The recently collected data on savings account rates offered by banks shows that IDBI Bank and Canara Bank offer the highest rates among public sector banks. Public sector banks offer comparatively lower interest rates than private sector banks and small finance banks. On the savings accounts, IDBI offers a 3% – 3.5% interest rate, and Canara Bank offers a 2.90% – 3.2% interest rate.
Salaried individuals mostly have multiple saving accounts, one linked to salary deposits and investments and one for loan payment and credit charges. Some may keep separate savings account to park emergency funds. Compared to fixed deposits savings account has lower interest rates.
As per data collected on November 25th, other public sector banks that provide better interest rates are Punjab and Sind Bank that offer 3.10%, and Indian Overseas Bank offers a 3.05% interest rate for savings accounts and the minimum balance requirement is Rs. 500 to Rs. 1000. Central Bank of India provides a 2.75% to 3% interest rate for savings accounts and the minimum balance requirement of Rs. 500 – Rs. 2000. Leading private sector banks such as HDFC Bank and Canara Bank offers 3% to 3.5% interest rate. But large public sector banks like State Bank of India and Bank of Baroda give far less interest rate for the savings account. SBI offers only 2.7%, and BoB pays 2.75% interest on the savings account balance. Small finance banks offer much better interest rates to their savings account holders. For instance, the AU Small Finance Bank offers up to 7% interest, and Ujjivan Small Finance Bank offers up to 6.5% interest for a savings account.
The public sector banks are backed by the Government of India and they aim to reach out to the lower and middle-income groups. Therefore, the minimum balance requirement is only Rs. 250 for public sector banks and it is nil for SBI. Compared to leading private sector banks this amount is very low. The minimum balance requirement in the savings account of Axis Bank and HDFC Bank is Rs. 2,500 to Rs. 10,000. At ICICI Bank minimum balance requirement is Rs. 1000 to Rs. 10,000.
A higher interest rate is not a criterion to choose a bank, it is a bonus. Customer should primarily check the long term track record and service standards of the bank, along with its branch network, and ATM facility across cities before choosing.
