“2024’s Best Savings Account Interest Rates: Top 7 Banks Revealed”

Saving is the basic tendency for anyone or everyone who is earning under the sky. So, why is saving so significant? As it is rightly said,

“Save for the Rainy Day”

The Bugbears

The savings account is the simplest form of saving product available to banks. We deposit funds, and banks pay us interest on the funds. All other saving products, like Recurring deposits, Fixed Deposits, etc., are bi-products of savings accounts. This blog will discuss the best Savings Account Interest Rates offered by different banks. To save you time I have listed the top 07 banks offering best savings account interest rates.

Why keeping Money in Savings Account is most preferred choice?

To better understand the interest inflow in saving accounts, I have divided banks in two categories; Large Commercial Banks and Small Finance Banks. As there is big difference on the interest rate offered by one big bank and another small bank. It is better to see them differently. I will also shed light on the main reasons for the difference in interest paid by both.

Interest Rates offered by Large Commercial Banks;

Bank Name	Interest Rate on Saving Accounts	Slab
SBI	2.70% p.a.	Upto 10 crores
PNB	2.70% p.a. 2.75% p.a.	Upto 10 lakhs From 10 lacs-1 Crore
UBI	2.75% p.a.	Upto Rs.50 lacs
Canara Bank	2.90% p.a.	Upto Rs.50 lacs
BOB	2.75% p.a.	Upto 50 Crores
ICICI Bank	3.00% p.a. 3.50% p.a.	Upto Rs.50 lacs 50 lacs and above
HDFC Bank	3.00% p.a. 3.50% p.a.	Upto Rs.50 lacs 50 lacs and above
Axis Bank	3.00% p.a. 3.50% p.a.	Upto Rs.50 lacs 50 lacs and above
Kotak Mahindra Bank	3.50% p.a. 4.00% p.a.	Upto Rs.50 lacs 50 lacs and above
IndusInd Bank	3.50% p.a. 5.00% p.a. 6.00% p.a. 6.75% p.a.	Upto Rs.1 lacs From 1 lacs-5 lacs From 5 lacs-10 lacs From 10 lacs-50 Crores

Interest Rates offered by Mid-Sized Commercial Banks;

Bank Name	Interest Rate on Saving Accounts	Slab
Yes Bank	3.00% p.a. 4.00% p.a. 5.00% p.a. 7.00% p.a.	Up to Rs.1 Lac From Rs.1 lac to less than 5 lacs From 5 lacs to less than 10 lacs From 10 lacs to less than 100 Crores
RBL Bank	4.25% p.a. 5.50% p.a. 6.00% p.a. 7.50% p.a. 7.00% p.a. 6.50% p.a. 6.25% p.a. 6.25% p.a. 5.25% p.a.	Upto INR 1 lacs From INR 1 lacs upto INR 10 lacs From INR 10 lacs upto INR  25 lacs From INR 25 lacs and upto INR  2 Crores From INR 2 Crores and upto INR 3 Crores From INR 3 Crores upto INR 7.5 Crores From INR 7.5 Crores upto INR 25 Crores From INR 25 Crores upto INR 50 Crores From INR 50 Crores upto INR 100 Crores
DBS Bank	3.25% p.a. 3.50% p.a. 3.25% p.a. 3.50% p.a. 7.00% p.a. 5.00% p.a. 4.00% p.a. 5.00% p.a. 3.00% p.a.	Upto Rs.1 lacs From INR 1 Lac to INR 2 Lacs From INR 2 Lac to INR 3 Lacs From INR 3 Lac to INR 4 Lacs From INR 4 Lac to INR 5 Lacs From INR 5 Lac to INR 10 Lacs From INR 10 Lac to INR 50 Lacs From INR 50 Lacs to INR 1 Crore Above 1 Crore
IDFC Bank	3.00% p.a. 3.50% p.a. 4.00% p.a. 7.00% p.a. 7.25% p.a. 7.00% p.a. 5.00% p.a.	Upto Rs.1 lacs From INR 1 Lac to INR 3 Lacs From INR 3 Lac to INR 5 Lacs From INR 5 Lac to INR 10 Lacs From INR 10 Lac to INR 5 Crores From INR 5 Crores to INR 50 Crores From INR 50 Crores to INR 100 Crores
Bandhan Bank	3.00% p.a. 6.00% p.a. 7.00% p.a. 6.25% p.a. 6.50% p.a. 8.00% p.a.	Upto Rs.1 lacs From INR 1 Lac to INR 10 Lacs From INR 10 Lac to INR 2 Crores From INR 2 Crores to INR 10 Crores From INR 10 Crores to INR 50 Crores From INR 50 Crores to INR 100 Crores
IDBI Bank	2.75% p.a. 3.00% p.a. 3.25% p.a.	Upto INR 1 Lac From INR 1 Lac to INR 5 Crores From INR 5 Crores to INR 100 Crores
Federal Bank	3.00% p.a. 3.00% p.a. 3.75% p.a. 4.00% p.a. 5.50% p.a. 7.10% p.a. 6.00% p.a.	Upto Rs.1 lacs rom INR 1 Lac to INR 50 Lacs From INR 50 Lac to INR 2 Crores From INR 2 Crores to INR 5 Crores From INR 5 Crores to INR 50 Crores From INR 50 Crores to INR 200 Crores Above INR 200 Crores

