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Highest Saving Bank Interest Rates / Best Interest

Rates on Savings Accounts - India 2012
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What are Saving Bank Accounts / What are SB accounts / What are Saving Fund
accounts:

Saving accounts are one of the most popular deposit accounts for individuals in India.
In such accounts, the depositor is normally issued cheque books and the customer is
allowed the flexibility of deposits of any amount and withdrawal of funds from the
account at any time. Although, most of the banks have rules for the maximum number
of withdrawals in a period and the maximum amount of withdrawal, yet no bank
strictly enforces these owing to competition in the banking circles. However, banks
have every right to enforce such restrictions if it is felt that the account is being misused
as a current account. (See below the features of Saving Bank accounts)

All PS Banks, Private Sectors (like SBI, PNB, BOB, ICICI Bank, Yes Bank,
Kotak Bank etc.) have the facility of Saving Bank accounts and these are
frequently used by salaried persons, pensioners, senior citizens and even
by students and housewives. These are the basic accounts used by public
for savings and making payments by cheques.

Interest on Saving Accounts - Is it Regulated by RBI ?

Till 24/10/2011, the interest on Saving Fund accounts was regulated by RBI and it was
4.00% p.a. on daily balance basis. However, wef 25th October, 2011, RBI has
deregulated SF interest rates and banks are now free to decide the same within certain
conditions imposed by RBI.
Which Banks Are Paying Maximum Interest Rates on Savings Accounts / Which Banks
are paying Best Interest on Saving Accounts

Sometimes a question is asked as to which is the best bank for opening a Savings
account ? Frankly speaking there is no straight forward answer to this query, as all
banks offer almost similar facilities to Savings Bank account holders i.e. allowing
deposit and withdrawals with cheque book facilities. However, the customer service
and rate of interest varies from bank to bank and more so from Branch to Branch also.
With ATM facilities you may need to go to bank only on rare occasions. Therefore, now
rate of interest is becoming a major deciding factor for opening a new account.

After deregulation by RBI of the Saving Bank interest, each bank is free to fix its rate of
interest on Saving Funds. On the very first day of deregultion, Yes Bank announced the
increase of Saving Fund Interest from 4% to 6%. The following are some of the banks
which are offering Best / Highest / Top / Maximum Interest Rates on Savings Account

BANKS PAYING Best Rate of Interest on Savings Bank Accounts in India*

/ Highest Interest on Saving Accounts

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Maximum
Rate of Best Rate
Interest of
on Saving Interest
Name of the Accounts on
Bank / (for Saving wef
Institution balance Accounts
upto Rs.1 (balance
lac) ABOVE
Rs.1 lac)

Yes Bank 6.00% 6.00% 01/11/2015

 Kotak
Mahindera 5.00% 6.00% 01/11/2014
Bank
5.00% (
6.00%
IndusInd from 10
4.00% 01/05/2015
Bank lac
upwards
)
6.1% (
7.00%
RBL Bank 5.10% from 10 01/08/2016
lac - 50
lac )

(The readers are advised to check on the website of the respective banks before decide to go for opening

a new account, as banks can change the rate of interest any time without informing our website).

* updated on 01/11/2016

Click Here for : Highest FD Rates of Banks in India

TDS on Savings Bank Accounts. TDS on Interest Income in Saving Accounts.

Why TDS is not deducted by banks on Saving Bank Interest?

TDS is not applicable on the interest paid on savings bank accounts. (Remember, this
does NOT mean that whole interest earned these account is tax free!). Under Section
194 (3) (vii), TDS is not applicable on interest earned on bank deposits other than time
deposits. The subsection (3) (vii) reads as follows : The provision of sub-section (1)
shall not apply to such income credited or paid in respect of deposits (other than time
deposits made on or after 1st day of July, 1995), with a banking company to which the
BR Act 1949 (10 of 1949) applies including any bank of banking institution referred in
Section 51 of that Act. Since Saving Bank accounts are demand deposits (and not the
time deposit) as per BR Act 1949, the interest earned on savings bank account is not
subject to TDS.

Whether Saving Bank Interest is Tax Free ? Tax Free Saving Account Limit 2013

No saving bank interest is not tax free. However, from the FY 2012-13, no tax is
payable on interest earned on Saving Bank accounts upto Rs10,000/- per year. Thus,
now interest earnings on savings bank accounts upto Rs10,000/-, are exempted from
Income Tax.

Major Features of Saving Bank Accounts :

(a) Major objective of saving account is to promote savings by the public

 (b) In saving fund accounts, banks do not put any restriction on the
number of times you can deposit funds or the amount of deposits, except
in recently introduced no-frill accounts etc.
 (c) Withdrawals are allowed subject to certain restrictions, but here
too the rules are not strictly insisted upon by banks.
 (d) The money can be withdrawn either by cheque or withdrawal slip of
the respective bank.
 (e) Now the rate of interest payable has been deregulated and is
between 4% to 7% p.a
 (f) There is NO maturity date for saving bank accounts as these are of
continuing nature.
 (g) Some banks insist on a minimum balance / minimum quarterly
balance in these accounts. However, now a days banks also open Zero
Balance and No Frill accounts where there are no requirements of
minimum balance.
 (h) Banks allow the saving bank holders the facility of paying
electricity bill, telephone bill and other regular monthly payments
through ECS etc.
 (i) Customers are also encouraged to give mandate for debit of Saving
Bank accounts for EMI payments for housing loan, personal loan, car
loan, etc.,
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