Quarterly Average Balance (QAB) Calculation for Savings Bank Account!!

High misconception among the people about average quarterly balance is that the balance which is to be maintained should be kept in savings bank account throughout the quarter. Say for example for a account the average quarterly balance to be kept is Rs.5,000. What people do here is they keep extra Rs.5,000 throughout the quarterly in their bank account to avoid any penalty charges as failure in maintaining the balance attracts unnecessary charges on the shortage funds.(List of banks that provides Savings bank account are ICICI bank, Axis bank, HDFC bank etc.)

But this is not the case, as the calculation of Average Quarterly Balance is done in a different way and same is very easy to understand. Let see how it’s been calculated with an example;

By Definition: The Quarterly Average balance (QAB) is the average of all the closing day balance for any quarter. In simple terms, add up all the closing day balance of the quarter and divide the same with the number of days of that quarter.

Therefore, QAB = (Total of all closing day balance in a quarter/total number of days of that quarter)

Example: Let say you are having a Savings bank account were you are supposed to maintain a Average quarterly balance of Rs.20,000, and the quarter we are talking here is April to June. You withdraw on April 20^th  a sum of Rs. 20,000 and redeposit on June 20^th a sum of Rs.10,000. What would be your Average quarterly balance is calculated as below; 

With a Average quarterly balance to be maintained at a level of Rs.20,000, you fail to keep the balance as per the above  example. What you got to keep in mind is for any quarter the sum of closing balance should not be less than (Rs.20,000 * 91) in this case, which is Rs.18,20,000. You might keep the same amount for one day in your account or you may distribute the same over the quarter.