When you open a savings account, you typically need to maintain a specific balance in your account, known as the Monthly Average Balance (MAB). By maintaining this amount, you can avoid MAB charges. Financial institutions require an MAB to manage funds in an effective way and provide various services without added charges.
It is a crucial component that allows you to maintain your financial well-being while promoting more stability. By getting more information on what the monthly average balance is, you can get more clarity on why it is crucial.
MAB full form in banking refers to monthly average balance. It is the average balance you must keep in your savings or current account throughout a calendar month. The requirement of MAB can vary depending on the type of account. At the end of the month, the bank calculates the MAB and imposes a penalty in case of any failure to maintain the minimum balance.
Some banks offer zero-balance current accounts, which can be an excellent option if you are looking to avoid fees or find it difficult to maintain a specific balance. However, these accounts typically lack the advanced features available with minimum balance accounts.
The monthly average balance calculation procedure involves averaging your closing balances at the end of the day over a period of a month. For example, if you have an MAB of ₹5,000 and the balance over the end of the day continues to be:
Day 1: ₹5,500
Day 2: ₹5,100
.
.
.
Day 30: ₹,5400
MAB= Sum of daily balance / Number of days in that month
= (₹5500+₹5100+…+₹5400)/30
The monthly average balance calculation for a month of 31 days is the total balance is divided by 31.
Having a minimum MAB doesn’t only help you avoid the penalties – it also ensures a good financial well-being and banking relationship. You can get these advantages by maintaining a minimum balance.
Check out some tips for successfully maintaining the MAB:
Also Read: How to Get Bank Account Statement?
Maintaining a monthly average balance can not only help you avoid penalties but also lets you access a range of rewards and services free of cost. Maintaining a substantial balance in your bank account is a testament to your financial discipline and stability. This can also be a key factor in securing favourable terms for credit cards.
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Yes, most banks charge a penalty known as MAB charges for not maintaining the required MAB.
Yes, you can set customisable alerts to track your MAB via net banking or mobile banking.
Yes, the MAB requirement may apply to joint accounts, depending on the bank and the type of account you hold.
Overdraft is a short-term loan to withdraw money against your savings or current account. Hence, it doesn’t affect the MAB.
By maintaining a high MAB, you can get some advantages. You can get rewards such as lifestyle benefits, personal loans at a preferential interest rate and discounts on other financial products.
