Salary accounts to yield up to 25 pc more interest income

Crisil said the new method of interest computation will increase the effective interest rate on savings balances, particularly for salary account holders.

“It is estimated that for a salary account holder with a minimum savings balance between 1-2 times of the monthly salary, the increase in interest income will be between 10 and 25 per cent,” it said.

The new computation method has taken effect from April 1, 2010. Earlier, banks gave an interest of 3.5 per cent on savings accounts on the basis of the least deposit in an account between the 10th and the last day of each month.

The interest is credited to the account twice a year, in March and September. As for impact on banks, Crisil said the cost of deposit for them will increase by 10-20 basis points (100 bps = 1 per cent), depending on the share and pattern of the current and savings accounts (CASA).“This will not materially impact their profitability or lead to any significant change in the share of low-cost deposits, that is CASA in the banking system,” it added. Crisil said, however, that the impact is expected to be higher for banks that have a dominant share of salary accounts with highly fluctuating balances. At the end of February, all commercial banks had a total deposit of over Rs 44 lakh crore, including savings, current and fixed deposits. The country’s largest lender State Bank of India has over 1.56 crore savings bank account holders.

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