As per the RBI Circular dated April 24, 2009 about Savings Account interest calculation, effective 1st April 2010, Savings Account interest will be calculated on daily balances maintained in your account. The Savings Account interest will be paid at half yearly intervals on 30th September and 31st March each year.
Another catch here is that bank’s have to pay a interest on 3.5% on a semi annual basis on our balances, that means all the interest rates of Fixed Deposits would have to significantly increase as if it’s not above 3.5% why would you even bother shifting your money from your bank account, as your money even being idle will secure 3.5% interest.
I used to set up few short duration FD’s with around 2.25% – 2.5% interest rate in my HDFC and ICICI Bank accounts, not any more! It better give me more than 3.5% for the same duration of 30 days or less, else all my money would get into Mutual Funds.
Adi…i didn't know that earlier the interest was calculated between the 11th and the end of the month..you are right it is cheating in a way…
yes, that's true. Nobody bothered to even check, after decades we are taking notice!