ABB stands for average bank balance. It is a simple measure of how much money usually sits in an account, taken from the bank statement.
There is no single method. Two common ones:
- Daily average: add each day’s closing balance, then divide by the number of days.
- Sample dates: average the closing balance on fixed dates each month, such as the 5th, 15th and 25th.
Example, made-up numbers, sample dates
| Month | 5th | 15th | 25th | Average |
|---|---|---|---|---|
| Sep | 2.0 | 3.5 | 1.0 | 2.17 |
| Oct | 1.5 | 4.0 | 1.5 | 2.33 |
| Nov | 2.5 | 3.0 | 0.5 | 2.00 |
| ABB, ₹ lakh | 2.17 |
How it gets read
Credit teams often compare ABB with the proposed EMI, as an EMI to ABB ratio. A balance can also be arranged to look good, so ABB alone proves little. Check it alongside:
- Whether balances spike only around statement or EMI dates
- Inward and outward bounces
- Whether large credits come from the business, or from related accounts
Which dates and thresholds apply is a matter for your institution’s policy.