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What Is Minimum Average Balance In Saving Bank Account? – How Is It Calculated

As we all know maintaining ‘Minimum Average Balance’ in saving bank account is must in most of the banks these days. So when my friend went to open a saving bank account with ICICI bank, the bank executive ask him to maintain a minimum average balance of Rs 10,000 in saving bank account to avoid penalty. Like most of us he understood that he needs to maintain atleast Rs 10,000 in his saving bank account every day else bank will charge penalty from him.

This is a misconception between most of the account holders that if there account balance will go below the minimum balance requirement set by the bank any day then bank will deduct penalty charges from there account. But this is not how bank calculates minimum average balance on each saving account.

Minimum Average Balance

Minimum average balance means the average balance of the whole month or quarter. To calculate average balance of a saving bank account, bank takes the minimum account balance of each day and then divide that sum with the number of days of that month to get the average balance of that month.

Minimum Average Balance = Sum of all the EOD closing balance / Number of days in that Month

If the average minimum balance of your saving bank account comes out to be Rs 10,000 then bank will not charge any penalty even if your account balance was as low as Rs 2000 or so in-between the month.

Lets have an example to understand this concept in detail

Lets say you have Rs 15,000 in your saving bank account on the first day of August. Lets see how your account balance moves during the month and what is going to be your monthly average balance at the end of the month.

Minimum Average Balance

On adding the EOD balance of each day of August the total comes out to be 3,60,000 then putting values in formula,

Minimum Average Balance = 3,60,000 / 31

Minimum Average Balance = 11,613

In the above example, the opening balance amount at the beginning of the month was Rs 15000 which then reduced to Rs 11000 on withdrawal of Rs 4000 on Aug 7 and so on. After all the withdrawal and deposits during the whole month account holder manage to maintain the minimum average balance of Rs 10,000. So in this case bank will not deduct any penalty even if the account had Rs 8000 and Rs 2000 for 6 days and 4 days respectively in the month of August.

Both public and private sector banks have a minimum balance requirement set by them which needs to be maintained by each account holder. In some banks you have to maintain minimum average balance every month whereas some banks maintain quarterly average balance. Here I have listed some of the banks with there minimum average balance requirement :


Minimum Average Balance

Monthly / Quarterly


State Bank Of India (SBI) Zero
ICICI Bank Rs 10,000 (U) Rs 5000 (R) Monthly Rs 250
Axis Bank Rs 10,000 Quarterly Rs 750
HDFC Bank Rs 10,000 Monthly Rs 250
Bank Of India Monthly Rs 20
Bank Of Baroda Rs 1000 (U) Rs 500 (R) Quarterly Rs 100 (U) Rs 50 (R)
Punjab National Bank
Citi Bank Monthly Rs 500
Canara Bank Rs 1000 (CB) Rs 500 (WCB)
Union Bank Of India Rs 1000 (CB) Rs 500 (WCB)

 *U – Urban Area, *R – Rural Area, *CB – Cheque Book, *WCB – Without Cheque Book

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