MAB rule means the Minimum Average Balance requirement that banks set for your savings account.
Here’s how it works:
1. What MAB Is
- Banks often require that the average balance in your account during a given period (usually a month or quarter) should not fall below a set amount.
- This average is calculated, not the exact closing balance every day.
Formula (Monthly Average Balance):
MAB = Sum of daily closing balances in the month / Number of days in that month
2. Example
Suppose your bank’s MAB is ₹5,000.
| Date Range | Balance | Days | Balance × Days |
|---|---|---|---|
| 1st–10th | ₹8,000 | 10 | ₹80,000 |
| 11th–25th | ₹3,000 | 15 | ₹45,000 |
| 26th–30th | ₹5,000 | 5 | ₹25,000 |
Total of “Balance × Days” = ₹1,50,000
Number of days in month = 30
MAB = ₹1,50,000 ÷ 30 = ₹5,000 ✅ (requirement met)
3. Why Banks Use It
- Encourages customers to keep a certain minimum deposit.
- Helps banks maintain liquidity for lending and other operations.
4. Penalty for Not Maintaining
- If your MAB falls below the requirement, the bank may charge you a penalty, which varies by bank and branch location (metro, semi-urban, rural).
- Some banks have recently removed these penalties, especially public sector banks.
Public Sector Banks (PSBs): Most Have Removed MAB Requirements
-
Yes, many major public sector banks in India have completely done away with minimum average balance (MAB) mandates on savings accounts—and also waived related penalties.
-
State Bank of India (SBI) removed the MAB requirement way back in 2020.
-
Canara Bank scrapped MAB requirements in May 2025 for all savings account types—including salary and NRI accounts.
-
Indian Bank eliminated the minimum balance criteria across all savings accounts effective July 7, 2025.
-
Punjab National Bank (PNB) no longer levies penalties for falling below the MAB.
-
Bank of Baroda waived charges from July 1, 2025, on standard savings accounts when MAB isn’t maintained (premiums excluded).
-
Union Bank of India will waive penalties for not maintaining the minimum balance from the quarter ending September 2025.
-
-
Official confirmation: The Ministry of State for Finance stated that, besides Basic Savings Bank Deposit Accounts (BSBDA) which inherently require no MAB per RBI guidelines, most PSBs have voluntarily eliminated MAB penalties in normal savings accounts too, in line with improving financial inclusion.
-
Objective behind the move: These actions aim to enhance customer convenience and attract more depositors, while still balancing financial inclusion goals.
Private Sector Banks: Mixed Trends, Notably ICICI Bank
-
While public sector banks have mostly moved toward zero-balance savings, major private banks are not fully following suit—some are expanding MAB requirements, especially for new accounts.
-
ICICI Bank:
-
Initially, effective August 1, 2025, they raised the MAB to a steep ₹50,000 for metro/urban, ₹25,000 for semi-urban, and ₹10,000 for rural branches for new savings accounts.
-
This caused significant backlash. In response, on August 13–14, 2025, they revised the new MAB thresholds downward to ₹15,000 (metro/urban), ₹7,500 (semi-urban), and ₹2,500 (rural).
-
Note: These changes apply only to new accounts opened on or after August 1, 2025—existing account holders remain under their original terms.
-
-
HDFC Bank, another large private player, also revised its MAB—but this too applies only to new savings accounts opened from August 1, 2025. Existing customers retain earlier, lower MAB levels.
-
Other private banks (like Kotak, Axis) still enforce their own MAB rules—and none of them have eliminated them entirely.
RBI’s View: Banks Have Full Discretion
The Reserve Bank of India has emphasized that there's no regulatory bans or directives preventing banks from setting MAB requirements—banks have the autonomy to decide what suits their policies.
Summary Table
| Bank Type | Status on Minimum Balance Requirement (MAB) |
|---|---|
| State-run Public Banks (SBI, Canara, Indian Bank, PNB, Bank of Baroda, etc.) | Most have removed MAB requirements and related penalties. |
| Union Bank of India | Waiving penalties from Sept 2025 onward. |
| Private Banks (HDFC, ICICI, others) | MAB remains; some have raised MAB for new accounts, particularly ICICI. |
| RBI | Doesn't regulate MAB; leaves it to banks' discretion. |
In Summary
-
If your question is whether banks have removed the MAB rule—the answer is: Yes, largely in the case of public sector banks—many have either fully scrapped them or waived penalties.
-
But for private banks, the trend is disparate: most continue to enforce MAB, and some (notably ICICI) have even raised it for new accounts—albeit with recent revisions following customer backlash.
-
RBI has not mandated any such changes; these are individual bank decisions.
0 Comments