According to the Reserve Bank of India (RBI) guidelines, banks are required to charge interest rate on loans at monthly rest with effect from April 1, 2002. Charging of interest on loans at monthly rests is, however, not applicable to agricultural advances where, for the convenience of borrower, interest rests are linked to crop seasons or harvesting/marketin g season. In the case of savings & term deposits, Banks are required to pay interest at quarterly or longer rests. In the case of savings deposits, at present, interest is calculated on minimum balance to the credit of the deposit account during the period from the 10th to the last day of each calendar month and credited to the account only when it is Rs.1/-or more.
On a review and in view of computerization in commercial bank branches, it is proposed that payment of interest on savings bank accounts by Scheduled Commercial Banks (SCBs) would be calculated on a daily product basis with effect from April 1, 2010.
This information was given by Minister of State for Finance, Shri Namo Narain Meena in written reply to a question raised in Lok Sabha today.