Bank customers to get interest on savings account sooner than 3 months

Mumbai: Bank customers will now get interest on their savings account as well as term deposits at an interval shorter than a quarter, as per a new directive of the Reserve Bank.

Most of the banks currently credit the interest accrued on the savings accounts every six months.

"Banks will now have the option to pay interest on rupee savings and term deposits at intervals shorter than quarterly intervals," RBI said in a notification on Friday.

As per the earlier norms, banks were instructed to pay interest on savings at term deposits on rupee deposits held in domestic, Ordinary Non-Resident (NRO), Non-Resident Special Rupee (NRSR) and Non-Resident (External) (NRE) at quarterly or longer intervals.

RBI said however that as banks are now functioning on core banking platform so it was decided to review the previous instructions.

Accordingly, banks will now have the option to pay interest on rupee savings and term deposits at intervals shorter than a quarter.

The revised instructions, the RBI said, are applicable to domestic Rupee deposits including Ordinary Non-Resident (NRO) and Non-Resident (External) (NRE) savings and term deposits.

In a separate notification, RBI allowed the banks the freedom to offer interest rates on incremental NRE deposits with maturity of three year and above without any ceiling until January 31, 2014.