Savings Account Interest Rates May 2024

The interest rate on a savings bank account is crucial as it helps the consumer determine how much they can earn on parked money. Both public sector and private sector banks offer interest on their savings accounts to facilitate users to earn maximum interests. 

We’ve put together a list of savings account interest rates to help you choose the account that’s most suitable for your needs. 

Savings Account Interest Rates of Public Sector Banks

The Government of India has merged a few public sector banks for the ease of their management, hence the interest rates of the merged banks will be that of the bank they are merged with. 

The interest rates of majority of Indian banks are as follows: 

Bank of Baroda

Bank of India 

Bank of Maharashtra

Canara Bank

Central Bank of India 

In the Central Bank of India, interest on deposits beyond INR 10 lakh is linked to the repo rate.

Indian Overseas Bank

Punjab and Sind Bank 

Punjab National Bank

State Bank of India 

UCO Bank 

Interest Rates of Private Sector Banks

Axis Bank

In Axis Bank, the interest on deposits of INR 10 crore and more than INR 10 crore is linked to the repo rates.

Bandhan Bank

CSB Bank

City Union Bank

DCB Bank

Dhanlaxmi Bank

Federal Bank

The Federal Bank has linked the interest on the deposits to the repo rate.

HDFC Bank

ICICI Bank

IDBI Bank

IDFC FIRST Bank

IndusInd Bank

Karnataka Bank

Karur Vysya Bank

Kotak Mahindra Bank

Nainital Bank

RBL Bank

South Indian Bank

Tamilnad Mercantile Bank

Yes Bank

The above interest rates and details on savings accounts are updated as on Nov. 21, 2022. While we update this information regularly, bank’s may have changed the rate of interest since the page was last updated.

How do Banks Calculate Interest?

Banks in India calculate interest daily on the closing amount of that particular day; let’s understand this with an example. An account has INR 1 lakh in it at the end of the day and the bank is providing an interest of 3%, then the formula of simple interest will be used to calculate the interest on that sum for that particular day. 

The procedure is as follows: 

                        100,000 X 3/100 X number of days/ 360

                        100,000 X 3/100 X 1/ 360 = INR 8.333

                         INR 8.333 is the interest for a single day.

X = multiplication sign 

This process will take place every single day on the amount and will be credited to the account every month. Once the amount credited the aggregate (amount + interest) will be regarded as the principal amount, this means that the account holder will get an interest the amount deposited by him and also the interest that he has received from the bank. This method is known as compound interest. 

Role of Repo Rate In Calculation of Interest

Some of the banks as per the below tables have linked their interest rates with the repo rate and hence any fluctuation in the repo rate will change the interest rate as well. Now to understand this process better we will have to understand the term repo rate first.

Repo rate is the interest at which the central bank of a country (RBI in India) lands money to other banks.

RBI has recently increased its repo rates.

As we understand that repo rate is the interest at which banks get loans from RBI so any increase in that will increase the financial burden on the bank, though RBI lends money at a smaller rate of interest than what the banks charge from their applicant but nevertheless the burden of the hike will eventually fall on the customers of the bank. Eventually the customers pay more interest on their loans.

While it increases the burden on people paying their loans back, it is beneficial for people’s deposits like savings and fixed deposits (FDs), making them more valuable for the banks as they satisfy their requirement of cash without borrowing money from an external source like RBI. Hence, increase in repo rate will increase the interest rate on any kind of deposit.

There is no standardized rule of linking the interest rates to the repo rates and banks apply this at their own convenience, for example Axis Bank a month ago had deposits above 10 crore linked to the repo rate. Post the RBI hiking the repo rate this May, Axis Bank switched to the simple interest method and halted linking interest rates offered to the repo rate.

The formula to apply the repo rates on the interest is also not standardized and differs from bank to bank.

Features and Benefits of Savings Account

Savings deposit insured by DICGC: The Reserve Bank of India (RBI) through its DICGC scheme protects both investments and interest earned on account holders’ savings deposits of up to INR 5 lakh in cases when the bank fails.

Cash withdrawal options: 

• Self-withdrawal at branch (passbook, cheque, withdrawal slip).
• ATMs

Most banks require depositors to visit the bank branch for withdrawal of higher amounts in lakhs with documents for proof of identification, along with a bank passbook. Cash withdrawal at ATMs other than the bank with savings accounts are chargeable. Also, cash withdrawal at your bank’s ATM is chargeable after crossing a certain number of transaction limits.

Cash deposit: 

• Self-deposit at the branch (passbook, PAN card, deposit slip).
• Use a debit card to deposit at cash machines.

SMS alerts on deposits and withdrawal

Debit cards: Depositors are provided with a debit card for cash withdrawal at ATMs, or for purchase of commodities offline with the use of POS machines, and even online through verification of OTP.

Netbanking/mobile apps: Depositors are provided with a netbanking option to login to their desktop or mobile and view their savings account details, bank statements, carry out transactions, transfer funds, etc. 

Interest rate: The interest rate calculation process takes place every single day on the amount available on the account and is credited every month.

Passbook and statement of account: View account details and history of the savings account. Depending on banks, a certain fee is levied for generating bank statements on passbook.

Cheque book: Banks issue cheque leaves to depositors for free in a financial year, which can be used as a bill of exchange to withdraw cash. It charges a fee for issuing a new cheque book.

Minimum balance: Banks require depositors to maintain a minimum balance (usually up to INR 1,000 to INR 2,000) to maintain the savings account, which vary among metro, urban, semi-urban, and rural branches. 

Note: Banks charge a fee for not maintaining the minimum balance, which can go up to INR 600 and above.

Nomination: A nominee can be added to receive the savings amount in event of the account holder’s demise.

Customer care: There are various ways to get customer care support from banks, such as live agent chat online, virtual assistance, SMS, and calls.

Documentation Required for Savings Account

• Duly signed savings account application form
• Digital signature (if the account is opened online)
• PAN card
• Two passport size photographs
• Proof of Identity and address as per KYC norms (passport, driving license, PAN card, voter identity card, NREGA job card, Aadhaar card, etc.