Almost everyone in India has a saving account. The ultimate aim of saving account is to encourage the healthy habit of saving money. People here in India prefer saving account because it is very easy to manage, secure and highly liquid. The facility of the debit card has made saving account easy to manage and highly liquid. A person can use his funds anytime, and from anywhere he wants.
Another advantage of saving account is that a bank provides you the nominal interest rate on your saving account. The earlier interest rate on saving account interest rate was decided by the Reserve Bank of India, but now RBI has deregulated the interest rate on saving account means now the banks are free to set their own interest rate that they will provide to their depositors.
So, your savings bank account should facilitate easy deposit and withdrawal, should offer you a good interest rate, have a reasonable minimum balance mandate, offer personalized services, and overall convenience.
Besides having the above features, your savings account should also possess the following attributes:
- Safety of your money
- Efficient customer service
- Substantial Number of branches in the city you live as well as across the country
- Internet Banking
- Phone Banking
- Mobile Banking
Many people deposit most of their money in savings account, but they don’t get the interest rate they deserve. Earlier banks provide interest of only 3.5% on saving the account. But after deregulation, there is competition among banks to get hold of as many depositors as they can by increasing their respective interest rate.
Banks use different criteria to calculate interest rate before deregulation and after deregulation. Before deregulation, banks offer a very low-interest rate as compared to after deregulation. Many people don’t know how the bank calculates the interest rate on the saving account.
How is bank interest rate calculated?
Before deregulation, banks pay interest on lowest balance available in your account between the 10th and final day of every month and that too of 4% only. Any amount deposited in that period was not taken into account for the calculation of interest of that particular month, but any amount withdrawn during that period were taken into account.
For example, Raju had a balance of Rs.80000/- in his account as of August 10th. On August 21st, he received Rs.60000 as an amount deposited by one of his relatives. On the 29th August, he had withdrawn Rs. 100000 for her daughter’s marriage; thereby amount left with him in his saving account is Rs. 40000.
In his case, the bank would consider Rs.40000 for interest calculation, as it is the lowest amount available in his account between 10th and 29th August. So, the interest amount that Raju is eligible for the month of September will be for Rs.40000 @ 4% p.a. which amounts to Rs.133.33.
As effective from 1st April 2010, following RBI’s was authorized to rework on interest rate calculation method, banks started calculating interest on a daily balance method.
Let’s see the difference this move can make to Raju interest earned on his savings account:
From January 1st to 20th, he will be paid interest for Rs.80000.
From 20th to 29th, interest is calculated from Rs. 140000 and for the remaining three days, interest is calculated on Rs.40000/-
So, the interest he earns for September will be Rs.299.28/- against the lowest balance available method, whereby he would have earned Rs. 133.33/- only.
So, now every rupee you keep in your account is taken into consideration to calculate the interest rate. Your every rupee earns for you and you need not plan ahead for your withdrawals to gain maximum benefits 133.33/.
Depositors of saving account have benefited a lot because of the deregulation of saving account interest rate. Banks now can set their respective saving account interest rate on their own so they are increasing their interest rate to get as many depositors as they can. Sometimes people get less interest rate because they are unaware of the bank’s interest rates.
So, we are providing a list of saving account interest rates offered by the top public and private sector banks in India. It will help you to choose the bank which offers the best interest rate on savings account deposits.
Public Provident Fund (PPF) is another great investment and saving option which gives you fixed percentage returns. You can calculate PPF returns with the help of this tool.
High Paying Saving Account Interest Rates
Here’s a list of bank interest rate on savings account: –
| Bank Name | Savings Interest Rate Below Rs 1 Lakh | Savings Interest Rate Above Rs 1 Lakh |
| Yes Bank | 6% | 7% |
| Kotak Bank | 5.5% | 6% |
| RBL Bank | 5.1% p.a. | 6.1% 7.1% p.a. (Daily balance above Rs.10 lakh) |
| Indus India Bank | 5.5% | 6% |
| Lakshmi Vilas Bank | 5%Â p.a. (Daily Balance Up to Rs.5 lakh); | 6% p.a. (Above Rs.5 lakh) |
| Bandhan Bank | 4.25% p.a. (Daily balance up to Rs.1 lakh. Interest paid half yearly) | 5% p.a. (Daily balance above Rs.1 lakh. Interest paid half yearly) |
| ICICI Bank | 4% | 4% |
| Axis Bank | 4% | 4% |
| Citi Bank | 4% | 4% |
| HSBC Bank | 4% | 4% |
| HDFC Bank | 4% | 4% |
| IDBI Bank | 4% | 4% |
| State Bank of India | 4% | 4% |
Here, we have listed the saving account interest rates for most of the top nationalized and private sector banks. Rest of the banks offer an interest rate of 4% p.a. on deposits made in a savings account.
This list helps you to know which bank is paying you at higher interest rate.