Intellectual Thoughts by Sanjay Panda: Savings a/c will earn daily interest

Savings a/c will earn daily interest

Savings bank account can earn you more interest now. The Reserve Bank of India (RBI) has issued a directive in its policy document that will change the way interest is paid on the minimum amount present in a savings bank account each day.At present, the interest (3.5 per cent per annum) is calculated on the minimum balance held in the account from the 10th of each month to the last day of that month. So, if a bank customer has Rs 1 lakh in his savings account one day and then Rs 100 another day, the minimum balance taken for calculation of interest in the period would be Rs 100.

But, from April 1, 2010, the interest paid on the savings account will be on the daily minimum balance. In other words, even the Rs 1 lakh balance in the savings account will earn the customer interest, even if it’s withdrawn later on. As per the new directive issued by RBI, only commercial banks will need to follow this new method of interest payment on savings accounts. Commercial banks include all banks other than co-operative ones.

This means that the money will start earning higher interest even as it remains liquid and safe.

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