At present, the interest (3.5 per cent per annum) is calculated on the minimum balance held in the account from the 10th of each month to the last day of that month. So, if a bank customer has Rs 5000 /-in his savings account one day and then Rs. 50/- another day, the minimum balance taken for calculation of interest in the period would be Rs 50.
From April 1, 2010, the interest paid on the savings account will be on the daily minimum balance. In other words, even the Rs 5000/-balance in the savings account will earn the customer interest, even if it is withdrawn later.
As per the new directive issued by RBI, only commercial banks will need to follow this new method of interest payment on savings accounts. Commercial banks include all banks other than co-operative ones.
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