If you have a zero bank account the thing is different. But in case if you have a normal CASA. Then you also will be informed about the MAB by your bank.
You have to take care and ensure that your balance does not go below MAB. Here MAB stands for monthly average balance.
Some people refer to it as the minimum balance requirement. But actually, it is not about the minimum balance that you maintain in your account.
The whole thing is about the average balance you maintain in the account. There is a huge difference between the two that we are going to understand in-depth here.
What Actually is MAB?
The monthly average balance is the amount of balance that you have maintained in your account. This is calculated on the basis of averages.
So even if you have withdrawn all your balance on a particular day of the month. If you again deposit a considerable amount in the account on the next day. You will be able to maintain your average.
How do Banks Calculate this?
It is all the computer systems of the bank that do the heavy lifting job. Let us not get much into the automated systems. And understand how this thing is calculated if I and you would like to do it.
First of all the end of the day balances for each day of the month are added or summed. And then the answer will be divided by the number of days in the month.
The answer we get is the average balance that you have maintained in your account for that month. This is how the banks calculate the MAB.
What Happens when MAB is Not Maintained?
This is a matter that we should understand very carefully. Because ultimately this is what we want to know. There are two things that will happen.
Among which one is the most important thing. The important point is you will be charged a penalty or fees by your bank for not maintaining your average balance.
And the other thing which only a few banks do is notify the account holder about the balance not being maintained. This is done by sending an SMS to the registered mobile number of the account holder.
How Much will be the Charge of Penalty?
The amount of charge will depend on the internal policies of the bank. And these tend to change from bank to bank.
Usually, the private banks in India have slabs that are used to calculate things. For example,
- Rs. 0 to Rs. 500 INR
- Rs. 501 to Rs. 1000 INR
- Rs. 1001 to Rs. 2000 INR
It depends upon which bank you are banking with. If you want to know the exact charges. Then you can do that with the help of the schedule of charges.
Visit the website of your bank and look for “Schedule of Charges”. You can find it in the footer of the website.
If you need an example for this page. Then you can refer to the one of Axis Bank here.
Will I Lose Services?
No, you will not lose access to any of the services offered by your bank for not maintaining balance. All the services will be active. But the bank might charge you extra for using them.