A minimum balance is the minimum amount of money that a bank or credit union requires a customer to keep in their account in order to avoid being charged a fee. The minimum balance is usually set by the bank or credit union and is typically based on the type of account the customer has. For example, a checking account may have a minimum balance of $100, while a savings account may have a minimum balance of $500. What is CRR and SLR? The Cash Reserve Ratio (CRR) is a percentage of total deposits that banks are required to maintain as cash balance with themselves. The rest of the deposits can be used by banks for giving loans and advances, for investment in government and other approved securities, etc.
The Statutory Liquidity Ratio (SLR) is the percentage of total deposits that banks have to maintain in the form of cash, or gold, or government approved securities before they can lend. What is a maintaining balance? A maintaining balance is the minimum amount of money that you are required to keep in your account in order to avoid being charged a fee. How is AMB calculated? The answer to this question can be found in the Schedule of Fees and Charges for the particular bank in question. However, in general, AMB is calculated as a percentage of the total value of the assets under management, and is typically charged on a quarterly or yearly basis.
Why banks have minimum balance?
The purpose of a minimum balance is to offset the costs associated with providing banking services. In order to have a checking account, for example, banks must cover the costs of processing transactions, maintaining records, and providing customer support. A minimum balance helps to ensure that these costs are covered.
There are a few different ways that banks can charge for minimum balances. The most common is to charge a monthly fee, which can be a flat fee or a percentage of the account balance. For example, a bank may charge a $5 monthly fee for accounts with balances below $1,000.
Another way that banks can charge for minimum balances is to offer different tiers of service, with different fees for each. For example, a bank may offer a basic checking account with a $5 monthly fee, and a premium account with a $10 monthly fee. The premium account may offer higher transaction limits, more favorable interest rates, or other perks.
Finally, some banks may charge a penalty if the account balance falls below the minimum. This penalty may be a one-time fee, or it may be a recurring charge. For example, a bank may charge a $25 penalty for each month that the account balance is below the minimum.
In general, banks require a minimum balance in order to offset the costs of providing banking services. The specific fees and penalties associated with minimum balances vary from bank to bank.
What is zero balance account called?
A zero balance account is a type of bank account where the account holder is not required to maintain a minimum balance. This type of account is often used by businesses as a way to manage their cash flow more efficiently. zero balance accounts can also be used by individuals who want to avoid paying fees for having a low balance in their account.