- What is AMB and AQB in a Savings Bank Account?
- Know the basic difference between them and see how banks calculate both of them
A large portion of our country’s population has at least one or more savings accounts in their names. Several banks provide savings accounts to customers in which they keep their money safely. The overall money in their accounts is known as Account Balance. When opening a Savings Bank account, banks ask the customers to maintain a minimum balance in their accounts. This minimum balance requirement in a Savings Account differs from one bank to another and generally is of two kinds – Average Monthly Balance (AMB) and Average Quarterly Balance (AQB).
You must be thinking about the word ‘Average’ attached to both kinds of minimum balances. Well, a customer doesn’t need to maintain a minimum balance in his or her account daily; it’s calculated on an average basis. Also, the minimum balance requirement tends to vary from one bank to another depending on the account holder’s location – Urban, Semi-urban, Metro, and Rural – and the type of savings bank account. Several people often get confused between Average Monthly Balance and Average Quarterly Balance. If you are also one of them or want to have a better understanding of both, this article is for you! We will cover all the fundamental differences between both of them and also tell how banks calculate them. So, keep reading!
Table of Contents
What Exactly is AMB and AQB?
When we are looking for differences between the AMB and AQB, it is essential to know them separately. This is why, first, we will tell you what exactly is AMB and AQB so that you can understand their functioning.
Let’s start with the Average Monthly Balance (AMB). As you can see from its name, this is the minimum balance that a customer must need to maintain in his or her savings account on a monthly average basis (30/31 days). However, when customers need to maintain this average minimum balance quarterly (90 days), it is known as the Average Quarterly Basis.
This is the fundamental difference between AMB and AQB – Total Number of Days of calculating average balance. In AMB, these days usually can be 30 or 31 (depending on the month) while in AQB, the total number of days will be flat 90. When customers fail to maintain the AMB or AQB in their Savings Accounts, banks ask for charges on the non-maintenance that changes from one bank to another depending on the account’s location and its type.
You should remember that a customer doesn’t need to maintain a minimum balance amount on a daily basis; it is always calculated on an average basis. So, you don’t need to be confused about it. To make it more clear to you, we are showing the calculation process for AMB and AQB in the next section. Please check.
AMB and AQB Calculations in a Savings Bank Account
It is important to know calculation processes to understand AMB and AQB completely. When we talk about AMB, it is the average of the sum of the overall daily closing balances of your savings account. What is this daily closing balance? Well, this is the final balance on each day after any deposit or withdrawals done by you. To know the AMB, banks divide the sum of daily closing balances in a month by a number of days in a particular month.
Let’s understand this through an example. We are showing a monthly bank statement of an individual. With this, we will tell you the process of AMB Calculation.
|August 01, 2020||Opening Balance||INR 10,000|
|August 12, 2020||Cash Deposit||INR 2,000||INR 12,000|
|August 18, 2020||ATM Withdrawal||INR 3,000||INR 9,000|
|August 25, 2020||Cheque Deposit||INR 5,000||INR 14,000|
|August 31, 2020||Closing Balance||INR 14,000|
So, you can see the opening balance on August 1, 2020, is INR 10,000. This amount of INR 10,000 was maintained for 11 (10,000*11) days before depositing INR 2,000 on 12 August.
After that, a balance of INR 12,000 was maintained for 6 days (12,000*6).
After withdrawing INR 3,000 on August 18, 2020, the balance of INR 9,000 was maintained for 8 days (9,000*8).
After a deposit of INR 5,000 via cheque, the balance was INR 14,000 for 7 days (14,000*7).
So the closing balance is (10,000*11 + 12,000*6 + 9,000*8 + 14,000*7) = (1,10,000 + 72,000 + 72,000 + 98,000)
AMB will be the sum of closing balances (INR 3,52,000) divided by the number of days (31) = INR 11,354
So, let’s say a Bank has asked to maintain an Average Monthly Balance of INR 10,000. With this MAB, an individual will not need to pay any non-maintenance charges on his savings account. You should also remember that while calculating the AMB, all days in the month will include holidays and Sundays.
Similarly, for the calculation of Average Quarterly Balance (AQB), banks divide the sum of closing balances on each day by 90 (Days in three months). Let’s say the sum of closing balances on each day is INR 9,50,000; the AQB will be 9,50,000 divided by 90 = INR 10,577
If a bank has asked to maintain an AQB of INR 10,000, the individual will not need to pay any charge for the non-maintenance on the savings account. So, you can see how banks calculate the AMB and AQB in a savings bank account. You can calculate both of them by yourself with the help of your savings bank account statement that will include all the deposits and withdrawal.
Several banks have shifted from AQB to AMB. The reason behind this fact is when banks calculate the minimum balance monthly, customers are more likely to maintain a minimum balance consistently. On the other hand, in the case of AQB, if a customer can maintain a minimum balance by depositing a lump sum amount on any day during the 90 days. For example, a customer can have a Zero balance for 89 days, and by depositing INR 4,50,000 on the 90th day, he or she can meet the AQB of (4,50,000/90) INR 5,000.
What are the Charges on Non-maintenance of Minimum Balance in a Savings Bank Account?
As we said, banks ask for fixed charges when a customer is unable to maintain the minimum balance in his or her savings account. We are showing the charges for Non-maintenance of AMB for some of the top banks in India. Check it out below.
|Banks||Charges for Non-Maintenance of MAB|
|State Bank of India (SBI)||Nil for SBI Regular Savings Account|
|HDFC Bank||For Metro and Urban Branches (AMB Requirement is INR 10,000) |
For Semi-urban Branches (AMB Requirement is INR 5,000)
|Punjab National Bank||For Rural Branches - INR 50 to INR 100|
For Semi-urban Branches - INR 100 to INR 150
For Urban/Metro Branches - INR 150 to INR 250
|ICICI Bank||For Metro/Urban/Semi-Urban/Rural locations |
|Bank of Baroda||For Rural Branches - INR 500|
For Semi-urban Branches - INR 1,000
For Urban/Metro Branches - INR 2,000