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Savings Account Interest Rates

Savings Account Rates

Last Updated 15th Aug 2020

6th August 2020 – RBI keeps Repo Rate unchanged at 4%

Lowest Interest Rate 0.50% by Standard Chartered Bank
Highest Interest Rate 7.50% by Equitas Small Finance Bank, Jana Small Finance Bank
Interest Calculation Frequency Daily Basis
Interest Payment Frequency Monthly/ Quarterly/ Annually
Nominee Allowed (above 18 years)
Tax on Savings Interest upto ₹ 10,000 is exempt under Section 80TTA
Key Facilities ATM, ECS, Cheque
Cash Withdrawal Free upto limits specified by bank. After that charges applicable

Online Saving Account Interest Comparison, Aug 2020

Bank Name Interest Rate Minimum Amount
DBS Bank 3.50% - 5.00% NIL
SBI 2.70% NIL
HDFC Bank 3.00% - 3.50% Rs. 10,000 for metro Urban branches Rs. 5,000 For Semi Urban branches Rs. 2,500 for Rural branches is required to open a Savings Regular Account
ICICI Bank 3.00% - 3.50% Rs. 10,000 in metro and Urban locations, Rs. 5,000 in Semi Urban and Rs. 2,000 in Rural locations
Axis Bank 3.50% - 4.00% NIL
Citibank 3.25% Rs. 25,000
Kotak Bank 3.50% - 4.00% Rs. 5,000
Yes Bank 4.00% - 6.00% N.A
India Post Office 4.00% Rs. 500
Bank of Baroda 2.75% - 3.00% QAB Rs. 500 and Rs. 1,000 for Rural and Urban respectively. Zero balance facility only for salaried employees in Central/ State Govt. Public and Private Limited Companies, Agents of Life and General Insurance Corporations and Students
Standard Chartered Bank 0.50% - 3.50% NIL
PNB 3.00% - 3.25% Rs. 500 to 1,000
South Indian Bank 2.35% - 4.60% N.A
IDBI Bank 3.10% - 3.60% Rs. 5,000 Metro and Urban, Rs. 2,500 Semi Urban, Rs. 500 Rural
Andhra Bank 3.00% Rs. 150
Indian Bank 3.50% - 3.75% Rs. 250 for non cheque operation and Rs. 500 for cheque operation
Canara Bank 3.25% - 3.75% Rs. 1,000 for Metro, Urban and Semi Urban branches and Rs. 500 for Rural branches
UCO Bank 2.50% - 2.75% AQB ranges between Rs. 250 and Rs. 1,000
ESAF Small Finance Bank Regular Saving Account 4.00% - 7.00% Rs. 1,000
AU Small Finance Bank Samarth Saving scheme 4.00% - 7.00% Rs. 5,000
Equitas Small Finance Bank Regular Saving Account 3.50% - 7.50% N.A
Jana Small Finance Bank Regular Saving Account 4.50% - 7.50% Rs. 2,500
Fincare Small Finance Bank Smart Saver Account 3.50% - 7.00% N.A
Ujjivan Small Finance Bank Ujjivan Bank Regular Savings Account 4.00% - 6.50% N.A

Savings Account Interest

A savings account opened at a bank is a basic type of account that allows you to deposit money and keep it safe while earning moderate interest on the balance maintained in the accounts. Different financial institutions provide varying rates of interest on a savings account. The rate of interest on savings accounts is further based on the minimum average balance maintained in the account.

Savings Account Interest Calculator

Interest is earned on average balances in the account calculated on a daily basis. However, interest on savings account can be paid monthly, annually or quarterly.

The following formula is used by banks to calculate interest on Savings Bank Account on the basis of daily balance in the account

Interest = Amount (Daily balance)*(No of days)* Interest/Days in the year.

The example below explains the method to calculate interest on a savings account on a daily basis.
Illustration: Mr. A has ₹ 2,00,000 in his savings account from 1st June to 26th June of a year. On 26th June, he withdrew 1,80,000. What will be the total interest amount earned @ rate of 4% in the month calculated on a daily basis?

Interest for 26 days = 2,00,000 * 26 * (4/100)*365 = ₹ 569
Interest of 4 days = 20,000 * 4 * (4/100) * 365 = ₹ 8.76
Total interest earned during the month at the rate of 4% p.a. calculated on a daily basis is ₹ 577.76 (₹ 569 + ₹ 8.76)

List of Payments Bank Interest Rate and Minimum Balance

Payments Bank Minimum Balance Interest Rate
Paytm NIL Starts at 2.75%
Airtel Payments Bank Ltd NIL Starts at 2 50%
India Post Payment Bank NIL Starts at 2.75%
FINO Payments Bank NIL Starts at 2.75%

Features of Payment Banks in India

Payment Banks are differentiated banks that are set up to ensure that there is financial inclusion of payment services to migrant labour workforce, small business holders, low-income households and workers in organised sectors etc. which are still not accessible to the commercial banks. Payment Banks in India work under following limitations.

