Federal Bank Minimum Balance — Account Types & Charges Explained

Shreya, a freelance graphic designer from Kochi, noticed a debit entry in her Federal Bank account titled “AMB Charges ₹350.”

Confused, she contacted customer support, only to learn that she had not maintained the Average Monthly Balance (AMB) required for her account.

“I thought I had enough money in my account,” she replied.

Like many customers, Shreya had assumed that as long as her balance didn’t hit zero, she wouldn’t be penalised. But in reality, AMB requirements vary based on the account type and location, and failing to maintain it could result in penalties.

This blog explains the minimum balance rules of Federal Bank, applicable penalties, and how to avoid unnecessary charges.

What is Average Monthly Balance (AMB)?

The Average Monthly Balance (AMB) is the average of daily closing balances in a calendar month. Banks calculate it to check whether you meet the required balance threshold set by the bank.

Formula:

AMB = (Sum of all daily closing balances in a month) ÷ (Number of days in that month)

For example, if you maintain ₹10,000 for 15 days and ₹5,000 for the other 15 days in April, your AMB would be:
(₹10,000 × 15 + ₹5,000 × 15) ÷ 30 = ₹7,500

If the required AMB is ₹10,000, you would be short by ₹2,500.

Federal Bank Minimum Balance Rules

Federal Bank offers various types of savings accounts catering to individuals, businesses, students, women, and NRIs. Each account has different minimum balance requirements, based on features and services.

Federal Bank Minimum Balance by Account Type

Read More - Minimum Balance Penalty 
 

Shreya was using a Facebook Selfie Account, which required ₹5,000 as AMB. She had maintained only ₹2,500, hence the penalty.

Penalty Charges for Not Maintaining Minimum Balance

The Federal Bank charges a fee if the AMB falls below the required limit. The penalty varies depending on the shortfall.

Federal Bank AMB Non-Maintenance Charges
 

GST at 18% applies over and above the penalty amount.

So, for a ₹350 penalty, Shreya ended up paying ₹413 (₹350 + ₹63 GST).

AMB Calculation: Real-World Scenario

Let’s assume Rahul, an NRI, has an NRE Savings Account that requires ₹10,000 AMB. Here's his balance activity for May:
 

• 1–10 May: ₹2,000
   
• 11–20 May: ₹5,000
   
• 21–31 May: ₹15,000
   

Sample AMB Calculation for NRE Account
 
Also Read -  BOB Minimum Balance
 

Rahul fell short by ₹2,419.35. That’s over 25% shortfall, so the penalty would be ₹100 + GST.

Zero-Balance Account Options in Federal Bank

Not everyone wants to track AMB. Federal Bank offers BSBDA and Jan Dhan Accounts that come with no minimum balance requirement.

Federal Bank Zero-Balance Account Features
 

Zero-balance accounts are ideal for pensioners, students, rural customers, and those who want basic banking access without penalties.

How to Avoid Penalties on Minimum Balance?

After incurring penalties twice, Shreya implemented a strategy to avoid them forever:

1. Maintain an Extra ₹1,000–₹2,000 Buffer

Small fluctuations won’t affect AMB if a buffer is maintained.

2. Set Balance Alerts

Federal Bank’s mobile app and SMS service allow alerts for low balance.

3. Link FD to Savings (Auto Sweep)

Some Federal Bank accounts allow linking to a fixed deposit that sweeps into maintain a balance.

4. Switch to a BSBDA

If you don’t transact regularly, converting to a BSBDA saves on penalties.

5. Opt for Monthly Deposits

Automate monthly deposits via SIP or RD to maintain a minimum balance.

Do Minimum Balance Charges Apply to Salary Accounts?

No, Federal Bank salary accounts do not have a minimum balance requirement as long as the salary credit is active.

However, if there is no salary credited for 3 consecutive months, the account is converted to a regular savings account, and AMB rules begin to apply.

Always check with the bank regarding conversion timelines and options.

Are Penalty Charges Refundable?

Federal Bank offers a one-time waiver of AMB penalty charges, subject to:
 

• Account holder’s request through the branch or customer care
   
• Reasonable justification (e.g., medical emergency, salary delay)
   
• Good past track record
   

Shreya applied via the app and received a refund after 4 working days.

Comparison With Other Banks

To understand where Federal Bank stands, here’s a comparison with leading banks in India:

Minimum Balance Comparison with Other Banks
 

Federal Bank’s AMB is more flexible than private banks like Axis or ICICI, but slightly stricter than SBI, which offers completely zero-balance accounts.

Conclusion: Save Money by Staying Informed

Shreya’s ₹350 mistake may seem small, but over a year, such charges could add up to ₹4,000–₹5,000 enough to fund an emergency or a short vacation.

By understanding your account type, minimum balance rule, and available zero-balance options, you can save thousands annually and manage your finances smartly.

FAQs on Federal Bank Minimum Balance

Q1. What is the minimum balance for a savings account in Federal Bank?
For most savings accounts, it is ₹5,000. For premium accounts, it can go up to ₹25,000. BSBDA accounts require no minimum balance.

Q2. What happens if I do not maintain the required balance?
The bank will charge a penalty ranging from ₹50 to ₹350 + 18% GST, depending on the shortfall.

Q3. Can I request a refund for AMB penalties?
Yes, you can apply for a one-time waiver through the branch or customer support. Approval depends on the case.

Q4. Is AMB calculated daily or monthly?
AMB is the average of the daily closing balances for an entire month.

Q5. How can I check if I’ve met my AMB?
Use the FedMobile app or net banking to track daily balances and calculate your monthly average.