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?

109 CommentsAdd Comment

  1. Swarup Saha

    Good information neatly written.
    Small mistake…..total balance of Rs.20000.00 for 14 days should be Rs.280000

      • Harpal

        I have a query.. How does the calculation of quarter is done. Is it calculated based on calendar year (Jan to Dec cycle ), financial year (Apr to Mar cycle) or is it based on date of your account opening??
        Really appreciate your article on this subject. It indeed is very helpful especially the away it is explained with example

  2. Soubhagya Kumar Patra

    Nice Information Manish.. Seems a small mistake.. I got completely confused by seeing 28,000, I guess it should be 2,80,000 i.e. (14*20,000).

  3. Arunima

    Nice information. My experience with PSU Bank (UCO) when once my minimum balance was below 1000 . The bank charged Rs. 200 once for that quarter, then again charged RS. 200 as half yearly fine as once in that half year you had low balance and again yearly fine of Rs. 200. So, in total I had to pay 600rs. for not maintaining minimum balance in my SB Account.After that experience I really make it a point to stick to the minimum balance.

  4. Rashmin

    PSU Bank are more batter as compare to Private, PSU insist QMB for 1000 Inr and Private force for AMB and that is also 10000 Inr. it is advisable to keep account with PSU and maintain 1000 Inr and keep 9000 Inr as FD, which can earn little more interest. if you have multiple family account this amount can be handsome. :)

  5. Vineet

    Manish,

    Nice and informative article as usual! I think banks should display minimum AQB (or AMB) required and till date AQB for current quarter (or AMB for current month) in account information page of netbanking. Ofcourse they will not do it unless RBI mandates it. Banks use it to gather more fees from customer and it is unfair to customer….
    My experience with ICICI bank was not good. I had opened savings account with ICICI 10+ years back when their AQB requirement was 5000 Rs. One fine day I noticed that my statements were showing that I was privileged banking customer. On their website it was mentioned that AQB for privileged banking savings acct is 25000 Rs. I called up customer service and they confirmed that my account was “upgraded” to privileged banking and as a result I will have to maintain 25000 AQB. They were not able to give me reason by whose instructions this change was done. Also it was not possible to revert it back using phone banking. I had to download a form and send it to ICICI bank branch where my account was located. After this incident my AQB was “restored” to Rs 10,000. According to bank it was not possible to set AQB back to 5000 since system did not accept that value anymore! I don’t know how many customers would have been “upgraded” like this and have never noticed it untill they were slapped penalty!
    BTW one piece I found incorrect in article is about AQB in public sector banks. I have acct in SBI and that does not have concept of AQB. I have to maintain minimum balance of Rs 1000. Even on single day if EOD balance falls below this minimum balance, charges are applied to account.

  6. Brijmohan

    HDFC bank has also moved to MAB. By moving from QAB to MAB, banks are able to fetch earn more charges from the customers

  7. vijayakumar

    SBI recently – have come out with – no min balance.account. If we are a current account customer – we are fleecced. Min is 10000 Rs + advantage – you will not be given a pass book . I wonder they can charge afee for quarter or for year- why should I put my money for nothing??( 4 % interest ?)
    vijayakumar- chennai/

  8. Anand

    This concept of quarterly average is from private banks only.

    I don’t think SBI has this ‘average balance’ concept.
    Their rule is simple: minimum balance of 500/- without chequebook and 1000/- with chequebook. (this is old rule, might be changed by now. please clarify)

  9. T.M.Varghese

    Dear Manish,
    Very informative.
    Can you also write a small article on how the SB Interest is calculated. If you have already written kindly provide the link.

  10. Shinoj Jose

    SBI has recently announced that they are removing the minimum balance rule. That is, your SBI account can be a zero balance account.
    IDBI has done this two years ago. But it dint get the expected publicity, I believe.

      • chandan

        Dear Manish
        well what is interest on any saving account? I have 3 saving accounts… But in only one am getting this is issues..I have Indusind saving bank account and in every month they debit 3,6 INR from my saving balance…Take example of this month..I have almost 20000 INR in my Indus saving account they charge me 3 rs (they name it interest ) on this 31st july … could you clear me y? then i can only take the action against them…

    • Achin Juneja

      If the 1st month of the quarter has 30 days, then QAB is not met. For example, if 1st month is April, then total days are 91 (30+31+30) & total daily balance is 9,00,000.

  11. Abhijit

    Even I am curious about how these banks are calculating the interest on a saving / salary account. Pls give few examples as well.