  • Payment Banks are authorised to accept a deposit up to ₹ 1 Lakh from a customer.
  • Unlike commercial banks, Payment Banks can only issue Debit/ATM cards. They are not allowed to provide credit cards to customers.
  • People can open both savings accounts and current accounts in Payment Banks.
  • Only, Indian residents are permitted to open an account in Payments Banks.
  • It also provides facilities for paying utility bills such as electricity, water bill etc.
  • They are also allowed to offer Internet banking and Net Banking facilities to customers.

Paytm

  • Paytm Payments Bank accepts customer deposits upto ₹ 1 Lakh in savings and current accounts.
  • Along with providing free access to digital Paytm Debit Cards, it also offers a range of other financial services like Insurance, Loans, Mutual Funds of partner banks. You can request to get a physical Debit Card issued on a request.
  • You don't require to maintain a minimum balance in Paytm Payments Bank.
  • You can receive a 2.75% rate of interest per annum on money deposited in a savings account. You can earn upto 7% rate of interest by using a fixed deposit facility in Payments Bank.

Airtel Payments Bank

With Airtel Payments Bank, you can easily open a saving account with a paperless process in a few minutes.

  • Airtel Payments Bank Ltd provides an annual interest rate of 2.5% p.a on your savings account.
  • You don’t require to maintain a minimum balance in your savings account.
  • Bank provides you with a free virtual Debit Card.
  • You can also get access to the free personal accident insurance cover of Rs. 1 Lac.
  • Airtel Payments Bank provides a plethora of services like making transfers, mobile/DTH recharge, paying utility bills, online shopping, FASTag etc.

India Post Payments Bank

Anyone above the age of 18 years with access to Aadhar and PAN card, can open a savings account with India Post Payments Bank.

  • With India Post Payments Bank, you can receive interest at 2.75% p.a on your balance in savings accounts.
  • Customers can open a savings account with zero balance.
  • You don’t require to maintain a monthly average balance in your accounts.
  • You can also get free monthly e-statements.
  • With India Post Payments Bank, you can make easy bill payments and recharges.

FINO Payments Bank

  • Interest on savings accounts in FINO Payments Bank can be received at 2.75%p.a. However, you can earn up to 7.25% p.a. by opting for a Sweep account facility.
  • With FINO Payments Bank, you can get free Platinum/Classic RuPay Debit Card
  • There is no commitment to maintain any minimum monthly average balance.
  • It provides services such as depositing, withdrawing, transferring or receiving funds, shopping, paying bills.
  • With Rupay Platinum Debit Card you can also get Accidental Insurance/Permanent disability cover of upto ₹ 2 Lakh.

List of Banks with Zero Balance Savings Account with Interest Rates

Bank Name Interest Rate
Axis Bank 3.50% - 4.00%
Standard Chartered Bank 0.50% - 3.50%
SBI 2.70% - 2.70%
DBS Bank 3.50% - 5.00%

Saving Account

Saving Account is an interest bearing account opened by a customer to deposit his or her surplus income. The account is designed for individuals who earn a fixed salary or a fixed income. This facility is also available to students, senior citizens, and pensioners and so on.

Typically, the amount of money that is not intended to be used for daily expenses is parked into savings account. The money is available to be withdrawn anytime and hence, the account is completely liquid, at the same time earning some interest.

Myriad features that are bank specific are available to the depositor. These include but are not limited to depositing and withdrawal facility using cheque, ATMs and online banking, sweep facility to fixed deposit accounts, phone banking and special loan offers

Interest rate on savings account were earlier fixed at 3.5% per annum. However, the rates were deregulated by RBI in 2011 and now banks are allowed to fix their own savings interest rates. As a result of deregulation, saving interest rates offered by banks in India today range from 0.50% to 7.50%. Highest saving deposit rate is offered by Equitas Small Finance Bank,Jana Small Finance Bank.

Compare Savings Account and Fixed Deposits

While, both savings and fixed deposit accounts are designed to allow the depositors to save their surplus money, there are some basic differences between savings account and fixed deposits account in the nature of savings that should be parked in these accounts, rate of interest and transaction facilities allowed on these accounts.

Savings Account Fixed Deposit Account
Savings account allows individuals to park a part of their income and earn interest on it. The money can be deposited or withdrawn any time. Fixed deposit account is a type of account in which a fixed sum of money is deposited for a fixed period. You are not allowed to deposit and withdraw money before the redemption date.
Suitable to park a certain amount of surplus funds for a temporary period. Suitable for long term investments and depositing money which you do not expect to spend or require for a minimum period of time.
Offers many facilities to users including ATM facility, online banking, phone banking, cheque book facility, ECS, NEFT, RTGS. Doesn’t offer any transactional facilities. However, you can avail loan against fixed deposits to meet your short term funds requirements without breaking your FD.
Savings account earn nominal rate of interest ranging from 0.50% to 7.50%. FD are deposits of long duration which do not allow withdrawal of money. Interest rates are higher savings account in the range of 2.25% to 9.25%.

