older customers, we had an agreement on their minimum balances, which is not being changed," said an official with HDFC Bank.

Almost all private banks have norms whereby saving accountholders are required to maintain a minimum average balance for Rs 5,000 in urban areas and Rs 2500 in semi-urban and rural areas.

On the other hand foreign lenders like Citibank have a requirement of an ‘average monthly relationship' at Rs 10,000 that could go up to Rs 30 lakh. An average monthly relationship refers to total deposits with the bank under various schemes. HSBC has kept this level at a range between Rs 25,000 and Rs 25 lakh.

The main reason for this imposition seems to be the free cash withdrawal from the ATM of a third party. Free ATM withdrawals from April 1st are expected to increase the cost of funds for most banks and therefore the banks are taking moves that would neutralize the effect. They are also expected to raise the inter-bank fee ever since this new service has been applicable.

Currently HDFC has around 10-11 million savings account customers that maintain a minimum average balance of Rs 32,000 against the minimum requirement at Rs 5,000.

Recently even ICICI had raised its floor level for balances of saving accounts but the hike was applicable for all including its existing customers.