Average monthly balance (AMB) is now a mandate from banks to keep or hold a savings account. The minimum balance varies depending upon the demographics of the bank. It may be in urban, rural, semi-urban or metro area. Major leaders in lending loans like state bank of India, HDFC Bank, ICICI bank have their AMBs fixed based on the above categories. In case the customer fails to maintain the applicable minimum balance, a penalty is charged upon him/her. The amount of penalty may also vary depending on various factors.

HOW AMB IS CALCULATED?
Average monthly balance is the average of closing-day balances for a particular month. Each day’s EOD (End-of-day) balance is added and divided by (number of days) in that particular month.

Formula is:
AMB for a given month= (Sum of all EOD closing balances) / (number of days)
Lets us understand this with an example,
You have an account with QWE bank whose minimum balances requirements are Rs. 5000.
 On November 1st, you have account balance = Rs. 5000
 On November 12th, you withdraw amount = Rs. 4000. EOD balance = Rs. 1000
 On November 18th, you deposit amount = Rs. 10,000. EOD balance = Rs. 11,000

Now calculating the AMB,
Sum up all the EODs
 1st-12th November: EOD balance = Rs. 55,000 (5000*11), 11 is the number of days
 12th -18th November: EOD balance = Rs. 6000 (1000*6), 6 is the number of days
 18th-30th November: EOD balance= Rs. 1,32,000 (11000*12), 12 is the number of days

Sum of all EODs = Rs. 1,93,000
Total number of days in November = 30
Hence, AMB = Rs. (193000/30) = Rs. 6433.33

AMB requirements of top 3 banks in India:

STATE BANK OF INDIA
According to SBI’s website www.sbi.co.in , if you have a regular savings bank account in the urban or metro city branches, then you will be required to maintain Rs. 3000 as the average monthly balance.
If you have an account in the rural or semi-urban branches, then the average monthly balance requirement is Rs. 1000 and Rs. 2000 respectively. Failing to maintain these minimum requirements, the following are the penalty charges:

Branch: Metro or Urban (AMB= Rs. 3000)
METRO/ URBAN BRANCH PENALTY CHARGES
Shortfall <= 50% Rs. 10 + GST Shortfall > 50-75% Rs. 12 + GST
Shortfall > 75% Rs. 15 + GST

Branch: Semi-urban (AMB = Rs. 2000)
SEMI- URBAN BRANCH PENALTY CHARGES
Shortfall <= 50% Rs. 7.50 + GST Shortfall > 50-75% Rs. 10 + GST
Shortfall > 75% Rs. 12 + GST

Branch: Rural (AMB = Rs. 1000)

RURAL BRANCH PENALTY CHARGES
Shortfall <= 50% Rs. 5 + GST Shortfall > 50-75% Rs. 7.50 + GST
Shortfall > 75% Rs. 10 + GST
(Source: www.sbi.co.in )

HDFC BANK
HDFC stands out as one of the most sought-after private banks in India with the highest rates. Rs. 10,000 is the average monthly balance for branches in urban and metro areas as per the official website www.hdfcbank.com . Semi-urban branches require Rs. 5000 and rural ones require Rs. 2500 as the average monthly balance and average quarterly balance. Or a set up fixed deposit worth Rs. 10,000 for a minimum of 366/7 days or 1 year and 1 day. Failing to maintain these minimum requirements, the following are the penalty charges:

Branch: Metro or Urban (AMB= Rs. 10,000)
METRO/ URBAN BRANCH PENALTY CHARGES
>=7500 to <10,000 Rs. 150 >=5000 to < 7500 Rs. 300 >=2500 to < 5000 Rs. 450 0 to < 2500 Rs. 600 Branch: Semi-urban (AMB = Rs. 5000)
SEMI- URBAN BRANCH PENALTY CHARGES
>=7500 to <10,000 NA >=5000 to < 7500 NA >=2500 to < 5000 Rs. 150 0 to < 2500 Rs. 300 Branch: Rural (AQB = Rs. 2500)
RURAL BRANCH PENALTY CHARGES
>=1000<2500 Rs. 270 0 to <1000 Rs. 450 Taxes are also applicable to these slabs. (Source: www.hdfcbank.com ) ICICI BANK
Customers with regular savings account in ICICI bank need to maintain a monthly balance of Rs. 10,000 in Urban and Metro branches. Rs. 5000, Rs. 2000 and Rs. 1000 are the requirements for Semi-Urban, Rural and Gramin areas. Failing to maintain these minimum requirements, the following are the penalty charges:

AREA PENALTY CHARGES
METRO Rs. 100 + 5% of the shortfall in desired AMB
URBAN Rs. 100 + 5% of the shortfall in desired AMB
SEMI-URBAN Rs. 100 + 5% of the shortfall in desired AMB
RURAL Rs. 100 + 5% of the shortfall in desired AMB
GRAMIN 5% of the shortfall in desired AMB
(Source: www.icicibank.com )

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