Banks to calculate interest on savings account on a daily basis from 1 April
20 Feb 2010
The Reserve Bank of India (RBI) has directed scheduled commercial banks in the country to calculate interest on savings accounts on a daily basis.
Accordingly, banks will pay interest on savings accounts on a daily product basis with effect from 1 April 2010, RBI said, adding the it has further advised banks to work out the modalities in this regard, in order to ensure a smooth transition.
"We advise that payment of interest on savings bank accounts may be made by banks on a daily product basis with effect from April 1, 2010," RBI said in its directive to banks.
RBI said commercial bank branches now have satisfactory levels of computerisation to support such calculation.
The RBI, had, in its annual monetary and credit policy statement on 21 April 2009, proposed that payment of interest on savings bank accounts by scheduled commercial banks would be calculated on a daily product basis with effect from 1 April 2010.
RBI, in a master circular dated 1 July 2008, on interest rates on rupee deposits - both resident and non-resident - had advised banks that in the case of savings deposits, interest should be calculated on the minimum balance to the credit of the deposit account during the period from the 10th to the last day of each calendar month and credited to the account only when it is Re1 or more.
RBI said it had also referred the matter to the Indian Banks' Association, which was of the view that payment of interest on a daily product basis would be feasible only when computerisation in banks is completed.