What is Monthly Average Balance (MAB)? How to Calculate?

Everyone has a bank account in today’s date. There is no money in the bank account, there is definitely a bank account. There is more than 1 bank account in the name of a person. When we have to maintain the Monthly Average Balance in all the accounts which are different from bank to bank. Have you ever thought about how it all works and will know about monthly average balance maintenance today?

Many people are still not able to understand what is Monthly Average Balance and how to calculate it. Today I will tell you how the bank calculates the Monthly Average Balance and what you should do to maintain it.

monthly average balance

The bank has implemented the mandatory rule of maintaining a minimum monthly average balance (MAB) on the savings account, if the customer is not able to keep this balance in his account, then the bank collects a penalty from them, as a fine, the bank will take some money from your account. The amount is deducted, most people are not aware of it, on the basis of which rules the bank is levying the fine on the customer’s account, on this page you are giving detailed information about the Monthly Average Balance.

What is Monthly Average Balance?

Many people still have many misconceptions about Monthly Average Balance and they do not understand how to calculate Monthly Average Balance.

If the Monthly average balance is said in a straight way then – By adding the balance of all those days in your account for the 30 days of the month, divide it by the 30 days of the month, now the total will be your Monthly Average balance.

Who does not need to keep a Minimum Balance?

Before you get into the calculation of balance, know that some people are exempted from keeping the minimum balance. In fact, the No-Frills Account, BSBDA account opened in the bank will always be a zero balance account. Apart from these, many other types of accounts also do not need to maintain a minimum balance.

  • Jan Dhan accounts
  • basic savings account
  • pension account
  • Children’s Account – First Flight, First Step
  • Accounts receiving benefits from welfare schemes
  • salary package account
  • Account of students up to 21 years

If you fulfill any of these conditions then rest assured. You will not be penalized for not maintaining the minimum balance.

Penalty for not maintaining balance

Banks want you to keep money in your account so that they also keep earning interest. But if your account remains empty then even the banks will not get any benefit. And that’s why they levy penalties when the average balance is low.

In private banks, this penalty is close to Rs 500. Whereas most government banks levy a penalty between Rs 200 and Rs 400. Now if you listen to SBI’s penalty in comparison to theirs, then you will be happy. SBI levies a maximum penalty of Rs.15.

Keep in mind that this penalty is monthly. Every month it is checked whether you have an average balance in your account or not. If there is no average balance then a penalty will be levied every month. Apart from this, 18% GST is also added to the penalty amount.

Process to calculate Average Monthly Balance

  • Get End of Day balance for the whole month
  • Sum all the EOD balances
  • Divide the Total by days in the month
  • The result would be the Average Monthly Balance
  • average monthly balance formula

This formula to calculate the average balance has made it very easy for the customers. Because they have a chance to maintain the average balance.

Suppose someone has to keep an average balance of three thousand rupees but there is no money in his account till the tenth day of April. But on 11th his salary comes. In such a situation, if he leaves only four and a half thousand rupees in the account till April 30 (20 days), then an average of three thousand will become for the month.

For Example

Suppose you deposited 5000 rupees in your account on 1st July and you withdraw 3000 rupees on 10th July, after that you deposited 10000 rupees again on 20th July, in this way 12000 rupees remain in your account at the end of the month. In such a situation, the monthly average balance will be calculated as follows.

  • From 1st July to 10th July ie, 9 days your balance 5000×9= Rs 45000.
  • 10th July to 20th July ie, 10 In this way your balance 2000×10=20000 rupees.
  • From July 20 to July 31, ie, 11, in this way your balance is 12000 × 11 = Rs 1,32000.
  • Total balance from 1st to 31st July = Rs 1,97,000.
  • To get 1-days balance, it will be divided by 31, then the amount received = Rs 6354.

This means that no matter how many transactions and deposits you have done, your one-day balance remains more than Rs 5000, otherwise the bank can collect a fine from you.


In this post, I have told you about the Average Monthly Balance fixed in the savings account of the bank. You also learned that if the average balance is not maintained then there will be penalty. But there is no need to worry those people to whom the rule of minimum balance does not apply.

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FAQs –

What is the minimum monthly average balance?

A monthly Average Balance (MAB), also known as Minimum Average Balance, is nothing but the minimum amount that you need to maintain in your savings account every month. The figure is calculated at the end of each month and failure to maintain this minimum average balance will result in penalties.

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