Monthly Average Balance (MAB): Meaning, Full Form, Charges, Calculation, & Tips
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  • Personal
  • Business
  • Corporate
  • Private Banking
  • Privy League
  • NRI Services
  • Investors

Savings accounts offer a secure avenue to manage your finances, but they come with specific terms and conditions. One such requirement is maintaining a specific minimum balance, known as the Monthly Average Balance (MAB).

MAB, the abbreviation for Monthly Average Balance in banking, represents the average amount that must be present in your account at the end of each month. It's an essential aspect of your banking experience. In this blog, we'll discuss the concept of Monthly Average Balance, its calculation, and the implications of falling below the required MAB. This blog will also explore how MAB requirements vary between banks and account types.

What is Monthly Average Balance?

Monthly Average Balance (MAB) is a crucial metric in banking that reflects the average amount you need to maintain in your account over a month. Here are the key points:

  • MAB is calculated by taking the average of your daily account balances for a given month.
  • It serves as a benchmark set by banks, ensuring customers maintain a minimum balance in their accounts.
  • Falling below the stipulated MAB can result in penalties or charges.
  • Different banks and types of accounts may have varying Monthly Average Balance (MAB) requirements, so it's important to be aware of your account's specific terms.
  • Maintaining the MAB not only helps you avoid penalties but also ensures your account is in good standing.

How to Calculate Monthly Average Balance?

Banks calculate the monthly average in savings accounts. The manual method of calculating MAB requires a sum of all end-of-day balances and dividing by the number of days in the month.

Here’s the monthly average balance formula to calculate MAB.

MAB = (total end of the day closing balances) / (number of days in a month)

For example, if you had Rs 1,000 for 15 days and Rs 1,500 for 15 days, your MAB would be (Rs 1,000 x 15 + Rs 1,500 x 15) / 30 = Rs 1,250.

You can also easily and accurately calculate your personal average monthly balance by utilising the monthly average balance calculator online.

By computing, you can obtain the minimum monthly average balance for your savings account.


Tips on Maintaining a Healthy Monthly Average Balance

A healthy monthly average balance on a savings account will help you avoid penalty fees and minimise monthly average balance charges, ensuring you have a seamless experience with the bank.

Here are some tips to help you keep your MAB on track:

  • Regular Monitoring: Maintain MAB by constantly monitoring your account.
  • Automate Transfers: Use automatic withdrawals from other account deposits in case of any shortfall.
  • Budget Wisely: Always know what kind of expenditure you are making, and avoid overspending.
  • Use Mobile Banking: Mobile banking applications can be utilised to monitor real-time balances.
  • Explore Account Types: Consider a different type of account that may better serve the MAB requirement.

Also Read: How to Calculate Interest on Savings Account

What are the Fees & Charges Associated with MAB?

Understanding the fees and charges associated with Monthly Average Balance (MAB) is crucial to avoid unexpected financial burdens. Here's what you should know:

  • Penalties: Falling below the required MAB can result in penalty charges, which vary from bank to bank.
  • Service Restrictions: Some banks may impose restrictions on accounts with consistently low MAB.
  • Interest Loss: Maintaining a lower balance may lead to reduced interest earnings on your savings account.
  • Account Closure: In extreme cases, failure to meet MAB requirements could lead to account closure.

To avoid these fees and charges, it's essential to stay informed about your bank's specific MAB rules and work towards maintaining the required balance in your account.

Differences between MAB & AMB

Parameters Monthly Average Balance (MAB) Average Monthly Balance (AMB)
MAB is an average of daily balances in a month.
AMB is an average of daily balances over a month.
Usage It is commonly used in savings accounts.
It is often used in current accounts.
It is usually calculated for savings accounts.
It is typically for business accounts.


Also Read: What is e-KYC? Definition, Process,

Frequently Asked Questions

1. What is the Full Form of MAB?

MAB full form in banking stands for Monthly Average Balance. It is the average balance maintained daily for a particular month.

2. What are the consequences of not maintaining the required MAB?

Failure to meet Monthly Average Balance requirements may result in penalties and restrictions on your account. Thus, it is crucial to monitor your daily and monthly balances.

3. How often is the MAB requirement assessed by the bank?

Banks typically assess MAB Balance on a monthly basis.

4. Can MAB charges vary from one bank to another?

Yes, MAB charges can differ between banks, so it's important to be aware of your specific bank's policies.

  • MAB ensures your savings account maintains a minimum balance, which, in turn, safeguards your ability to cover essential expenses.
  • Falling below the MAB threshold can result in fines and restrict access to critical banking services.
  • Skilful account management can help you avoid MAB-related fees. Monitor your balances, set up automated transfers, and practise effective budgeting.
  • Familiarising yourself with your bank's MAB regulations is essential to prevent unexpected financial complications.
  • Overall, clearly understanding MAB and actively managing it represents a wise financial move.


Maintaining your Monthly Average Balance is vital for smooth banking. Understanding MAB is necessary to manage your accounts wisely. It can help you avoid unnecessary charges and financial stress. Keep an eye on your balance and ensure you meet the requirements to maximise your banking experience.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.