Here's some good news for savings account holders. The Reserve Bank has asked banks to start calculating interest rates on savings accounts on a daily basis from April 1.
This move will enable saving bank account holders to earn higher interest rates.
Currently, banks calculate interest (3.5 per cent per annum) on these accounts on the lowest available balance, between 11th and the last date of a month.
The new system would help saving account holders earn 16-18 per cent more from their deposits. According to bankers, the new system will amount to higher interest payouts and may even result in a slight rise in the cost of funds.
The RBI had announced this in the April 2009 and had given time to all banks to get their IT infrastructure in place for a smooth transition to the new system.
"We advise that payment of interest on savings accounts may be made by banks on a daily product basis with effect from April 1," RBI said in a notification, which also asked banks to ensure a smooth transition and work out the modalities in this regard.
Currently, interest rates on saving accounts are de-regulated, barring up to Rs 200,000. The RBI only administer interest rates on saving bank deposits up to Rs 200,000, and for the deposits above this amount, banks are free to give any interest rates.
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