A Savings Account is the most basic form of banking in India. The country has about 100,000 banks spread across the country.
Therefore, you can open an SB account at any of these banks and their branches. However, there are several factors one needs to consider before entering into a banking relationship with any of these banks.
So in this article, you get to know which bank gives highest interest rate on saving account in India.
Things to Look for in SB Accounts
Here’s a list of some factors that you should consider, if you’re planning on opening an SB Account at any bank.
These would save you a lot of hassles in opening and operating the account.
Ease of Opening an Account
Nowadays, a lot of banks harp on the ease of opening an SB Account with them. Rightly so.
The Aadhar card and its system of biometric verification of credentials make it very easy to open a bank account.
There are no complicated forms to fill, unlike in the olden days or like some other banks. Aadhar Know Your Customer (KYC) verification is very easy.
All you need to do at the bank is put your finger on the fingerprint reader and all your Aadhar details will pop up on the screen of the banker.
Using these details, they will open an SB account for you in less than 10 minutes.
You will also get an OTP for the bank to access your Permanent Account Number (PAN) from the Digilocker facility of the Indian government.
In such cases, you can walk out of the bank with your account functioning fully and a welcome kit that consists of the bank passbook, checkbook, and a non-personalized ATM card.
Branch Banking Services
Branch Banking Services or BBS is very important nowadays.
Basically, it means that you can transact or avail facilities at any branch of your bank, instead of visiting the one where you opened the account.
BBS is very useful if you’re traveling or working. All you need to do is visit the nearest branch of your bank.
They will access your account and provide you with the necessary service such as replacement of debit card or issue of bank statement.
You can also deposit a check or cash at these branches, without visiting your “home branch.” The BBS service assumes greater importance considering that a lot of Indians migrate to other cities for work.
And they might not wish to open another account at that place. Therefore, they can do all transactions from any branch of a bank that offers BBS.
Ease of Transacting
You wouldn’t want to wait in a queue for half an hour or more to complete a transaction, would you? Therefore, ease of transacting and speed is one of the main things you should look for when choosing a bank and branch to open an account.
Often, we need to visit a branch of our bank for some work. Usually, most banks advertise that you can complete every transaction within 10 minutes.
Unfortunately, that’s not the case always. At some banks and their branches, you might have to spend almost an hour just to get a simple demand draft or deposit cash.
Therefore, find a bank where you can perform transactions easily. That not only helps save time, but also hassles.
Generally, such banks have a high level of automation and they use computers for every transaction. This makes it faster for the banker to access your account and transact,
Online Banking Services
Very often we need to send money to someone in a hurry or request a fresh checkbook, block our lost ATM card or report some wrong transaction.
Therefore, open your SB account at a bank that offers online banking services. Most banks in India now have online banking services.
Despite this, some banks lag in technology. Therefore, go for an SB Account with a bank that deploys modern technology which allows you to make speedy online transactions.
You can also check your balance online and invest in Stocks and Mutual Funds through net banking facilities.
At the same time, check whether the bank has a facility to connect your account with the Bharat Interface for Money (BHIM).
A good bank should also offer its own mobile banking apps that are simple to use and fast. This helps you access your account even while you’re on the move.
Actually, there’s not much you can do about the interest rates that any bank pays on your Savings Bank account.
That’s because the apex bank- the Reserve Bank of India- fixes the limit over how much interest all banks can offer.
Therefore, no bank is as such free to offer any interest rate it wants to its customers.
However, all banks do have some flexibility in choosing the interest rate on saving account they can offer within the RBI stipulated limits.
These would range from 2.5 percent per annum to seven percent per annum. Generally, this is simple interest, calculated on your Average Quarterly Balance (AQB) and paid half-yearly.
Therefore, in this article, I will write about banks that pay the highest rate of interest on Savings Bank accounts in India.
Please note that these rates are prevalent at the time of writing this article in mid-2021. They’re subject to change anytime due to RBI regulations.
Which Bank gives Highest Interest Rate on Saving account.
Normally, banks pay an annual interest rate on saving account ranging between 2.5 percent and seven percent.
However, there are lots of terms and conditions to get higher interest rates on a saving account. Usually, for ordinary Savings Bank accounts, the average rate of interest per annum is four percent.
The four percent rate of interest is applicable if you maintain the minimum deposit or AQB of Rs. 500. Rs.1,000, Rs.5,000 or Rs.10,000 as per the bank rules.
You can get higher interest rates of up to seven percent only if you maintain an AQB of more than Rs.100,000 in your SB Account.
Therefore, in this list, I’m providing the list of banks that meet all the specifications that I mention above, alongside their interest rate on saving accounts.
1. Ujjivan Small Finance Bank: 4 percent
Ujjivan Small Finance is one of the banks in India which gives the highest interest rate on a savings account. Ujjivan Small Finance Bank is one of the latest entrants in the field of banking in India. Ujjivan SFB is also billed as the fastest-growing bank in India.
They offer annual interest of four percent on an SB account. The minimum balance for opening an account at Ujjivan SFB is Rs.5,000.
2. IDFC First Bank: 5 percent
IDFC First Bank is one of the banks with highest interest rate in India.
IDFC First Bank is a private sector bank known for its high technology. This makes opening and operating an account at IDFC First Bank a very simple and pleasurable experience.
