You can earn more interest on your savings account now! Recently, the Reserve Bank of India has issued a directive to banks that they should start calculating interest rates on savings accounts on a daily basis from 1st April of this year.
The interest rate is 3.5 percent per annum and will be credited on half yearly basis. At present the interest is calculated on the minimum balance held in the account from the 10th of each month to the last day of that particular month. For example, if you have Rs.10,000 in your savings account one day and then Rs.1,000 another day, the amount taken for calculation of interest in that month would be Rs.1000 only.
For many people who get salary in the first week doesn’t earn any interest on their deposits for the first nine days of every month. A salaried person’s account gets depleted as the month goes on and he ends up earning interest only on the minimum balance left in his savings account.
The interest paid on the savings account will be on the daily minimum balance from 1st April 2010. The interest rate will be calculated both on Rs.10,000 as well as Rs.1,000.
The RBI had asked the banks to follow this rule several months ago but banks fiercely resisted and petitioned against this new directive. Because this move is likely to increase the interest outgo of banks and minimize their earnings. However, RBI stuck to its word and notified the rule recently.
According to the new RBI directive, only commercial banks, which include all banks other than co-operative ones, should follow this new method of interest payment.