Interest on Savings Bank Accounts

Interest on Savings Bank Account

Rate and periodicity

The periodicity of interest payment in savings account is usually half yearly. However, some banks pay interest at quarterly rests.

For long, banks in India used to pay uniform rate of interest in savings bank accounts. However since October last year, the RBI has permitted relaxations and allowed individual banks to fix up their rates subject to a couple of conditions:

(a) A bank has to have one single rate for all savings deposits up to Rs 1 lakh;

(b) A  bank can offer different rates for savings deposits above Rs 1 lakh, but it cannot discriminate between two or more such deposits in terms of rate of interest if made on the same date at any of its offices;

This has already made some impact and you may be interested to know if any bank has begun to offer more for savings deposit?

Most of the banks presently offer 3.5% p.a. for savings deposits. However you must have observed spells of advertising by a couple of banks that they are paying much more.

Kotak Mahindra Bank is presently offering 5.5% p.a. on all savings deposit with balance up to Rs 1 lakh and 6 % p.a. for those with balance above Rs 1 lakh;

Yes Bank presently offers 6% on all savings deposit with balance up to Rs 1 lakh and at 7% p.a. for those with balance beyond Rs 1 lakh;

If you maintain heavy balance in your savings bank account, you may be keen about the rates of interest offered by various banks.

TDS on interest paid on savings bank accounts

Banks do not deduct any TDS on interest paid to savings bank accounts.