Basically, savings bank accounts bear lower interest rates if compared to the fixed deposits of banks and NBFCs. Compared to major private banks, there are a few small and new private banks which offer better interest on savings accounts. Reviewing how much interest the banks pay to hold the deposits in the savings account is highly recommended. There is one new private bank promising more than 7 per cent return on savings accounts despite declining interest rates. Bandhan Bank currently provides interest rates of up to 7.15 per cent which is at the top of our list. After that RBL Bank, IndusInd Bank and IDFC Bank offer a higher interest rate of 6.5%, 6% and 6% on savings accounts respectively.
Interest rates are similar to those provided by small finance banks. AU Small Finance Bank and Ujjivan Small Finance Bank, for example, deliver up to 7 per cent and 6.5 per cent interest rates. Compared with leading private and public sector banks, the interest rates provided by small finance banks on savings accounts are better. HDFC Bank, ICICI Bank, for instance, provide 3 per cent to 3.5 per cent interest rate only. Up to 4 per cent interest is paid by Axis Bank and Kotak Mahindra Bank. Whereas an interest rate of 2.70 per cent and 2.75 per cent interest on their savings account is currently provided by the leading giants such as SBI and Bank of Baroda.
Savings Accounts Interest Rates
|Sr No.||Banks||ROI in % p.a.||Minimum balance limit|
|1||Bandhan Bank||3 - 7.15||Rs 5000|
|2||RBL Bank||4.75 - 6.50||Rs 500 to Rs 2500|
|3||IndusInd Bank||4 - 6||Rs 1500 to Rs 10,000|
|4||IDFC First Bank||3.5 - 6||Rs 10,000|
|5||Yes Bank||4 - 5.5||Rs 2,500 to Rs 10,000|
|6||DCB Bank||3.25 - 5.5||Rs 2,500 to Rs 5,000|
|7||Karnataka Bank||2.75 - 4.5||Rs 1,000 to Rs 2,000|
|8||South Indian Bank||2.35 - 4.5||Rs 1,000 to Rs 2,500|
|9||Axis Bank||3 - 4||Rs 2,500 to Rs 10,000|
|10||Kotak Mahindra Bank||3.5 - 4||Rs 2,000 to Rs 10,000|
Minimum and maximum deposit limit
The minimum balance threshold in private bank savings accounts opens at Rs 500 and continues up to a limit of Rs 10,000. Compared with public sector banks, this is maintained higher by the banks because they are more involved in going out with their facilities to the salaried middle class and self-employed individuals. The minimum balance limit is kept at Rs 5000 by Bandhan Bank whereas a cap of Rs 2,500 to Rs 10,000 is kept by Axis Bank and HDFC Bank respectively.
For different banks, the eligibility requirements may be different to open a savings account. Below are the basic ones:
- He or she must be a resident individual
- He or she must have a minimum age limit of 18 years of old
- Non-Resident Indians
- He or she must have a valid/stable source of income
The below-listed documents must be kept handy by the individual while opening a savings account with a bank:
Identity proof: PAN, Voter ID, Passport, Aadhaar Card, 2 passport size photographs.
Address proof: Passport, Utility bills of the last 3 months, Aadhaar Card, Voter ID Card.
Income proof: Bank statement of the last 6 months, salary slip for the last 3 months.
Under the heading 'Income from other sources', the interest you earn from a savings account is subject to taxation. Furthermore, an exemption of up to Rs 10,000 on such interest income is accounted under Section 80TTA and, thus, only interest received above Rs 10,000 is subject to taxation.
Excluding the basic savings bank deposit account, the minimum balance standard for a regular savings account is taken into consideration here. A higher interest rate on a savings account will only be an acceptable deal if you go for the bank which has a solid reputation in the market, excellent service norms, a broad branch network and city/nation wide ATM facilities.