Highest Savings Bank Account Interest Rates in India

After the recent deregulation of savings bank account interest rates by RBI, at least three banks have hiked their interest rates.

Yes Bank was the first one to raise the interest rates on savings account with all balances to 6%, and this was followed by Indus Ind and Kotak bank announcing interest rates hikes on their savings accounts too.

I think other banks are going to follow suit soon, and I’m going to maintain a list of the best savings bank account interest rates on this page which will be updated periodically.

To start with, these are the three banks that have announced a hike in their interest rates.

S.No. Name Under Rs. 1 lakh Over Rs. 1 lakh
1 Yes Bank* 6.0% 7.0%
2 Indus Ind Bank 5.5% 6.0%
3 Kotak 5.5% 6.0%
4 Karnataka Bank 4.0% 4.0%**

*Yes Bank’s press release on their website.

**Karnataka Bank offers 5% for deposits over two lakhs.

Thanks to Hari for leaving comments and informing me about this.

Bemoneyaware caught the fact that the original RBI notification was being interpreted in at least two different ways – one was that all banks will have to pay the same interest rate on deposits of less than Rs. 1 lakh, and the other was that banks were free to decide the interest rates on deposits of less than a lakh as long as they don’t create slabs under that amount.

The fact that these banks have set up different rates for deposits of less than Rs. 1 lakh helps clarify that and show that there will be differential rates even for savings bank balances of less than a lakh. This is good because a large number of people will fall under this category.

Once again – thanks to Hari and Bemoneyaware for their timely and keen inputs.

Update: Thanks to Vivek for pointing out that Karnataka Bank has also raised their interest rates. 

63 thoughts on “Highest Savings Bank Account Interest Rates in India”

  1. The budget comes as big boost to Yes Bank and Kotak, as interest upto 10,000 on saving account is tax free. Therefore, balance of upto 157000 in Yes Bank is tax free, weighted average post tax yield of 6.36%, comparable pre tax yield of 9.22%. Better to keep money upto such cut off amount in saving account of Yes Bank or Kotak, rather than put in FD, as former is fully liquid and there is no penalty on withdrawal.

    1. This is an interesting view point; do you have an account at Yes Bank? Do they give 6% on the entire amount that’s in your savings account or just the sum over Rs. 1,00,000?

      1. @Manshu:
        Yes Bank gives 6% for amount less than Rs. 1,00,000 and 7% for about >= 1,00,000 which is way better than any other bank. ankm83’s cut off of 157000 is in fact higher but the exact cut off is 139000 without attracting any tax liability with 7% interest rate.

        1. I’m a bit confused by your comment because 157000 will generate Rs. 10,000 in savings account if you calculate the way you said. So, 6,000 on the first lakh, and then 3,990 on the remaining 57,000 (calculated at 7%)

          If that’s the case then I’m a bit lost on where 139,000 is coming from?

          Thanks!

          1. Manshu:

            It is very simple, you will get interest on your daily closing balance but the interest will get credited only once in a quarter implying that it is quarterly compounding. Moreover as interest is going to be on daily closing balance if you have 1,20,000 in YES Bank then on first day you will get 7% on 1,20,000 for 1 day, on next day say you have 99,999 then you will get 6% on 99,999 hence this is not on the partial amount, the way you are thinking and I am sure about this 🙂

            So simple excel model will tell you that @7% daily with quarterly compounding to earn 10000 interest what should be the initial principal amount (use goal seek) and you will get 1,39,000 as break even.

            I hope this makes it clear 🙂

            1. I see what you are saying now. I thought you were earlier saying you get 7% on the additional amount over a lakh. Thanks for clarifying. Also, how are you sure this is the way they calculate? Personal experience or you read somewhere?

              1. Mansu:
                Although RBI circular says otherwise that if you have 1,25,000 as balance, upto 1,00,000 bank should pay 6% and 7% for for 25,000, it is difficult for banks to implement the differential rate approach due to system issues so all the banks, till the time system fix comes, are paying higher rate on entire amount.

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