They offer annual interest of five percent on their Savings Bank account. You can get up to seven percent on AQB of more than Rs.100,000.
3. Fincare Small Finance Bank: 5 percent
Bangalore-based Fincare Small Finance is Bank offers an annual interest rate of five percent on its Savings Bank account.
In fact, you can open an account online through their app. The initial SB Account will be with Partial KYC. You have to visit any branch of the bank for full KYC.
They offer superb digital services for banking too.
4. Paytm Payments Bank: 4 percent
Paytm Payments Bank is an offshoot of the very popular mobile wallet, Paytm. Generally, you don’t need to open a separate Paytm Payments Bank account.
It will be automatically opened when you download their app to use the Paytm wallet. All you need to do is complete the full KYC to enjoy their banking services.
In line with RBI policies and limits, Paytm Payments Bank also offers four percent annual interest on their SB accounts.
You can get an ATM card from Paytm Payments Bank for a fee, which is payable through the app.
5. RBL Bank: 6 percent
If you are looking for the bank with the highest interest rate on saving account, You can consider the RBL bank. RBL Formerly known as Ratnakar Bank Ltd, RBL Bank offers a high, six percent interest on its Savings Bank account.
However, the flip side is that you’ve to maintain a minimum AQB of Rs.100,000 in your SB account.
If the amount falls below Rs.100,000 as of the minimum balance at any point in time, you can attract cash penalties, which are taken from the remaining balance in your account, as per RBI laws.
6. Kotak Mahindra Bank: 4 percent
If you have the question: which bank gives the highest interest rate on saving account in India? And the name of Kotak Mahindra bank won’t come, it is not possible. Kotak Mahindra Bank has the best banking services in India, both offline and online.
They have a wide range of SB accounts to choose from, including the Zero Balance Kotak 811 account that you can open online.
Their net banking, BBS, and mobile banking services are highly sophisticated yet very simple to use. I rank them as the best bank to open an SB account.
Kotak Mahindra Bank offers an interest of four percent on all its Savings Bank accounts. And for AQBs in excess of Rs.100,000, you can get 5.5 percent annual interest on SB accounts.
7. Yes Bank: 5.25 percent
Yes Bank has been in the news a lot in recent years. At the same time, it’s one of the leading private sector banks.
They pay an annual interest of 5.5 percent on Savings Bank Accounts, where the minimum AQB is Rs.100,000.
You can get lower or four percent interest on simple SB accounts where the minimum AQB is Rs.10,000.
They also offer advanced net banking services and BBS to their customers across India.
8. India Post Savings Bank: 4 percent
Another superb account that pays four percent interest per annum comes from India Post.
The Post Office Savings Bank Account attracts a four percent interest, but the AQB is just Rs.50.
You can open a PO Savings Bank Account at most of the 160,000 post offices owned by India Post. You can deposit only Rs.50 as the minimum balance.
You won’t get a checkbook or ATM card for this account and all transactions have to be made at the post office where you hold the account.
9. Equitas Small Finance Bank: 3.5 percent
Equitas Small Finance Bank offers only a 3.5 percent interest rate on saving accounts but finds its way on my list because of its technology.
You can open an instant bank account at Equitas SFB using their app and complete all KYC formalities through your mobile phone only.
This is a new SFB in India and is growing rapidly. They also offer digital debit cards and you can get a physical one by applying through the app.
You can request a slew of services through their app and net banking, without the hassles of visiting the branch.
10. HDFC Bank: 3.5 percent
HDFC Bank is the largest private sector bank in India and deploys the latest technologies. Their services are at par with any major foreign bank.
In fact, HDFC Bank has won several accolades as the leading bank in India for its superb range of services.
You can open an SB account at any branch of HDFC Bank and avail of BBS, net banking, and mobile banking services.
They offer a 3.5 percent rate of interest, which is lower than some other banks. However, considering the facilities they provide, I would rate it among the best banks in India.
Does Interest on SB Accounts Really Matter?
While I’ve spoken of interest rates paid by various banks on their Savings Bank accounts and facilities, it’s worth asking this question: Does interest on SB accounts really matter? In my humble opinion, it doesn’t matter in the least.
That’s because banks charge an annual fee for maintaining your ATM card. And if we withdraw more than five times on ATM machines of other banks, we have to pay a service fee plus Goods and Service Tax (GST).
These charges almost negate or even exceed the interest we earn through an SB account.
Instead, if you’re interested in interests on your money, look for superb Fixed Deposit and Recurring Deposit schemes.
Maybe you got to know which bank gives highest interest rate on saving accounts. As I mention throughout this article, there is nothing known as the highest interest rates on SB accounts.
That’s because such interest rates are fixed by the RBI and individual banks have to operate within limited flexibility. There’s no point in maintaining a high AQB unless you’ve lots of surplus money.
Because, the same Rs.100,000 you will maintain a minimum balance in your SB account can fetch much higher returns if invested on an FD or other options such as stocks, debentures, and Mutual Funds.
Personally, I never consider the interest on my SB account because it’s almost minimal and doesn’t cover the costs of maintaining an ATM card or pays for withdrawals from ATM machines of other banks.
However, you can select any of the above banks based on other parameters such as technology, BBS, and other factors to open a bank account in India.