What is Average Monthly Balance & How To Calculate

As you all know, In State Bank of India you have to keep the minimum balance of 5000 for your Saving account and if you do not have enough balance, you will get a penalty. You have to pay 100-120 penalty which deducted from your account every month.

Many people still do not understand what is Monthly Average Balance and how to calculate it?

So today I will tell you how to calculate the Monthly Average Balance and what you should do to maintain it.

What is Monthly Average Balance?

Many people still have many misconceptions about MAB and they don’t know how MAB is calculated.

Monthly Average Balance (MAB) means —

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Monthly Average Balance or MAB is defined as the sum of all the end of the day closing balance of your bank’s savings account divided by the number of days in that particular month. 

Example:Suppose MAB RS.5000 for your account, and you keep Rs.5000 for 30 days so –

5000 * 30 = 150000

Now divide 150000 by 30

150000 ÷ 30 = 5000

So here your monthly balance is Rs.5000

So In this way, all banks calculate Monthly Average Balance.

Now suppose you deposit 150000 on 1st of the month, and withdraw money on 2nd day, now your balance remains zero in the rest of the day, so end of the month your MAB will Rs.5000.

See how-

150000 you deposited on 1st day: 150000 ÷ 30 = 5000

Now if your balance is NIL in the rest of the day, your Monthly Average Balance 5000 will be considered and you will not get any charge.

See another example:

If you have to maintain Rs.10000 in your account, then see how bank will calculate it:

10000 * 30 = 300000

Total 3 lac, now it will divide the bank for 30 days.

300000 ÷ 30 = 10000

So at the end of the month there will be 10000 MAB.

Now suppose you deposit 300000 rupees on 1st day of the month and if you take out all the money on 2nd day, you will still have 10000 MABs.

300000 ± 30 = 10000

Some easy tips

Open Account in Public Sector Bank

In most of the private banks, you have to keep Monthly Average balance up to 10000, if you can not able to maintain this amount then you can open your account in Public sector banks like Canara bank, Punjab national bank, Bank Of Baroda, Syndicate bank.

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Most of Public sector banks provide you low balance saving account where you have to keep only Rs.5000 – 1000.

Open Account in the Branch of Urban or Rural Area

In Metro cities, you have to keep more monthly average balance than rural or urban area. So open your saving account at Urban/rural area branches where you have to keep lowest MAB.

Open Zero Balance Account

Many Private bank including Public sector provides you Zero balance saving account under Pradhan Mantri Jan-Dhan yojna (PMJDY).

In Jan-Dhan saving account you don’t need to maintain any monthly average balance, you can keep zero balance.

I hope now you got it what is monthly average balance and how to calculate it.