The interest credit day of an SBI savings bank account will be credited during the last week of calendar quarters. As we all know our financial year starts on 1st of April. Interests are credited on quarterly basis.
When is the interest credit day of an SBI savings bank account.
SBI bank savings account credits interest on the 25th day of the quarter.
On 25th June for 1st Quarter : April to June
On 25th September for 2nd Quarter : July to September
On 25th December for 3rd Quarter : October to December
On 25th March for 4th Quarter : January to March
Changes in SBI bank quarterly credit interest?
Credit interest capitalized is interest on your balance in SBI savings account which is credited to A/c quarterly. Since, you have started RD, balance is your savings A/c is bound to reduce and so is credit interest capitalized amount.
RBI’s deregulation drive on saving interest rates has created a competitive environment across banks in an effort to retain and capture a loyal customer base.
The rate of interest in savings bank account was 4% per annum as mandated by the government in May 2011. However with the recent change banks are now allowed to fix their interest rates for saving account customers. Banks now use this as a competing factor and weave it into their merits to enhance their customer base.
The happy news for savings account holders is maximum benefits for their money irrespective of the time period. Before deregulation there was hardly any competition in this segment, and all banks offered the same rate of interest. So, there were no second thoughts for customers about shifting their savings account from one bank to another. However, now customers think twice before they start a new account or wish to switch an existing account to get the maximum benefits.
How does SBI bank calculate interest rate?
Interest income has a great impact on your income tax return. If you forget it to disclose, you may face a serious problem. Again, if you want deduction under section 80TTA, you have to disclose your interest income.
Your saving account is one of the sources of interest income. Actually, there are two types of method for calculation. One is old and another is new. From April 2010, the new method was introduced. I will explain it one by one.
Interest Rate of SBI Savings Bank Account
The interest rates offered by various banks are different and varies from bank to bank. Earlier, it was 4% (Irrespective the amount of money kept in the bank).
However, on 25th October 2011, it has been decided to deregulation of savings bank interest rate. After deregulation, banks are free to determine the savings account interest rates subject to the following conditions:
- Each bank will have to offer a uniform interest rate on savings bank deposits up to Rs. 100000, irrespective of the amount of money kept in the bank.
- For savings bank deposits above Rs. 100000, a bank may provide differential interest rates.
However, the above guideline is applicable for resident individual only.
Old Rule of Computation of Interest in SBI Savings Account
Earlier, the interest on SBI savings bank account was calculated on the minimum balance between 10th and last day of the month. Any deposits during this period were not taken into account but the amount of withdrawals was taken into account.
For example, the balance of your SBI saving account on 10th March was Rs. 10000. On 15th you have deposited Rs. 5000 in your account. On 31st March, the balance of your account was Rs. 15000 but the interest would be calculated on Rs. 10000 as it was the minimum balance during the period.
In case you have withdrawn Rs. 7000 on 25th March, then the balance will be Rs. 8000. This amount would be considered for interest calculation as it was the minimum balance during the period.
And, it was totally unfair. Why not? Why minimum balance man? We invest our money in the bank. Bank invests it in the market (Including us as a personal loan or a home loan etc). In that case, the bank may earn a high return from the market. In return, they will give us interest on minimum balance! Is this justifiable?
NO, Not at all. Due to this reason, that method is changed now.
New Calculation method
From April 2010, this method was changed. The interest on the savings bank account is now calculated based on the daily balance method. Therefore, you can get maximum benefit from your account because you can earn interest on your maintained closing balance per day.
How? Let us see the following example:
The opening balance of the SBI saving account on 1st March was Rs. 10000. On 21st March, you have deposited Rs. 5000. On 28th March, you have withdrawn Rs. 3000. According to the current rule, you will earn interest on Rs. 10000 for 20 days, on Rs 15000 for 7 days and on Rs. 12000 for 4 days. All the above balances are the minimum balance as maintained by you for a particular day.
I hope you all understand the calculation. Actually, the maximum of us has no idea about the importance of a savings account. Yes, you can save your money. But I want to tell you from the point of view of income tax. Don’t forget about the section 80TTA. An individual or HUF can avail deduction under section 80TTA in respect of interest on deposit in the savings account. The amount of deduction is Rs. 10000.