Compare Savings Account and Current Account

Savings account are meant to park your savings while allowing you to use the funds for paying your expenses as and when required. In contrast, current account is a pure transaction oriented account which is designed to allow businessmen carry their daily business transactions and also avail overdraft facility when required.

Savings Account Current Account
Savings account is an account meant for individuals who want to earn some interest on their savings, yet allow them the flexibility to use their savings. Current account refers to a running account or transaction account to ease off your daily business transactions.
Allows savings of any amount, with minimum balance requirement specified by banks. Has limits on withdrawal. Has a larger limit compared to savings. Has no limits on deposits and withdrawal.
Savings account is suitable for an individual. Current account is suitable for businessman, self-employed, proprietorship firm, partnership firms or company.
Rate of interest ranges from 0.50% to 7.50%. These accounts are zero or NIL interest accounts.
Overdraft facility is not allowed. Overdraft facility is allowed.

FAQs

Is savings account interest taxable?

Interest up to ₹ 10,000 accrued on your savings account during a year is tax free under Section 80TTA.

How do interest rates on savings accounts work?

Interest rates on savings accounts are calculated on the average balances in the account on a daily basis. This interest is however paid monthly, annually or quarterly as per the policy of the bank.

Which bank has the best interest rate for savings?

Presently, Equitas Small Finance Bank, Jana Small Finance Bank provides interest rate upto 7.50% and thus has best interest rate for savings.

What is the average interest rate on a savings account?

Earlier interest rates on savings accounts were fixed at 3.5% per annum. However, the rates were deregulated by RBI in 2011, and now banks are allowed to fix their own savings interest rates. As a result of deregulation, the savings interest rates offered by banks in India today range from 0.50% to 7.50%.

Can DEMAT account be opened with savings account?

Yes, DEMAT account can be opened along with Savings account. DEMAT accounts are required to trade in various stock market instruments and they have different charges from the savings account.


Our News - Aug 2020
  • 2020-08-10 : Survey reveals Coronavirus changed Indian outlook to personal financial matters news
    Scripbox Financial Freedom Survey 2020 was conducted to assess the personal financial outlook of Indians post-COVID 19. The survey revealed that 50% of respondents plan to remove discretionary spending and save more for an emergency. Further, the survey revealed that 28% will cut back on non-essentials, 22% will save to have a financial corpus to dip into during an emergency and 10% said that they will reduce their EMI burden.
  • 2020-08-06 : SBI reports Q1FY21 net profit of Rs. 4776.50 crore news
    State Bank of India reported a net profit of Rs.4776.50 crores for the period ended June 30, 2020, as against a net profit of Rs.6909.95 crores for the period ended March 31, 2020. The Bank posted a total income of Rs.87984.33 crores backed by retail loans like home, personal, car, two-wheeler, and gold loan along with the business and mudra loans. Further, the bank total deposits which include FD, RD, current and savings account grew at 15.96 per cent YoY.
  • 2020-08-04 : UCO Bank reports Rs. 21.46 crore PAT in Q1 news
    UCO Bank posted a net profit of Rs.21.46 crores for the period ended June 30, 2020, as against a net profit of Rs.16.78 crores for the period ended March 31, 2020. The bank reported total income aided by retail loans like home, personal, car, two-wheeler and gold loans along with business and mudra loans of Rs.4436.57 crores during the period ended June 30, 2020. In addition to this, total deposits which include FD, RD, current and savings accounts increased by 1.4% to Rs 1,95,119.60 crore.
  • 2020-07-29 : RBL Bank posted a net profit of Rs. 141. 22 crores for June quarter.
    RBL Bank reported a net profit of ₹ 144 crores for Q1 FY 2021 against loss of Rs. 3,801 crores for Q1-FY 2020. NII aided by home, personal, gold, car and two-wheeler loans along with business and mudra loans stood at Rs. 1,773 crores. Further, Cost of Deposit which includes FD and RD improved by 64 bps to 4.65% and CASA increased to ₹ 1,04,315 crore as on June 30, 2020
  • 2020-07-28 : Yes Bank reported a net profit of 45. 44 crore for June quarter
    YES Bank posted a 60.05% year-on-year fall in net profit at Rs 45.44 crore for the quarter ended June 30. The Bank had posted a net profit of Rs 113.76 crore in the corresponding quarter last year. Deposits at Rs 1,17,360 crore grew 11.4% QoQ aided by 26.4% QoQ growth in current account deposits and 12.6 per cent QoQ growth in term deposits which includes fixed and recurring deposits. CASA ratio stood at 25.8%. Further, Net interest income was at Rs 1,908 crore bolstered by home, personal, gold, car and two-wheeler loan along with business and mudra loans.
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