IDFC First Bank was the only bank that used to offer 6% interest rates to small depositors -– those maintaining a balance of below ₹1 lakh. The bank would offered it to all depositors maintaining a balance of up to ₹1 crore. But from 1 May, the bank has lowered its interest rates on the savings account.
Taking a cue from its peer, the bank now has different tiers. It will offer 4% for those who maintain balances below ₹1 lakh. Those maintaining a balance between ₹1 lakh and less than ₹10 lakh, the interest rate will be 4.5%. The highest interest rate of 5% is given to those who maintain a balance between ₹10 lakh and below ₹2 crore.
So, which banks now offer higher interest rates on a savings account?
Large private sector banks, like ICICI Bank, offer a 3-3.5% interest rate. Public sector banks, too, offer similar rates. Some, like the State Bank of India, offer even lower rates of 2.7%.
Some mid-sized private banks and small finance banks offer better rates of savings account.
FOR BALANCES UP TO RS 1 LAKH
Fincare Small Finance Bank: 5%
RBL Bank: 4.75%
ESAF Small Finance Bank: 4%
IDFC First Bank: 4%
Suryoday Small Finance Bank: 4%
Ujjivan Small Finance Bank: 4%
AU Small Finance Bank: 3.5%
Equitas Small Finance Bank: 3.5%
Jana Small Finance Bank: 3.5%
Bandhan Bank: 3%
FOR BALANCES ABOVE RS 1 LAKH
Equitas Small Finance Bank: 7%
(Above ₹1 lakh and up to ₹2 crore)
Ujjivan Small Finance Bank: 7%
(Above ₹1 lakh and up to ₹25 lakh)
Fincare Small Finance Bank: 6.25%
(Above ₹1 lakh and up to ₹5 lakh)
Suryoday Small Finance Bank: 6.25%
(Above ₹1 Lakh and up to ₹10 lakh)
Bandhan Bank: 6%
(Above ₹1 lakh to ₹10 crore)
Jana Small Finance Bank: 6%
(Above ₹1 lakh and up to ₹10 lakh)
RBL Bank: 6%
(Above ₹1 lakh and up to ₹10 lakh)
ESAF Small Finance Bank: 5.5%
(Above ₹1 lakh and up to ₹10 lakh)
AU Small Finance Bank: 5%
( ₹1 lakh to less than ₹5 lakh)
IDFC First Bank: 4.5%
( ₹1 lakh and below ₹10 lakh)
Do keep in mind that most banks have a tier system for offering interest rate. Take IDFC Bank as an example. If your account balance is ₹25,000, the interest payable will be 4% on the entire ₹25,000.
If the account balance is ₹5 lakh, the bank will calculate interest payable in two parts. It will pay an interest of 4% on ₹1 lakh. The remaining amount ( ₹4 lakh) will earn an interest of 4.5%.
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