[Year]

FINDING THE BETTER

INVESTMENT OPTION

(COMPARISON OF INVESTMENTS TO FIND BETTER ROI

PRIYANJALI DAS

PRIYANJALI DAS (191327)| SECTION-C PGDM 2019-2021

 Type of Bank Accounts
Accounts are vaults maintained by banks for individuals to keep their savings and surplus money safe.
Individuals can deposit their personal savings and surplus in these accounts and earn an interest on
the account balances. Some of the popular types of bank accounts in India are:
 Savings Account
 Term Account
 Current Account
 Recurring Deposit Account

Savings Account
Saving Account is an interest bearing account opened by a customer to deposit his or her surplus
income. The account is designed for individuals who earn a fixed salary or a fixed income. This facility
is also available to students, senior citizens, and pensioners and so on.
Typically, the amount of money that is not intended to be used for daily expenses is parked into
savings account. The money is available to be withdrawn anytime and hence, the account is
completely liquid, at the same time earning some interest.
Myriad features that are bank specific are available to the depositor. These include but are not limited
to depositing and withdrawal facility using cheque, ATMs and online banking, sweep facility to fixed
deposit accounts, phone banking and special loan offers
Interest rate on savings account were earlier fixed at 3.5% per annum. However, the rates were
deregulated by RBI in 2011 and now banks are allowed to fix their own savings interest rates. As a
result of deregulation, saving interest rates offered by banks in India today range from 3.25% to 7.00%.
Highest saving deposit rate is offered by DBS Bank.

Savings Account Interest Calculator

Interest is earned on average balances in the account calculated on a daily basis. However, interest
on savings account can be paid monthly, annually or quarterly.
The following formula is used by banks to calculate interest on Savings Bank Account on the basis of
daily balance in the account
Interest = Amount (Daily balance)*(No of days)* Interest/Days in the year.

Illustration: Mr. A has Rs. 2,00,000 in his savings account from 1st June to 26th June of a year. On
26th June, he withdraws 1,80,000. What will be the total interest amount earned @ rate of 4% in the
month calculated on a daily basis?

SOLUTION:
Interest for 26 days (1st June to 26TH June) =2,00,000 * 26 * (6/100)*365 = Rs. 854.79
Interest of 4 days (27th June to 30th June) = 20,000 * 4 * (6/100) * 365 = Rs. 13.15

Total interest earned during the month at the rate of 4% p.a. calculated on a daily basis is Rs.
867.94 (Rs. 854.79 + Rs 13.15)

Savings Account Interest Rate Comparison, Oct 2019, Best rates

Bank Name Interest Minimum Amount
Rate
DBS Bank Digi 4.00% - Nil
Account 7.00%

SBI Basic 3.00% - Nil

Savings Bank 3.50%
Account

HDFC Bank 3.50% - Rs. 10,000 for metro urban branches Rs. 5,000 For Semi urban branches Rs. 2,500 for Rur
Regular Savings 4.00%
Account

ICICI Bank 3.50% - Rs. 10,000 in metro and urban locations, Rs. 5,000 in semi urban and Rs. 2,000 in rural lo
Regular Savings 4.00%
Account

Axis Bank Basic 3.50% - Nil

Savings Account 4.00%

Citibank Citi 4.00% Rs. 25,000

Banking Savings
Account

Kotak Bank Nova 4.50% - Rs. 5,000

Savings Account 6.00%

Yes Bank Savings 5.00% - N.A

Value Account 6.25%

Bank of Baroda 3.25% - QAB Rs. 500 and Rs. 1,000 for rural and urban respectively. Zero balance facility only for
BOB Savings 3.75% of Life and General Insurance Corporations and Students
Account

Standard 4.00% Nil

Chartered Bank
Basic Banking
Account

PNB Saving 3.50% - Rs. 500 to 1,000

Deposit(General) 4.00%
Account

South Indian 4.00% N.A

Bank Regular
Savings
 IDBI Bank Super 4.00% Rs. 5,000 Metro and Urban, Rs. 2,500 Semi Urban, Rs. 500 Rural
Savings Account

Andhra Bank 4.00% Rs. 150

Abhaya SB
Account

Indian Bank 3.50% - Rs. 250 for non cheque operation and Rs. 500 for cheque operation
Savings Bank 4.00%
Account

Canara Bank 4.00% Rs. 1,000 for Metro, Urban and Semi urban branches and Rs. 500 for Rural branches
Savings Bank
Account

Post Office Savings Account

India Post offers numerous types of savings instruments for customers to choose from based on their
needs. The savings account with India Post can be opened with cash payment only. The account
offers tax benefits for interest amount up to Rs.10,000.
 Interest rate: 4% p.a.
 Minimum balance to open an account: Rs.20
 Minimum balance for non-cheque facility: Rs.50
 Minimum balance with cheque facility: Rs.500
 Debit card facility available
 Nomination facility available

Illustration: Mr. A has Rs. 2,00,000 in his savings account from 1st June to 26th June of a year. On
26th June, he withdraws 1,80,000. What will be the total interest amount earned @ rate of 4% in the
month calculated on a daily basis?

SOLUTION:

Interest for 26 days (1st June to 26TH June) =2,00,000 * 26 * (4/100)*365 = Rs. 569
Interest of 4 days (27th June to 30th June) = 20,000 * 4 * (4/100) * 365 = Rs. 8.76

Total interest earned during the month at the rate of 4% p.a. calculated on a daily basis is Rs.
577.76 (Rs. 569 + Rs 8.76)

COMPARISON OF INTEREST ON SAVINGS ACCOUNT BETWEEN BANK AND POST

OFFICE:

PARTICULARS BANK(KOTAK BANK) POST OFFICE

AMOUNT 200000 200000
DAYS 200000 for 26 days 200000 for 26 days
20000 for 4 days 20000 for 4 days
INTEREST RATE 6 4
INTEREST AMOUNT 867.94 577.76