A suitable slab structure for recovery of charges may be finalized. In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account.

The penal charges should be directly proportionate to the extent of shortfall observed.The policy on penal charges to be so levied may be decided with the approval of Board of the bank.In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of shortfall, penal charges may be recovered under intimation to the account holder.that in the event of the minimum balance not being restored in the account within a month from the date of notice, penal charges will be applicable. In the event of a default in maintenance of minimum balance/average minimum balance as agreed to between the bank and customer, the bank should notify the customer clearly by SMS/ email/ letter etc.RBI guidelines for levying penalty on non-maintenance of minimum balance

Here's how four prominent banks levy penalty on non-maintenance of MAB:Īponward, SBI has lowered charges for non-maintenance of average monthly balance in savings accounts. For metro/urban branches, the requirement is usually higher than semi-urban/rural branches. The MAB requirement varies from bank to bank and branch to branch. So, the minimum average balance will be 204000/31 i.e. Sum of all the EOD closing balances = Rs 2,04,000 Summing up the EOD balances: For 11 days-from July 1 to July 12-sum of EOD balance will be Rs (5000*11) = Rs 55,000įrom July 12 to July 18, sum of EOD balances will be Rs (1000*6) = Rs 6,000įrom July 18 to July 31, sum of EOD balances will be Rs (11000*13) = Rs 1,43,000. On July 18, deposit of Rs 10,000 takes place. On July 12, withdrawal of Rs 4,000 takes place. On July 1, the balance in the account is Rs 5,000. MAB = (Sum of all the EOD closing balances)/ (number of days in a month)Īssuming, a bank asks that you maintain Rs 5,000 as average monthly balance: To calculate the MAB, you need to add each day's end-of-the-day balance and divide it by the number of days in that month. MAB is the average of all the closing-day balances in a given month. You must maintain the minimum balance in your account to avoid penalties. Maintaining minimum average balance (MAB) in a savings account is important yet neglected by many. Some banks, the study claimed, had been imposing penal charges of over 100 per cent per annum on shortfall in maintenance of minimum balance in customers' accounts. Last year, a study by IIT-Mumbai professor Ashish Das showed that public sector as well as private banks had been imposing unreasonable charges on customers for failing to maintain minimum balances in their savings accounts.

Amb chrg incl gst