At times we come across terms called as Quarterly Average Balance and Monthly Average Balance for a Savings Bank Account. If we have a savings account or current account we need to maintain minimum balance in the account as per the account you hold. Minimum balance differ in case of different accounts.
Amount of balance maintaining varies from bank to bank, and differs on the account holder's location such as Urban, Semi-urban and Rural or category of account Normal, Privilege, Platinum, etc. However, this is not applicable for salary accounts.
Quarterly Average Balance (QAB)
It does not mean that you need to maintain it on daily basis. Banks take balance for each day in the quarter and are summed up and it is divided by the number of days in the quarter to arrive at the QAB maintained.
If the QAB is less than Rs 10,000, charges are levied on your account and amount is directly debited.
Monthly Average Balance (MAB)
Only difference is MAB computed every month. Here the bank will add day end balances every day of the month and divide by number of days in the month. This MAB is computed.
As informed earlier charges differ from bank to bank and account to account. To quote, let's take an example of HDFC Bank. They compute average balances on a quarterly basis.
Minimum Balance - Average Monthly Balance (AMB) Requirement:Rs 10,000 in Metro / Urban branches and Rs 5, 000 Semi-Urban / Rural branches
Charges levied for not maintaining minimum balance
For Urban/Metro branches:
If AMB in the account is between Rs 5,000 to Rs 10,000, a charge of Rs 250 per month would be levied.
If AMB is less than Rs 5,000, a charge of Rs 350 per month would be levied.
For Semi-Urban/Rural branches:
If AMB in the account is between Rs 2,500 to Rs 5,000, a charge of Rs 250 per month would be levied.
If AMB is less than Rs 2,500, a charge of Rs 350 per month would be levied.
* Plus Applicable Service Tax & Education Cess
It's best to maintain the required balance especially if you have an account with private sector banks, since their charges for not maintaining the balance can be steep. Government owned banks on the other hand do not levy much charges and the balance required is very low.