Tuesday, April 21, 2009


Reserve Bank Of India (RBI) somehow loves the date of 1st April. On this year April 1st 2009, it gave all the customers having ATM cards a unique gift of no transaction fee on cash withdrawals from non member banks ATM. So virtually ATM withdrawals from any ATM became free for the user , irrespective of his principal or mother bank. Come April 1st 2010, RBI has mandated that all the banks will have to calculate the interest on the savings account on a "daily product basis".
This means that you will get interest even if you keep money in the account just for one day in a month.Currently banks give you interest on savings accounts depending on the lowest balance held between the 10th and the last day of the month. If you keep money in your savings account from 1st to the 9th of the month and withdraw it on 10th , then you will not any interest on your deposits even though the bak had your money for 9 days. This helps the bank enormously as most account holders get their salary on 1st of the month and by 10th they generally use up money for paying up EMIs, rent and other fixed expenses. So the banks typically have the highest balance in savings account between 1st and 10th of the month but, due to the current rule, they avoid giving any interest to the account holders.
But, this will change from 1st April 2010. To illustrate how this will work, let us say you deposit SR 100000 in your savings account on April 1st. On April 10th you withdraw all your money. On april 11th you put the money back and then withdraw it again on 31st May.Under the current rule, you would not get any money as interest.
But with new rule coming in force next year, for each of the first 9 days you will be paid an interest of Rs 9.6 (@3.5% pa. which is the savings interest rate mandated by RBI).On the 10th day no interest will be paid since you removed your money.Interest payment will again resume from 11th April and will go on till 30th May. 31st again you will get no interest as your removed your money.So for the entire period , the depositor will be paid Rs 566 (59*9.6).
This is a big development for all of us who keep our money in savings account and we need to thank the RBI for taking this wonderful step. Whats the catch in it? Well none . You only have to wait for your calender to turn to 1st April 2010 to enjoy this benefit.

1 comment:

  1. Interesting concept. Really will help account holders earn more when they save more. I guess everyone's looking forward to next year's April 1st.