Banking

What is AMB Average Monthly Balance?

Banks usually have a criteria of the minimum balance that is require by them which the customer has to maintain in order to avoid fines that the bank charges for the non maintenance of balance which reflects in the bank statement as AMB .

The AMB of various banks differ banks to banks it goes from zero balance (Basic saving account) to 5000, 10000 or greater. If you have opened a bank account initially at 5000 AMB doesn’t mean that it will be like that forever. It depends on the bank to charge the AMB to a new value. In order to keep track of it you will usually get a mail of check the website of the bank

The fine for non maintenance of the AMB also varies from various banks. AMB fines varies from the minimum balance left

E.g. – if your MAB is 10000 your fines varies when it’s between 5000-10000 or between 2500-5000 or less than 2500.




How to maintain AMB Average Monthly Balance lest consider it is 10000

  • The Easy way
  • Keep the amount said by the bank as it for the whole month and never put the balance below zero . so with that you don’t have to work on how to maintains the Minimum Balance

  • The Hard way
  • Now for some reason your amount goes below 10000 after 10 days of a month . now even if you put 10000 just 5 days before the month end . it doesn’t mean you won’t be charged . you will be charged for non maintain of the account balance.

    The AMB is calculated on the account balance that you have at the end of the day of closing balance of that day . So suppose you have kept 10000 for 30 days the amb is calculated as (10000*number of days in a month )/number of days of month

    10000*30=300000/30(number of days in a month )= 10000 AMB

    Consider you kept 10000 for 15 days in bank other days you had zero balance so AMB will be as follows

    10000*15=150000 inr

    0*15=0

    Total AMB of the month = (150000+0)/30=5000 AMB

    So your AMB for the month is 5000.

In simple terms the AMB is the addition of closing balance of every day * the number of days of the month.

Below is an example if the records are as follows

Date End of Day Balance Average Addition
1/1/2017 2000  
2/1/2017 500 2500
3/1/2017 100 2600
4/1/2017 7000 9600
5/1/2017 1500 16600
6/1/2017 900 18100
7/1/2017 10000 19000
8/1/2017 15000 29000
9/1/2017 6000 44000
10/1/2017 500 50000
11/1/2017 70 50500
12/1/2017 790 50570
13/1/2017 500 51360
14/1/2017 6000 51860
15/1/2017 8000 57860
16/1/2017 2000 65860
17/1/2017 1000 67860
18/1/2017 500 68860
19/1/2017 0 69360
20/1/2017 0 69360
21/1/2017 0 69360
22/1/2017 3000 69360
23/1/2017 3000 72360
24/1/2017 3000 75360
25/1/2017 3500 78360
26/1/2017 500 81860
27/1/2017 500 82360
28/1/2017 20 82860
29/1/2017 0 82880
30/1/2017 0 82880
Total AMB   82880/30=2762.66

So above is a rough example to make you clearly understand the AMB with the average calculation the AMB for the month Is 2762.66 which is below 10000 AMB of bank




Here is another example if you have zero balance the entire month than how to manage AMB .

Date End of Day Balance Average Addition
1/1/2017 0  
2/1/2017 0 0
3/1/2017 0 0
4/1/2017 0 0
5/1/2017 0 0
6/1/2017 0 0
7/1/2017 0 0
8/1/2017 0 0
9/1/2017 0 0
10/1/2017 0 0
11/1/2017 0 0
12/1/2017 0 0
13/1/2017 0 0
14/1/2017 0 0
15/1/2017 0 0
16/1/2017 0 0
17/1/2017 0 0
18/1/2017 0 0
19/1/2017 0 0
20/1/2017 0 0
21/1/2017 0 0
22/1/2017 0 0
23/1/2017 0 0
24/1/2017 0 0
25/1/2017 0 0
26/1/2017 0 0
27/1/2017 0 0
28/1/2017 0 0
29/1/2017 150000 150000
30/1/2017 150000 300000
     
Total AMB   300000/30=10000

So above was another example where you have zero balance the entire month just to manage AMB you put 150000 in bank for two days which equals 300000 total eod balance addition .

Therefore 300000/30= 10000 .

Either you keep in your bank 20000 for 15 days Or 300000 for 1 day like that to maintain the AMB

HOPE YOU UNDERSTOOD WHAT I WAS TRYING TO MAKE CLEAR

IF YOU HAVE ANY DOUBT LEAVE YOUR QUESTION DOWN BELOW AND I WILL TRY TO REPLY TO ALL OF YOU .




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