Yes, from 1st April 2010, you’ll earn more money for every rupee that you deposit in your bank account. Though the interest rate of 3.5% p.a. on your bank balance remains the same, what has changed is the method of calculating the interest. Let me explain.
First, let’s try to understand how interest was calculated on your bank balance before 1st April 2010.
Most banks in India used to pay interest on minimum balance between the 10th and the last day of the month. So, suppose you deposited Rs. 1 lakh in your account on the 1st of March and withdrew it on the 31st of the same month, you won’t receive any interest on it. This is because, the minimum balance between 10th March (Rs. 1 lakh) and 31st March (Rs. 0) was zero.
Though you don’t get any interest on your money, the banks make sweet profit by lending these free funds at high interest rates. This gross cheating continued for a long time as most retail depositors never bothered to understand how interest was calculated on their bank balances and hence, never complained.
However, things have changed post 31st March 2010.
According to the new RBI guideline, banks are supposed to pay interest on daily minimum balance in the account. Hence, as per above example, if Rs. 1 lakh stayed in your account for 30 days, you’ll earn interest at the rate of 3.5% p.a. for those 30 days.
Hence, as the title states you’ll earn more money in your savings bank account from 1st April 2010.
