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Savings Bank Interest on Daily Product Basis from April 2010

Current · Source: Reserve Bank of India · RBI/2009-10/322 · issued 19 Feb 2010 · ~1 min read

Quick answerFrom April 1, 2010, all scheduled commercial banks (excluding RRBs) must pay interest on savings bank accounts using the daily product method, replacing the earlier monthly minimum balance approach.

The rule, in the simplest words

Banks must pay interest on savings bank accounts using the daily product method from April 1, 2010.
Interest is calculated daily based on the end-of-day balance, not the monthly minimum balance.
Banks must update their IT systems to compute interest daily and ensure accurate calculation and reporting.

How it plays out — a real example

A branch operations officer in Indore, Rohan, ensures that the daily product method is applied correctly to calculate interest on savings bank accounts, resulting in higher interest payouts for depositors and a smooth transition for the bank's IT systems.

What changed

RBI mandated that interest on savings bank accounts be calculated on a daily product basis effective April 1, 2010. This follows an earlier circular from April 24, 2009, which proposed the change and asked banks to prepare for a smooth transition.

What it means for you

Banks must update their core banking systems to compute interest daily based on the end-of-day balance, rather than the monthly minimum balance. This benefits depositors by crediting interest for every day funds remain in the account, potentially increasing interest payouts. Banks may see a slight rise in interest expenses and need to ensure accurate daily calculation and reporting.

What you must do

Ensure IT systems are configured to calculate savings bank interest on a daily product basis from April 1, 2010.
Communicate the change to all branches and relevant departments for smooth implementation.
Review and update internal guidelines and customer communications to reflect the new interest calculation method.
Test daily product calculations in a pilot branch before full rollout to avoid errors.

Who it affects

All scheduled commercial banks (excluding RRBs), Depositors with savings bank accounts, Bank IT and operations teams

❓ Common questions

Regulatory timeline

Stated effective date effective April 1, 2010
Decoded by BankPulse 2026-06-19 07:28 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the daily product basis for interest calculation?

Interest is calculated on the end-of-day balance for each day, summed over the month, and paid at the applicable rate. This replaces the earlier method based on the minimum balance maintained during the month.

When does this change take effect?

The circular mandates implementation from April 1, 2010. Banks were advised earlier in April 2009 to prepare for this transition.

Does this apply to Regional Rural Banks (RRBs)?

No, the circular explicitly excludes RRBs. It applies only to scheduled commercial banks.

📜 Read the original circular — full text as issued by RBI

RBI/2009-10/322

 DBOD. No. Dir. BC 77/13.03.00/2009-10 

  February 19, 2010 

 All Scheduled Commercial Banks

 (Excluding RRBs) 

 Dear Sir

 Payment of Interest on Savings Bank Account on Daily Product Basis 

 Please refer to our circular DBOD. No. Dir. BC.128/13.03.00/2008-09 dated April 24, 2009 advising banks that in view of the present satisfactory level of computerisation in commercial bank branches, it is proposed that payment of interest on savings bank accounts by scheduled commercial banks would be made on a daily product basis with effect from April 1, 2010. Further, banks were advised that in order to ensure a smooth transition, they may work out the modalities in this regard. 

 2. We advise that payment of interest on savings bank accounts may be made by banks on a daily product basis with effect from   April 1, 2010 . 

 Yours faithfully

 (P. Vijaya Bhaskar) 

 Chief General Manager-in-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/322 · issued 19 Feb 2010. The plain-English explanation above is BankPulse’s own independent summary.

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Who does what — compliance checklist

🏦 Branch Manager

Communicate the change to all branches and relevant departments for smooth implementation.
Test daily product calculations in a pilot branch before full rollout to avoid errors.

💻 IT / Systems

Ensure IT systems are configured to calculate savings bank interest on a daily product basis from April 1, 2010.

📜 Compliance

Review and update internal guidelines and customer communications to reflect the new interest calculation method.

Grouped from the action items above — a single circular may involve more than one team.

Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (All scheduled commercial banks (excluding RRBs), Depositors with savings bank accounts, Bank IT and operations teams), your first concrete step on “Savings Bank Interest on Daily Product Basis from April 2010” is: “Ensure IT systems are configured to calculate savings bank interest on a daily product basis from April 1, 2010.” (RBI issued this 19 Feb 2010).

Circular: RBI/2009-10/322 -- Savings Bank Interest on Daily Product Basis from April 2010
Issued: 19 Feb 2010
Action required: Ensure IT systems are configured to calculate savings bank interest on a daily product basis from April 1, 2010.
Action required: Communicate the change to all branches and relevant departments for smooth implementation.
Action required: Review and update internal guidelines and customer communications to reflect the new interest calculation method.
Action required: Test daily product calculations in a pilot branch before full rollout to avoid errors.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5508&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.