current account
mab requirements

The reason could be anything from a new salary account being opened every time one changes a job to a high-interest rate offered on fixed deposits by certain banks. Average Monthly Balance is the minimum amount of money that a customer must maintain in their bank account on a monthly basis. It is calculated by taking the sum of all the daily closing balances in the account during the month and dividing it by the number of days in that month. However, there is no criteria in case of basic savings account, zero balance accounts and online bank accounts.



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So, enjoy free access to all domestic Visa ATMs or carry-out NEFT transactions from your phone, all with one savings account. You can also calculate your average monthly balance with the help of a calculator given by HDFC bank. 3) If an account holder fails to maintain the QAB and the balance goes below the prescribed amount, the bank enforces penalty or non-maintenance charges. The QAB is calculated by adding the Closing Day Balances and dividing the sum by the number of days in the quarter. If you too had been a similar situation, read this article to know what average minimum balance is and how you can save yourself from paying the penalties.

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If the customer account have below average monthly balance then customer account is charged according to banks rule. However, on 20th November 2014, the RBI specified some revisions on the levy of penal charges on non-maintenance of minimum balance/quarterly average balance in savings account. However, it is important to understand that many people don’t know how the average balance is calculated. This is because it is arrived at by adding up the closing balance in your account every day divided by the number of days in that month. Several experts say that it is imperative to maintain a monthly average balance in your savings bank accounts.



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According to information obtained through an RTI filed in 2017, SBI had received Rs235 crore in fines from 3.89 crore normal savings accounts for failing to maintain a monthly average balance. This is from a PSU which has a far lower minimum balance requirement in comparison to most private sector banks in India. Imagine the combined amount earned by all banks for account holders breaching the minimum balance limit. There are different types of bank accounts that require an average monthly balance.

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5) The QAB or say, minimum balance requirements in public sector banks is usually less than that in private sector banks. The same holds true for the penalty of non-maintenance of QAB. While Banks like SBI, PNB ask for around Rs.500 as QAB for normal savings account, private bodies such as HDFC, AXIS bank or ICICI demand as high as Rs.10,000 for QAB..

Some banks may require a higher minimum balance while others may have no minimum balance requirement at all. For instance, let’s consider the AMB requirement of one of the leading banks in India, HDFC Bank. While implementing the withdrawal of your money for initiating a payment, use your debit card offered by the bank on a requisite day. Also, using the online/POS payment method can be a good way too. This is because withdrawing money in advance will hold back the chances of earning interest on your savings bank account.

When is the interest earned on my saving account deposited/credited into my account?

MAB is not to be confused with the minimum account balance, which is the minimum balance your savings account must have in order for you to avoid penalties. The MAB requirement may be higher for a priority/premium bank account. For regular savings account, the MAB charges (approx. range) by various banks are mentioned in the table below. This is why there’s a need for maintaining a minimum average balance in an account. ICICI – The MAB requirements for an ICICI Regular Savings Bank Account are Rs 10,000, Rs 5,000, Rs 2000, and Rs 1000 for metro, urban, semi-urban, rural, and gramin locations, respectively. If the balance falls below the monthly average balance, a penalty of 6% of the shortfall or Rs. 500, whichever is less, is assessed.

  • Average Monthly Balance is the minimum amount of money that a customer must maintain in their bank account on a monthly basis.
  • This is because withdrawing money in advance will hold back the chances of earning interest on your savings bank account.
  • Hence, Rahul’s monthly average balance is much above the mandated Rs 10,000 and he will not be charged any penalty.
  • Your task is to keep the required amount in your savings account to avoid any fine on your name.
  • It is the responsibility of customer to keep their communication details updated with the bank to receive such notifications.

While doing this, you need to include all the holidays and working days. Now, with the help of the account statement given above, we will calculate the “Monthly Average Balance” of Mr S. You may find the step-by-step calculation in Table 2 provided below. By now you must have understood that it’s quite simple to follow the norm. Thus, you must deposit INR 19,667 by the 31st of the Month to maintain the required MAB of INR 10,000.

Required Average

The standard quarters are set as April-June, July-September, October-December, and January-March. In accordance with these quarters, the QAB is calculated. Interest will be credited in the savings account on quarterly basis. However Private banks like ICICI Banks, HDFC bank, Axis Bank etc have Monthly balance as high as Rs.10,000 and charges a high penalty for not maintaining it , It some times can be as high as Rs.750.

