How are banks calculating interest on savings accounts?

Late last year RBI deregulated the interest rates on savings accounts and allowed banks to set their own rates. This resulted in banks raising their interest rates and creating two slabs of under a lakh and over a lakh.

For example, Yes Bank offers 6% on the saving bank balance of under Rs. 1 lakh and 7% on balances of over a lakh. Similarly, Kotak pays 5.5% for balances of less than a lakh and 6% on balances of over a lakh.

Does anyone have practical experience with this or knows for certain how this is going to be calculated?

Replies (6)

For daily balances upto 1 lakh you would be paid interest at 5.5%/6% and for daily balance above 1 lakh you will be paid higher interest rate. 

Systems used by banks like finnacle etc automatically takes care of this.

Yes, interest is calculated on daily balance maitained by you, in your account
Originally posted by : Celiena goel
Yes, interest is calculated on daily balance maitained by you, in your account


Agree with Celiena...

Check this, it may help you.. https://business.rediff.com/report/2010/apr/12/perfin-how-daily-interest-on-savings-accounts-is-calculated.htm

Thanks Harini :)  

Thanks Harini :)  

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