Daily Interest Rates on Savings Accounts from April 1 2010

RBI has made it mandatory for all the banks in India to calculate interest rates for the amount lying in the customer’s savings bank account on a daily basis rather than monthly basis.  Previoulsy it used to be like banks will calculate interest rates only on the basis of the balance left on the savings bank account on the month end rather than throughout the month.  Thus if you were having Rs. 10,000 on the first of a particular month but within the month ends you withdraw a major chunk and leave only Rs. 500 as balance in your account, your interest rate will be calculated for Rs. 500 only and not for the Rs. 10,000 that you have kept for the nearly whole month but withdrew it at the last moment.  This option is totaly against the customers.

Thus to make the customers happy, RBI has instructed all the banks to calculate interest on a daily basis from April 1, 2010.  This new option would definitely make it a worthy move and help us get the better out of our savings bank account where most of us keep some funds as reserve but still previously you don’t earn anything out of it, but now it would indeed be extra worthy to hold funds on our savings account (either for emergency purposes or for any other regular withdrawal purposes).

It would be worth to wait watch for how welll the Indian banks are going to implement this and whether it will be continued on a regular basis or stops in between, as it has been the case on many occasions not only on the banking front but elsewhere too.  The one such example is the RBI ordering about the unlimited ATM withdrawal but later it was changed to 5 times per month from other bank ATMs.

It is also worthy to see how they add the interest acrued to our account, whether monthly or daily.  My guess is that the amount will be added on a monthly basis but the interest will be calculated on a daily basis.  RBI is really proving that they are indeed customer friendly with such initiatives but it is only these banks which are making it the other round by looking at their own convenience and profit rather than making the customers like us satisfied.