New Delhi: State Bank of India (SBI) has revised charges for non-maintenance of Average Monthly Balance (AMB) in savings accounts effective from April 01, 2018. The country's largest bank took to Twitter and informed, "Effective, April 2018, SBI has reduced the AMB requirement by up to 40%, and the charges for non-maintenance of AMB have been reduced to be one of the lowest in the industry."


At present, many banks are insisting the bank account holders to maintain AMB, else they would be penalised. As a savings account holder, one needs to keep a check on the average balance limits that are set by the banks. Some banks may ask you to keep a low limit of Rs 1,000 while some have set it at Rs 5,000.

In order to avoid penalties, you need to minimum balance requirement and for that, one must know how it is calculated them and ensure that this requirement is met while optimising the amount of funds kept in a savings account.

For your help, here's how to calculate the average monthly balance for bank savings accounts:

Suppose for an example, a bank asks that you maintain Rs 5,000 as average monthly balance. This is how AMB will be calculated in August.

On 1st August, the balance in the account is Rs 5,000
On 10th August, you withdrew Rs 3,000 take place
On 20th August, you again deposited of Rs 10,000 in the bank

Now, from August 1 to August 10, i.e., 9 days, total balance will be Rs (5000*9) = Rs 45,000

From August 10 to August 20, total balance will be Rs (2000*10) = Rs 20,000

Now, from August 20 to August 31, i.e., 11 days, total balance will be Rs (12,000*11) = Rs 1,32,000

Therefore, from August 1 to August 31, the total balance was maintained as Rs 1,97,000. The average for 31 days will be Rs 6,354 which is above the required limit. Hence, no penalty will be levied. The number of days is calculated on the basis of the day's closing balance.