I had read that RBI had instructed banks to calculate interests on daily balances from 1st april 2010. Has this been implemented or shelved? I haven't noticed any difference in my interest credits.
Earlier the balance was arrived at as;
- Average of Minimum balance between 10th and 25th.
- So if you balance was 50,000 on 10th morning, and during the day it went to 10,000 the balance for the day considred was 10,000.
- This was done for 16 days and the average balance for 16 would be sum of balance for each day divided by 16.
- The interest was given for the month using this balance.
In the new ruling the minimum balance every day would be used. This means that earlier if you get a salary on 1st and make bill payments from 5th to 10th, in the earlier system you would not get more interest. In the current system for the first 5 days your balance would be more and hence you would get more interest.
The difference in calculation would just reult in around 10% more interest for most users and its not noticible.
Yes, the measure was implemented.
Your interest credits used to be effected by the timing of your deposits and withdrawals. I think people who paid all their bills before the 10th, and then got paid on the 10th or just after, might notice a difference (might); but it's unlikely anyone else would.
This article discusses the change in the context of the basis point change - http://new.valueresearchonline.com/story/h2_storyview.asp?str=17308. It all sounds good on the surface, but with 7% inflation it's actually just mitigating your loss. Worth a read.