How to deal with a changing minimum balance
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5 Comments
Banks have changed the mandatory minimum savings account balance amount from time to time. A rise in the amount can be a cruel blow to many account holders in these tough times. There is a financial implication of the change as it would end up blocking a larger amount of funds for account holders. While this cannot be avoided fully, there is a manner to tackle it in order to ensure the least hit. Let’s see how it can be done.Quarterly average balance
The manner of maintaining a balance in the savings account has changed for several banks over the years. Earlier this used to be a minimum figure that has to be present in the account at all times. Now this has changed to a quarterly average figure. This term itself is confusing for a lot of people. In this system, instead of a minimum figure the balance has to be maintained on an average basis calculated over the entire quarter. This could mean a situation where a larger amount is maintained for a few days while on other days the figure can fall below the minimum amount to complete the requirement. If the balance falls below the minimum figure over the quarter then banks will levy the charges.
Rise in figure
A rise in the minimum balance amount will obviously require some more funds from an account holder. So, for example, if the minimum figure is raised to Rs 10,000 from Rs 5,000, then there will be a need to maintain the higher figure as an average. The first thing to see is whether the new and higher balance figure is applicable to your account or whether it is restricted to new accounts only. If a person is maintaining a higher balance than required in the account then there might not be much of a change that is required. So, for example, a person who maintains around Rs 20,000 at all times in his/her account will not be impacted by such a change, but in other cases there can be a smart way to tackle the situation.
Dealing with the situation
Consider, for example, a situation where the quarterly balance requirement is raised to Rs 10,000 from Rs 5,000. In this situation, an investor will need to ensure that over a 90-day period he/she should have a sum total of the amount in the account coming to Rs 10,000 x 90 = Rs 9,00,000. This means the investor can keep either Rs. 10,000 for all 90 days, or some more amount for less days but maintain the average so that he/she can avail a zero balance facility. For example, if the individual has some extra amount of, say, Rs 50,000 then he/she can keep this in the account for 18 days and for the remaining period maintain a zero balance in the account.
The situation would vary depending upon the exact amount available with the individual, but the overall idea remains the same. This is to ensure that for a short period of time the higher balance in the account is used for the purpose of completing the overall requirement for the quarter and after that the amount is freed up so there is no restriction on the use of the amount in the account. This will ensure that the worry of the minimum balance is also taken care of when the requirement is completed in this manner.
Again not everyone might be able to adopt this strategy but in these tough times it is essential to ensure that every rupee is put to the maximum use. This will ensure that there is a lower cost of conducting the entire exercise and making the best use of the available money. This is also the time when the real benefit is magnified because of the overall situation.
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Published on April 20, 2009 · Filed under: Banking, Personal Finance, Savings Account; Tagged as: bank account, How To, minimum balance, Personal Finance, quarterly balance, savings account
5 Responses to “How to deal with a changing minimum balance”
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sukhdev said on June 15th, 2009 at 10:41 pm
i had opened 4 fdr a/c with Barklays bank for one year back.thay offered me zero balanced sb a/c with it.now after one year they have credited the fdr amount in my sb a/c without intimaion to me and charged rs 750/- + tax on all the four a/c.pl. beware of such banks.can any body help me where should the complaint should b lodged.
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Rupeetalk said on June 15th, 2009 at 11:55 pm
This is a normal practice with the banks to increase the level of minimum balance to increase their Net Interest Income. As CASA(Current Account/Saving Account)balance contributes a major figure in Net Interest Income(NIIs) of banks, they tend to increase the minimum balance, sometimes it occurs without any notification to customers. Thanks to the above post which says how to deal with the current situation. An amount of Rs 10000 kept for 90days at 3.5% rate of interest(current Saving Account interest rate in India) earns you
Rs 10087.76 while Rs 50000 kept for 18 days in Saving Account gives Rs 50086.37. So, in the latter case, you can use the money for the remaining 72 days at your discretion and earns interests for you also. So, it serves both purpose of maintaining the minimum balance in saving account and also let you gain extra returns. So, keep enjoying the Saving Account judiciously. -
Sanjay said on June 16th, 2009 at 12:03 am
Sukhdev, you can complain to the bank’s Branch Manager apprising them of all the transactions being done on your account without your notice. In case they don’t listen to you or make any kind of excuses, you can file your complaints with Bank’s Ombudsman which has been authorized to resolve all the consumers’ complaints. But before going to them, you must complain to the Branch Manager as this is the precondition before approaching to Bank’s Ombudsman.
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sameer Goyal said on September 6th, 2009 at 12:55 pm
Hi i opened a account with Standard Chartered Bank in Year 2007. On that time average Quarterly balance required to be maintained was rs 10000. I always maintain that balance. But they increase AQB to Rs 25000 in Year 2009 without any intimation. Also they debited my account two times with Rs. 1379. So total of Rs. 2780 Rs debited. How can they do so without any intimation. Now they are refusing to refund that amount. can any one help me to curb such banking practices. My cell no is 9810700333.
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@sameer Goyal
You can have a word with the branch manager and tell them you have not been informed of this change. Do all the work in writing. Incase they dont listen, complain to banking ombudsman with a copy to the branch manager too..The banking ombudsman will definitely help in this regard.
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