The savings account will yield 30 to 40 basis points more to the account holder from April 1 with banks shifting to the new method for calculating interest on savings deposits.
Following the Reserve Bank guidelines, the banks would be required to calculate interest on savings deposits on a daily basis beginning April 1.
At present, the interest rate on savings accounts is calculated on the minimum balance held from the 10th day to the last day of each month. Savings deposit yields an interest rate of 3.5 per cent and is credited to the account on a half-yearly-basis — in March and September.
Payment of interest accumulated, however, even after with the daily calculation would be as per the existing practise of at the end of six months.
“With the new norms coming into effect from tomorrow, the cost of funds for banks would increase between 30 and 40 basis points,” Bank of Maharashtra Chairman and Managing Director Allen Pereira told PTI. “But it would be difficult to say how much of it would translate for individual savings account holders,” he said.