    What is the interest applicable for SA? Also can we compare SA against short term FDs? If it is worth managing these short term FDs to get extra interest (excluding tax on interest) then it is worth doing it i mean..!

    If you have already written kindly provide the link.

  12. sharad gupta

    Thanks manish for usefull and informative article. I read your book “Jago Investor” and like very much. Very usefull book for beginners I make many mistakes in my earlier financial life due to no more aware about finance. thanks again.

  13. Vijay Hegde

    Just a word of caution on the time frame considered for AQB. The definition of the quarter differs from bank to bank (learned from paying a fine). I used to follow the logic suggested of keeping high sum for few days. Only mistake was Axis bank quarter range is from 26 to 25 for eg.. 26 Dec to 25th Mar. I realized after paying the fine :(. ICICI follows calendar month or quarter. Do confirm with your bank whether the month or quarter considered is a calendar month or quarter.. or get the date range explicitely.

      • Charan

        Hi Manish,

        Great article and it was an eye opener for me on AQB concept.

        I have a suggestion here, if you come across any new things while replying to comments, can you please add a note to the main post, so that it will be helpful for readers to grasp the entire details without going through all comments (Which I generally do to check if I have missed anything and also check opinions of readers). Of course I understand that you will have huge number of comments across all the posts everyday, but the things which can add huge value to the post can be considered like the example that Vijay has given, which is also a main criteria that needs to be checked before maintaining balance in account.

        Thanks,
        Charan

        • Charan

          Yes, I do it sometimes, but its really not an easy job given the work load . Also the article has a structure and predefined components and in many cases something good in comments section might not be easy to add to article . However if something is really that great , I try to make sure to add it back.

          Another way of looking at it is that reader has to take that pain to look deeper and get the best out of it , just a reader who want to get everything from the article itself and not wanting to take pain of looking at comments will loose something . given the overall situation right now , thats how things are at the moment . I hope you understand ! . But thanks for pointing and showing concern on that !

          • Charan

            Manish,

            Thanks for considering the suggestion. I usually go through all the comments not to miss any minute points which might have been missed in the topic.

            Charan

  14. Lalit Gandhi

    Hi Manish,
    Nice article!
    Do you know what is the cut-off time for banks as end-of-the-day? Say for e.g. I have a balance of 15000 at 5p.m and i withdraw 5000 after that on the same day, so at 11.59p.m it will be 10000, so which amount is considered for calculating AQB?

  15. Vivek, Hyderabad

    I had an SB A/c with Axis Bank. Unfortunately, I could not maintain the AQB and I carried out number of transactions. Initially, I was levied penalty of Rs.750/-. Moreover, because of non-maintenance of AQB each and every Branch transactions entailed a flat fee of Rs.100/-. All in all, Axis Bank marked a lien of Rs.8200/-. Thank God, at that time, my bank a/c was nil. Otherwise, Axis Bank would never have paid it back. I got the a/c the closed with the help of Banking Ombudsman. One thing, I can surely say is PSU Banks are Peace of Mind and their services are at par with Private banks. I can tell you for guarantee that I am never gonna use the services of Private Banks. (Because our funds act as cheap reserve for them, which they on-lend to customers at exorbitant interest rates). Private banks are avaricious.

  16. Anil Vishwakarma

    Ohh Fishh..
    last month Kotak Bank’s eat my Rs.870 for non maintening the balance.
    I dont know about this funda.
    Thanks to Manish, Ohh khuda ye article bhejne ka khayal manish ko teen mahine pehle kyu nahi aayaa.

    anyways
    Very Funduu Articles.

    With Love
    Anil Vishwakarma.

  17. Murugesh

    Hi Manish,

    pls clarify,

    i have SBI saving account with MODS options enabled, so every month 26th auto sweeped the excess amount from my main account to deposit account, how they will calculate the QAB? is it only applicable to my main account? are they include the MOD account also?

    regards,
    Murugesan.K

    • Charan

      Murugesan,

      MOD account will not be considered for QAB. The remaining amount that is lying in the savings account will be considered for QAB. The fixed amount upon which the excess amount will be checked will be far more than the QAB limit. So I think you don’t need to worry about as in the worst case if you use all remaining funds which are left in savings account, then also the most recent FD will be cancelled and money would be credited to savings account (which is the way kotak account works.. I think any bank with auto sweep works same).

      Charan

      • Charan

        Yes, I do it sometimes, but its really not an easy job given the work load . Also the article has a structure and predefined components and in many cases something good in comments section might not be easy to add to article . However if something is really that great , I try to make sure to add it back.

