Monday, February 22, 2010

Interest Calculation method changed by RBI

Very interesting article, outlining the benefits of the new interest calculation engine proposed by RBI.

As per the writer, the interest on your savings account would be calculated on a per day basis now, instead of the current method. In the current method, the interest is calculated on the minimum of balance between 10th and the end of month.

A salaried person always loses out in this method, since by the end of the month, the balance is very low and therefore the interest is calculated on that.

I wonder, if and when the banks would start following this methodology ? Also, is it a direction from RBI or an instruction (the other words, is it a suggestion or an order)

Lets see what comes out... April is not far anyway...

Good luck to those who leave idle money in savings bank account...

in reference to: Moneycontrol || Wealth >> Bank deposits >> Get double interest on your savings account! (view on Google Sidewiki)

2 comments:

SAP-PP said...

Yes. It's beneficial for both B ank and account holder.
Bank is benefited by attracting more people to have more amount in the a/c thereby they can leverage the cash.
In fact, bank should offer same interest rate as loan interest rate for our deposit.
If this is done, instead of investing in shares/stocks, people deposit more in the deposits, which is any how more beneficial to bank

Raghav said...

Absolutely. This makes another small shift in thinking about keeping small time money in bank accounts instead of investing in liquid/cash funds.

People might think about not investing in such funds for very short durations now that the difference in returns is so low...