From October 2011 Reserve Bank of India (RBI) freed the interest rates offered by banks on Savings Bank Account. Since then the competiitoin has intensified with Yes Bank leading the pack. Its offering a rate of 7% per annum on saving bank accounts for deplosits above 1 Lakh and 6% for deposits below 1 Lakh.
The table below shows the interest rate offered by banks on its saving account.
|Banks||Deposit Below Rs. 1 Lakh||Deposit Above Rs. 1 Lakh|
|Kotak Mahindra Bank||5.5%||6.0%|
|All Other Banks||4.0%||4.0%|
These deposits are the cheapest form of deposits for banks and so in future the rates may get more competitive in future.
Should you get a new bank account to get benefit of increased interest rates?
If you are someone who inevitably keeps a large sum in saving bank account it makes sense to go for a new account. For e.g. if you keep 1 Lakh in your savings account, at 4% you would get Rs 333.33 as interest per month while with 7% you would get Rs 583.33. So the difference is Rs. 250 per lakh per month.
Also keep in mind most of the banks offer sweep in accounts where the amount in excess of pre specified automatically goes into fixed deposit. So you might take advantage of the same rather than going for a new account.
Which bank offers highest interest rate on savings account in India?,
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