A savings account is a deposit account that generates interest that is deposited at a bank or other financial institution. Despite the fact that these accounts usually carry a low interest rate, their stability and dependability make them an excellent choice for holding capital for emergency needs. Unlike bank fixed deposits, which can incur a huge penalty if you withdraw your funds early, your access to funds in a savings account will remain incredibly liquid. Interest rates on savings bank accounts are typically lower than those with fixed deposits. Savings accounts at public sector banks pay significantly lower interest rates than those provided by many private and small finance banks. It's crucial to consider how much interest banks offer for keeping the capital in a savings account before opening one no matter which bank it is.
Tax benefits on savings accounts
The primary goal of opening a savings account is to safeguard our capital. A savings account requires you to put aside a portion of your regular salary to cover it from unexpected circumstances. The interest earned on deposits is the most important reason why people open a savings account. Interest is calculated in subject to the amount of money deposited in the account. This interest rate fluctuates in a timely manner. Interest earned from a savings account is taxable under the category of "Income from other sources." Furthermore, Section 80TTA allows a deduction of up to Rs 10,000 on interest earned, which means that interest received in excess of Rs 10,000 is subject to taxation. To know how to save tax on savings accounts, Click here
Minimum and maximum deposit limit
The minimum balance threshold in public sector banks' savings accounts ranges from Rs 250 for rural accounts with cheque books and Rs 100 for accounts without cheque books at Union Bank of India. With a minimum deposit cap of Rs 500, Union Bank of India is followed by IDBI Bank, Punjab National Bank, and so on. Since public sector banks are supported by the government of India and are more active in approaching out along with lower and middle class customers with their offerings, this is maintained much lower than the criteria of leading private banks and small finance banks of India. The minimum balance limit for Axis Bank and HDFC Bank is Rs 2,500 to Rs 10,000. The minimum balance threshold for ICICI Bank is Rs 1,000 to Rs 10,000, while it is Rs 5000 for Bandhan Bank. The minimum quarterly average balance of the savings account is Rs. 5,000 for DCB Bank branches in Tier 1 cities and Rs. 2500 for DCB Bank branches in Tier 2.
Savings Accounts Interest Rates
IDBI Bank and Punjab National Bank currently provide interest rates on savings accounts of up to 3.5 percent, followed by Bank of Baroda and Canara Bank with interest rates of up to 3.2 percent among the top list of public sector banks. As opposed to what leading private banks provide, these interest rates are attractive. HDFC Bank, Axis Bank, and ICICI Bank, for example, deliver 3 to 3.5 percent rate only. Large public sector banks, on the other hand, offer even lower interest rates on savings accounts. The State Bank of India (SBI), for example provides only 2.7% interest rate on its savings account. In comparison to public sector banks, small finance banks give higher interest rates to their savings account holders. Jana Small Finance Bank, for example, provides interest rates of up to 7.5 percent, while Equitas Small Finance Bank offers interest rates of up to 7.25 percent which are much higher than the interest rates provided on fixed deposits of leading public and private sector banks. Hence, below we have compiled the top 10 public sector banks which are currently providing the highest rates on savings accounts.
|Banks||ROI in % per annum||Minimum balance limit|
|IDBI Bank||3 to 3.5||Rs 500 to Rs 5000|
|Punjab National Bank||3 to 3.5||Rs 500 to Rs 2000|
|Canara Bank||2.9 to 3.2||Rs 500 to Rs 1000|
|Bank of Baroda||2.75 to 3.2||Rs 500 to Rs 2000|
|Punjab & Sind Bank||3.1||Rs 500 to Rs 1000|
|Indian Overseas Bank||3.05||Rs 500 to Rs 1000|
|Union Bank of India||3||Rs 250 to Rs 1000|
|Central Bank of India||2.75 to 2.9||Rs 500 to Rs 2000|
|Bank of India||2.9||Rs 500 to Rs 1000|
|Indian Bank||2.9||Rs 500 to Rs 2500|