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SBI – For SBI account holders in rural areas, an average minimum balance of Rs. 1000 per month, Rs. 2000 in semi-urban areas, and an AMB of Rs. 3000 in the metropolis. You can calculate MAB by dividing the total closing balances by the number of days in a month. Banks also use the cash deposited by account holders for different purposes. The bank required him to maintain a monthly average balance of Rs 10,000.

For example, in a 30-day month, the daily closing balance on each day is added and divided by 30 to get the average monthly balance. The charges for not maintaining MAB differ from one bank to another. Let us say your bank asks that you maintain INR 10,000 as the average monthly balance. Now say, you could maintain INR 8964 as MAB in a 31-days month for the first 28 days. In this instance, you are short of INR 1036 to maintain the required MAB of INR 10,000. As such, to avoid the penalty for the remaining 3 out of 31 days, you should have balances of at least INR 19,667.

But before that I have taken a moment on what Quarterly Average Balance means and how it is determined. I hope it helps you understand the minimum balance requirement of your bank account. So, total balance comes to Rs 3.01 lakh and the average monthly balance is Rs. 10,033. Hence, we see that this is above the required minimum average balance and no penalty will be levied. However, the calculation of the minimum monthly average balance and quarterly average balance is the similar. Customers are required to maintain a minimum monthly average balance as per the Savings account variant held with Standard Chartered Bank.

Ultimately, the average for the month needs to total Rs 5,000. Finbanking is a finance and banking Blog website that provides the latest updates and news about the financial industry and banking sector. It covers a wide range of topics such as personal finance, investing, banking, and the economy. So, merely putting back the amount that you have taken earlier, won’t be sufficient to fulfill the average balance criteria. In fact, if you add a few days gap to it, the average balance will keep falling for the number of days it was in deficit.

Kotak Mahindra Bank does not control or endorse such websites, and bears no responsibility for them. By clicking on the hyper-link, you will be leaving and entering our partnered website which will display recurring payment details enabled on your Kotak Bank Credit / Debit Card. The minimum Average Monthly Balance requirement in an Edge Savings Account is Rs. 10,000/-.

The penalty for not maintaining the minimum balance varies from bank to bank. Some banks charge a fixed amount as a penalty, while others charge a percentage of the shortfall in the minimum balance. In some cases, the penalty may be waived off if the customer has a good relationship with the bank or if the shortfall is for a short period.

This article is very helpful and informative for calculating monthly average balance. One can get every details in single Infographic, the way you explain makes complicated things simple. As per my research the starting date for counting monthly average balance will be 1st august. Still you should contact to your bank and confirm the date. Designed to suit the requirements of the new-age professional, Kotak Edge Savings Account gives you a little bit extra than a regular savings account.

Enter the activation code sent to your registered mobile number to complete the registration process and experience the convenience of mobile banking on your mobile phone with ease. The figures shown in the infographic are not accurate. By clicking on the hyper-link, you will be leaving and entering website operated by other parties.


Quarterly Average Balance refers to the sum of all of the closing balances of a quarter divided by the number of days in a quarter. Calculate the “Monthly Average Balance” by dividing the sum of weighted account balances by the number of days in the particular month. Since the daily closing balance is averaged out, the account holder may have more funds than MAB on some days that can make up for the shortfall on some days. People often misunderstand the monthly average balance as the bank’s way of controlling the amount of money you spend – and using it as a mode of levying penalties if you fail to comply.

average balance requirement

As such, you must deposit the required sums so that your MAB at the end of 31 days is INR 10,000 or higher. Account holders can opt for mobile banking, internet banking, or call the customer care center of their bank to know about the MAB requirement. In case you don’t want to block this amount for the whole month then there is a clever way of doing this. After that, you can bring your balance even below zero as you have already fulfilled the requirement levels.

The minimum average balance varies with the different saving account and the branch locality. For example, a specialised savings account or savings account that caters to the high networth individuals will be higher than a normal savings account. Also, the savings account opened in a rural or semi urban area will have lower minimum average balance than a bank branch in the urban areas. The concept of average monthly balance is used by banks to determine the minimum balance that a customer must maintain in their account.

You can follow some of the tips to ensure that you follow the how is average monthly balance calculated norm. It would be highly beneficial so as to protect yourself from penalties. Now let’s look at Quarterly Average Balance as some of the banks follow this norm. Before beginning the math, let’s consider a hypothetical account statement of Mr S. Table 1 shows the account statement which belongs to the month of March 2017.

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