        Another way of looking at it is that reader has to take that pain to look deeper and get the best out of it , just a reader who want to get everything from the article itself and not wanting to take pain of looking at comments will loose something :) . given the overall situation right now , thats how things are at the moment :) . I hope you understand ! . But thanks for pointing and showing concern on that !

  18. Krish

    Your examples of maintaing high balances for few days and to keep the lowest balance for the rest of days to maintain AMB/QAB requires precision accuracy of following up of ones bank accounts on daily basis. It would be interesting to know whether your example of 90K/10 days is been practiced by anyone.

    I am a HDFC bank Imperia customer and luckily these AMB/QABs are not applicable for such accounts.

  19. KRANTIVIR RAJPUT

    I personally think there should be a standard banking norm for all banks for maintaining min balance.So that people don’t have to worry about maintaining it.
    In the previous comment one gentleman got auto-upgraded by ICICI and hence now he is in higher-min-balance, also another one in PSU was charged 600rs !!. Hence a standard norm with an easier name “MIN-BALANCE” should be applicable to all.

  20. Abhijit

    I guess, when the saving A/C issued is ZERO Balance account, I think we should not worry about the minimum balance required to maintain to avoid penalty.

    I have a zero balance a/c & fortunately never faced this kind of penalty issue.

  21. Mukesh Kumar

    SBI now has no minimum balance in MOST of their savings account. effective from few months. icici is very froud bank. band kar dena chahiye.

  22. MrP

    I found my QAB in lakhs. My account is in axis bank.
    How to know the penalty charge if someone could not maintain that balance?
    How and Why they calculate QAB for next quarter? What is their prob if they don’t have any QAB concept ?

  23. sudhank

    Very useful for me and few of my colleagues (going to share with them). Recently opened account with YES bank as offering highest FD rates with sweep accounts also. but condition is of QAB 10,000 INR . I was keeping that 10,000 rs blocked now a real relief for me. Thanks for the article !! :)

  24. Suvajit

    In my account I am not maintaining any balance. It keeps in 0. ICICI charged me 750+… If dont give this money, will they harass me?? I have no other ICICI Bank acc/loan or any other card.

  25. Sachin

    HI Manish,

    My company had opened my salary account about 2 years ago and after opening company gets closed.So cpma[ny didn’t paid salary into may account.

    So now HDFC bank telling me that your zero balance account converted to Savings acccount so please tell me what is next procedure I can Do?

    Thanks:)

  26. vivek

    Hi Manish,
    I Have a preferred account with HDFC and my question is that can i maintain it as zero balance account if i’m having a FD over lacs with that account.
    Thanks
    Vivek

  27. Ramshiva

    Nice workings , and thanks alot for clearly briefing and easily any one can understand the calculation. i also charged Rs.826/- as penalty for not maintaining for minimum average balance.

  28. Jay P

    I just opened an axis bank, actually wanted a easy access saving account with Quarterly Average Balance of 10,000 but the executive told me if I did an initial deposit of 1,00,000 & withdraw it afterwards, the maintenance charge would be NIL(special benefit) for customers who do the above initial deposit while creating a new account.

    I did as said, when the welcome kit came the account type was Prime Plus SBPRP with Quarterly Average Balance of 1,00,000 not the easy access saving account with Quarterly Average Balance of 10,000.

    Upon confronting the executive he said do not worry & showed this pdf – http://www.axisbank.com/download/prime-schedule-of-charges.pdf
    Where its written Quarterly Average Balance requirement is 1,00,000
    & below that its written charges for non-maintenance is NIL!!!!
    He reassured even if you withdraw the whole amount the charges will be NIL.

    After exiting the branch I called their customer support to confirm & the executive said 750/- would be the charge & he does not know about the NIL part.

    Whom to believe I don’t know!!!!
    I am worried if I do not maintain the QAB they will charge for non-maintenance, for not maintaining they 10,000 they are charging 750 GOD knows what the amount will be for 1,00,000.

    Can someone having Prime Plus account or have knowledge about this please help me!!!!!

    • Achin Juneja

      The SBPRP a/c from Axis bank requires the initial deposit to be minimum Rs.1,00,000. There is no minimum AQB requirement, no ‘non-maintenance of AQB’ charges. But the ‘unwritten’ condition is that the a/c will be degraded to a SBPRM a/c if AQB drops below Rs.60,000.
      This was revealed after talking to a bank executive.

  29. 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.

  30. 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….

  31. 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 !

  32. 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

  33. Prakash

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

  34. Paras

    Awesome writing, Manish.

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

    Great work, keep it up ! ! !

  35. 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

  36. Mateen Shaikh

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

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