What changed
Previously, UCBs calculated savings interest on the minimum balance between the 10th and last day of each month. Now, interest will be computed on the daily closing balance, effective April 1, 2010.
What it means for you
This shift benefits depositors by crediting interest on every rupee held daily, increasing payouts. For UCBs, it requires upgraded core banking systems to handle daily calculations and may compress net interest margins on savings accounts.
What you must do
- Upgrade CBS and IT systems to compute and credit interest on daily balances by March 31, 2010.
- Train staff on the new calculation method and communicate changes to customers.
- Review savings product pricing and fee structures to manage potential margin impact.
- Ensure compliance with the directive and submit readiness confirmation if required.
Who it affects
All Primary (Urban) Co-operative Banks, Savings account customers of UCBs, IT and operations teams at UCBs
When does the daily product basis become effective?
From April 1, 2010, as per the RBI circular dated September 1, 2009.
What was the old method for calculating savings interest?
Interest was calculated on the minimum balance in the account from the 10th to the last day of each month, as per the 1987 directive.
Do UCBs need to upgrade their systems?
Yes, RBI explicitly advises ensuring requisite infrastructure for a smooth transition to daily product calculation.