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Understanding Quarterly Average Balance (QAB) vs Monthly Average Balance (MAB)
Posted on Thursday, November 14th, 2024 | By IndusInd Bank
Maintaining a minimum balance is often a requirement in current accounts. This balance helps banks maintain liquidity and manage the cost of operations. Two of the most commonly used metrics for this are Quarterly Average Balance (QAB) and Monthly Average Balance (MAB). Though they sound similar, QAB and MAB are distinct in their calculation methods and implications.
Let’s break down what QAB and MAB mean individually, highlight their key differences, and explore what options you have got to avoid high minimum balance requirements.
What is QAB?
The quarterly average balance refers to the minimum average balance that must be maintained in your current account over a quarter (3 months). Banks calculate this by summing up the daily closing balances for each day in the quarter and then dividing the total by the number of days in that quarter.
What is MAB?
The monthly average balance is the average balance you must maintain within a given month. Here, the bank sums up the closing balances for each day in a month and divides the total by the number of days in that month.
Note: If your current account balance falls below the required average, your bank might levy a non-maintenance charge.
Comparing QAB and MAB | Key Differences
| Criteria | MAB | QAB |
| Time period | Calculated over a 1-month period | Calculated over a 3-month quarter |
| Frequency of monitoring | Assessed at the end of every month (12 times a year) | Assessed at the end of every quarter (4 times a year) |
| Impact of daily balances | More sensitive to daily balance variations | Less affected by short-term fluctuations in balances |
| Penalty risk | Higher, as a few low-balance days can affect the average | Lower, due to the longer calculation period |
| Account type suitability | More suitable for those with a regular financial routine and predictable monthly income | Ideal for those with fluctuating income or spending habits |
| Flexibility | Requires more consistent and careful account balance management | Provides greater flexibility by accommodating balance fluctuations throughout the quarter |
Also Read: Exploring UPI: Can Current Account Holders Utilise It?
Want a Current Account Without High Minimum Balance Requirements? Here is a Solution
Want to open a current account but don’t want the hassles of high minimum balance requirements? It is wise to opt for the Indus Max Current Account by IndusInd Bank, which only needs a minimum average balance of ₹10,000. This digital current account comes with a host of valuable features, including:
- Free cash deposit: You can deposit up to ₹6 lakhs for free at home and non-home locations
- Unlimited free transactions: NEFT, RTGS, and IMPS transactions incur no cost
- Auto-sweep facility: With the auto-sweep feature, any surplus funds get automatically moved to linked fixed deposits and earn higher returns
- Doorstep banking: Enjoy the convenience of cheque and cash pick-up/delivery services directly at your doorstep
A 100% digital process allows you to open a current account in under 20 minutes and get it activated within 24 hours.
Take a look at the steps below:
Step 1: Apply online: Visit the bank’s website and go to the “Current Accounts” section. If a low MAB is your priority, choose the IndusInd Bank Indus Max Current Account from the list and click on “Apply Now” to start the process. You can also start the process with a mobile banking app.
Step 2: Provide contact details: Enter your Aadhaar-linked mobile number, email address, and PAN details. Also, select the type of current account you wish to open (e.g., sole proprietorship or individual) and specify your location.
Step 3: Submit business details: Here, share your business information such as company name, industry type, annual turnover, Udyam registration number, and GST details.
Step 4: Select the current account variant: Reconfirm the current account you have chosen to finalise the application process.
Step 5: Submit the application: After reviewing the application, hit submit. The bank will process your information and may schedule a video KYC for both the business and authorised signatories. Upon successful verification, your current account will be activated.
Ending Note
While both QAB and MAB are designed to make sure that account holders maintain a healthy balance in their current accounts, they operate over different time periods and have distinct implications. It is critical to understand how each is calculated and their respective penalties to manage your finances more effectively.
It’s practical to opt for the Indus Max Current Account, which comes with an MAB requirement of only ₹10,000. You also enjoy benefits like high transaction limits, doorstep banking services, free electronic transactions, premium digital solutions, and an auto-sweep facility to earn interest on surplus funds.
In simple words, you enjoy affordability and high-end banking features in a single package. Apply Now!
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
