With effect from April 1, 2010 payment of interest on savings bank accounts by scheduled commercial banks would be calculated on a daily product basis. The calculated interest will be credited to your account quarterly. How does the bank calculate the Internet.
Here is the method.
Consider the amount in your bank account from 18.01.2016 – 31.01.2016. is Rs.1000/- and the rate of Interest is 4% Per Annum. Then the calculation will be as :
Int = ((Principal or the amount in bank) * No of days * Rate of Interest ) / (100 *365)
Rate of Interest : 4% => 4 / 100.
No of days in a year = 365 as the rate of interest is calculated for a year.
= (56000)/(36400) = Rs.1.53.
The interest will be Rs.1.53.
Most of the scheduled bank, the minimum Rate of interest is 4% from April 1 2010. The rate of interest has been deregulated by RBI. After April 1, 2010, Banks has their space to fix the Rate of Interest.
For more details about this Visit RBI website.