What changed
Previously, interest on savings deposits was calculated on the minimum balance between the 10th and last day of each month. Now, from April 1, 2010, interest must be calculated on the daily product basis, meaning interest accrues on the actual daily balance.
What it means for you
This shift benefits depositors by ensuring they earn interest on every rupee held each day, not just the minimum balance. For co-operative banks, it requires system upgrades to track daily balances and compute interest accurately, potentially increasing interest expenses.
What you must do
- Update core banking systems to compute interest on daily product basis from April 1, 2010.
- Train staff on the new calculation method and communicate changes to customers.
- Review and adjust interest rate policies to manage potential cost impacts.
- Ensure smooth transition by testing systems and reconciling accounts before the deadline.
Who it affects
State Co-operative Banks (StCBs), Central Co-operative Banks (DCCBs), Savings account depositors at these banks
What is the daily product basis for interest calculation?
It means interest is calculated on the actual balance in the savings account each day, rather than on the minimum balance during a fixed period. This gives depositors interest for every day their money stays in the account.
When does this change take effect?
The revised procedure applies from April 1, 2010. Banks must implement the daily product basis from that date onward.
Do co-operative banks need to inform customers about this change?
Yes, banks should communicate the revised interest calculation method to savings account holders to ensure transparency and avoid confusion.