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Wednesday 7 April, 2010

Banks to give 3.5% p.a. returns on savings accounts

Starting 1 April, we all will get 3.5% per annum interest for funds that are idle in our savings bank accounts. Earlier banks were mnadated to give 3.5% per annum returns on the lowest balance between the 10th and the end of any month.

Assume that in month, one had deposited a large sum on on the 15th of a month and keep it there for the rest of the month. One would tend to think it will get some interest because the money sat in your account for 15 days, one does not. Because the minimum balance in your account from the 10th to the 15th is zero, that is the amount picked up to calculate the interest.

Banks will have to give interest on a daily closing basis.

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