How to Calculate Quarterly Average Balance ?

Do you understand what is the meaning of Minimum Quarterly Average Balance in your saving account? When you say “Quarterly Average Balance of your saving bank account is Rs 10,000” , what does it mean exactly? A lot of people feel that their balance in saving bank account should not go below Rs 10,000 on any given day, otherwise there will be penalty charges and they make sure that they have a buffer of Rs 10,000 in their saving bank account all the time. This means that their account always have that much surplus. However the way quarterly average balance is calculated is different and very simple.

Meaning of Quarterly Average Balance ?

It simply means the average of the all the closing day balance in a given quarter. So given a quarter, add up all the closing day balance and then divide it by the number of days in the quarter. If you have to put it as formula it would be

QAB = (Total of all the EOD closing balance)/(number of days in quarter)

Let me show you an example . Let us say the quarter we are talking about is Apr-June . Now your balance in the start of the quarter (Apr 1) is Rs 20,000 . You withdraw 15,000 on 15th Apr and then Deposit 8,000 on 12th June. What will be the quarterly average balance for the Apr – June Quarter ?

Quarterly Average Balance Calculation

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Learnings & Tips

  • Keeping Rs 30,000 in a bank account for 1 full month , is same as keeping 10,000 for full 3 months (30k * 30 days = 10k * 90 days)
  • If you want to keep ZERO balance in your account for most of the time, then the best thing would be to put a big amount like 90,000 for first 10 days of a quarter Q1 and then do a FD for 5 months , and then once it matures, you will be in Q2 end , and then you can put it for another 10 days , this way you will meet quarterly balance for both Q1 and Q2 .

PSU Banks vs Private Banks

A lot of PSU banks like SBI bank, Bank of India , Allahabad bank generally have a lower Quarterly Average Balance to be maintained in saving bank account, it average limit is upto Rs 500 in most of the banks and non-Maintenance Charges are very low around Rs 50-100 only. However Private banks like ICICI Banks, HDFC bank, Axis Bank etc have quarterly balance as high as Rs 10,000 and high charges as penalty for not maintaining it , It some times can be as high as Rs 750 . Note that ICICI Bank has recently moved to Monthly Average Balance (which I came to learn when I was writing this article and thanks to everyone that I knew it as I have my account in ICICI bank only)

Did you knew how the minimum average balance is calculated ? Now will this information impact your banking in any way ? Will you keep less money in your bank account because you now understand that quarterly average balance is calculated in a different way than you thought?

111 CommentsAdd Comment

  1. Vaidy

    This method is actually a very polished method to rob your bank account. The thief takes it away without telling you.
    These fellows send you an sms when they do so. That is the only difference ! I think I should file an FIR with the police.
    I was clearly told by HDFC that I will not have any charges on my preferred account, and they happily keep changing
    their policies. I have sweepin FDs of several lakhs but they still are charging me MAB charges, as they regularly sweepin into the FD. Why don’t they simply sweep out to maintain the required balance ? They lie all the time. The tell
    you one thing and do something else. Each officer in the branch has a different idea of the offering. Bunch of crooks !
    Since there is clear proof that they are constantly stealing money from my account, I guess it qualifies for an FIR, doesn’t it ?

  2. Mateen Shaikh

    How we will calculate the minimum balance charges ?
    Some banks are apolied oe some not , why ?

  3. Sarju Jadhav

    Hi Manish,

    Very useful Article,

    Can you tell me if Canara Bank has same process for calculation of minimum balance.
    Their customer care says, at any point you go below 500 and you are penalized with Rs 30.

    Please Help !!!!!

    Thanks in Advance

  4. Paras

    Awesome writing, Manish.

    I liked the infographics, it actually helped in understanding the concept easily.

    Great work, keep it up ! ! !

  5. Prakash

    Really nice article, enlightening one for common people who still think banks as alien territory, expect more of this

  6. Nimesh

    Sorry to say that, but this calculation will be not applied to SBI Current account.

    SBI tells you to maintain 10,000 AQB, but if your closing balance for any single day will go below 10,000, SBI will charge you 611 Rs. per Quarter. Even if the further 89 days you have 20,000 closing balance than too.

    I had face this thing in last quarter, and after dealing with so many emails to SBI, I get the knowledge about this.

    • Hi Nimesh

      Is yours a normal saving bank account ? Or some other special account like premium or something . Because as far as I understand, it should not be like what you mentioned, it would be interesting to find more on this

  7. Ashmit Shah

    I have a HDFC savings account which I do not want to continue further, so emptied my account. Now as the balance is zero, the AQB charges are accumulating and whenever I go to the branch to close it, they say that pay the AQB non-maintenance charges first which I do not want to pay. Like this, will the account eventually get closed, without paying the charges ?

    • thats a short term solution , Imagine in future you want a bank loan and only HDFC is an option , they will track down your history and ask you to settle it , better to clear the history !

  8. Jayant

    Benefits of maintaining AQB
    AQB can be a real boon if workout with a proper planning..
    if one is able to maintain 10000 AQB for minimum two quarters, can earn 200 rupees interest….since most of major private banks provide 4%p.a on saving account on half yearly basis….if calculations are right for higher AQB interest earned would also be higher..e.g: for 25000, it would be 1200 rupees yearly..AQB is just a mini FD…only one has to just deposit and forget…if required in emergency one can withdraw too…e.g. if one is maintiaining AQB of 20000 on yearly basis and withdraws 10000 for a month anytime during the year, would still earn 732 rupees compared to 800 rupees on 4%p.a basis…
    some banks provide higher interest too…Indusind gives 6%>1lac &5.5%1lac & 6.5%<1lac…if compared with FD which interest rate ranges from 8.25% -10%(public sector banks only provide higher interest and that too on 5 years range)…so it would always be better options to earn on savings..
    on personal note I have earned more than 5000 in last two years and recovered all the previous charges paid on non maintanence of AQB without discontinuation of account and playing bank policies only…
    so I would only say.. Don't Worry, just Play Cleverly….

  9. Vijay

    HDFC earlier had an option when you keep 50000Rs in FD you dont have to maintain the AQB or MQB.. Now its been removed.

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