Savings account to earn more

Savings bank account is going to yeild more from this year onwards. The RBI has issued a directive in its policy document that will change the way interest is paid on the minimum amount present in a savings bank account each day.

At present, the 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 1 lakh in his savings account one day and then Rs 100 another day, the minimum balance taken for calculation of interest in the period would be Rs 100.

But now the policy is being revised. the interest paid on the savings account will be on the daily minimum balance. In other words, even the Rs 1 lakh balance in the savings account will earn the customer interest, even if it is withdrawn later.

The Reserve Bank of India (RBI), as part of its annual credit policy review on Tuesday, said that banks should now calculate interest on savings account balances "on a daily product basis." alculation on a daily basis would be effective from April 2010 and the modalities would be worked out in consultation with banks.

This move is a depositor-friendly measure. For bankers though, the new calculation will imply a higher cost of funds. Senior bankers say that the salaried class and pensioners would benefit the most by RBI’s move. This will definitely motivate people to hold more money in their savings bank accounts.