Savings Bank Account Deregulation
All the banks in India has to offers 3.5% interest rates for all the savings bank account holders. It is the regulation enforced by Reserve Bank of India (RBI). This regulation has been amended recently to give the exact interest rates for all the days in a month. Previously banks provided only for the last 20 days of minimum balance which will be very less for the account holders. From 1st April,2010, savings bank account holders would receive the more interest income because of these changes.
Last week RBI has announced that it would like to deregulate the interest rates for the savings bank accounts. Here deregulation means, it will not be under the control of RBI anymore. The interest rates will differ for each bank. The banks will decide the interest rates based on their financial condition and other factors. The deregulation puts more competition among the banks to attract more savings bank account holders.
Some of the facts about Savings Bank account
- Savings bank account interest rates are 3.5% across all the banks.
- Prior to April 2010, savings bank interest rates are calculated for the last 20 days of the month and taking into the consideration of minimum balance.
- Deregulation would put more pressure on the banks to increase the interest rates.
- It is expected that after deregulation, the interest rates may go up to 4.5%.
- Deregulation is on proposal stage, after the review by industry experts, RBI will formally announce the deregulation
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June 23, 2010 at 8:50 pm
saving bank interest on everyday should be fixed by regulation under RBI to safeguard the saving bank account holders otherwise a fight will be there between bank and holder. This type of competition between bank by deregulating will become serious and RBI has to interfere in such matter so, to regulate all banks under RBI.
June 25, 2010 at 7:29 pm
HI mahesh maisuria,
Your assumption is correct. There could be unhealthy fight between the banks. Small banks may suffer by no increasing the new account holders. We have to wait and watch, how things can proceed.
Thanks,
Krishna
June 25, 2010 at 10:41 pm
This is great news for all of us who have a good chunk of our money lying in the savings account for emergency.
Thank you for keeping an eye and providing us the info on whats going around. Wonderful site.
June 25, 2010 at 10:44 pm
HI Striker,
Yes. It is good news. But, if the interest rates are going down to the current rate, then it could be loss for the customers.RBI has to set the minimum rates for the savings bank.
Thanks,
Krishna
September 9, 2010 at 10:58 pm
Hi,
I agree with you RBI should ideally set a minimum rate for the savings bank account if this deregulation is taking place. This would ensure that the account holders would atleast be sure of a minimum amount. Also I think they should also implement a policy wherein if a bank is changing a rate on the savings bank account it should be for atleast a specified period of time (say 90 days/ 120 days, etc.) this would lessen the chance of fights between the banks and its customers due to incorrect interest income, etc.
This is good information. Please do share other good links if any.
Thanks,
Bharti
November 2, 2011 at 4:25 am
Hi,
I agree RBI should ideally set a minimum rate for the savings bank account if this deregulation is taking place. This would ensure that the account holders should get at least a specified chunk of the profit they are earning using the amount in SB accounts. But I’m surprised where the big players like HDFC, SBI and ICICI; no news from their side. If its turn to increase the lending rates they do with immediate effect but this time they are putting the things under cover.
February 9, 2012 at 8:16 am
Is the interest earned on saving or Fixed deposit taxable or not. If the same is taxable then how much amount is taxable and from which range. please advise me through E-mail so that action could be taken because the financial is near to close. Please help me. If there is any order please help me. Thanks