Freeing of Savings Bank Rates

According to a Reserve Bank of India (RBI) mandate, from April 1, 2011 banks will calculate interest paid on money kept in the savings bank account on a daily basis. This is a departure from the earlier practice of calculating interest on the lowest balance after the 10th of every month


In rising Interest Rate scenario, comes a whiff of hope in the form of freeing up of Saving Bank Account rates. RBI has mentioned that uniform rate has to be charged for deposits up to Rs. 1 lakh

It was last fixed @4.00 % p.a, to be calculated on daily product basis from 03.05.2011

Fixed deposit rates were freed in 1997; and further it has taken over 14 years to free the SB accounts rates. So next time your bank may have a deal different for you and your neighbor.

SB account is used by all & sundry. and there was a time when Interest payable half-yearly, every January and July on the minimum balance in the account, between the 10th and last day of the month. Some times, the month of payment varied, but it did n't matter because one never got a chance to earn out of the month end incomes like salaries. It has become history now. Not only your daily balances are counted, but also, you get paid the market rates. Enjoy

DBOD.Dir.BC. 41/13.03.00/2011-12

October 25, 2011

Deregulation of Savings Bank Deposit Interest Rate

In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949 and in partial modification of its directive DBOD.Dir.BC.No.89/13.03.00/2010-11 dated May 3, 2011, the Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that banks are free to determine their savings bank deposit interest rate for resident Indians only with immediate effect subject to two conditions. First, each bank will have to offer a uniform interest rate on savings bank deposits up to Rs.1 lakh, irrespective of the amount in the account within this limit. Second, for savings bank deposits over Rs.1 lakh, a bank may provide differential rates of interest, if it so chooses, subject to the condition that banks will not discriminate in the matter of interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date, at any of its offices.

(B. Mahapatra)
Executive Director

Source : www.rbi.org.in