Interest Rates offered by top Small Finance Banks;

Small Finance Bank	Interest Rate on Saving Accounts	Slab
AU Small Finance Bank	3.00% p.a. 4.00% p.a. 5.00% p.a. 7.00% p.a. 7.25% p.a. 7.00% p.a.	Upto INR 1 Lac From INR 1 Lac to INR 5 Lacs From INR 5 Lac to INR 10 Lacs From INR 10 Lacs to INR 1 Crores From INR 1 Crores to INR 5 Crores From INR 5 Crores to INR 10 Crores
Equitas Small finance bank	3.50% p.a. 5.00% p.a. 7.00% p.a. 7.80% p.a.	Up to ₹ 1 lakh From ₹ 1 lakh and upto ₹ 5 lakhs From ₹ 5 lakhs and upto ₹ 25 Crores From ₹ 25 Crores and above
Ujjivan Small Finance Bank	3.50% p.a. 5.00% p.a. 7.50% p.a.	Upto Rs.1 lacs From 1 lacs-5 lacs From 5 lacs and above
Utkarsh Small Finance Bank	4.00% p.a. 6.25% p.a. 7.50% p.a. 7.25% p.a. 7.50% p.a.	Upto INR 1 Lac From INR 1 Lac to INR 5 Lacs From INR 5 Lac to INR 2 Crores From INR 2 Crores to INR 10 Crores From INR 10 Crores to INR 50 Crores
Suryoday Small Finance Bank	3.00% p.a. 5.00% p.a. 7.25% p.a. 7.50% p.a. 7.75% p.a. 7.25% p.a.	Upto INR 1 Lac From INR 1 Lac to INR 5 Lacs From INR 5 Lac to INR 10 Lacs From INR 10 Lacs to INR 5 Crores From INR 5 Crores to INR 25 Crores From ₹ 25 Crores and above
Jana Small Finance Bank	3.50% p.a. 5.00% p.a. 7.50% p.a. 7.55% p.a.	Upto INR 1 Lac From INR 1 Lac to INR 5 Lacs From INR 5 Lac to INR 10 Crores From INR 10 Crores to INR 20 Crores
ESAF Small Finance Bank	3.50% p.a. 6.00% p.a. 7.50% p.a. 8.00% p.a.	Upto INR 1 Lac From INR 1 Lac to INR 5 Lacs From INR 5 Lac to INR 15 Crores From ₹ 15 Crores and above

Now, to make it simple for you, I have extracted the top 07 banks paying the highest interest on savings accounts from the above three tables. As the interest payout is different, I have segregated them into 07 categories. Each category is listed in descending order from highest interest-paying bank to lowest interest-paying bank.

Other parameters, like their presence (no. of branches), are also tendered. Say one bank may pay high interest on savings, but its branches are limited to a particular region. As a whole, it may not be beneficial for the majority. Therefore, I have selected banks based on the following parameters;

• Branch Network in all regions
• Bank Size
• Business Size
• Bank’s Customer Base
• Bank’s Latest Financial Year Result 

Top 07 Banks revealed in each Segment

Up to 1 Lacs	1 Lac to 5 Lacs	5 Lacs to 10 Lacs	10 Lacs to 50 Lacs	50 Lacs to 1 Crores	Above 1 Crore
RBL Bank	Bandhan Bank	IDFC Bank	Ujjivan Small Finance Bank	Suryoday Small Finance Bank	Suryoday Small Finance Bank
IndusInd Bank	RBL Bank	Equitas Small finance bank	Suryoday Small Finance Bank	Utkarsh Small Finance Bank	Ujjivan Small Finance Bank
Utkarsh Small Finance Bank	Utkarsh Small Finance Bank	Ujjivan Small Finance Bank	Utkarsh Small Finance Bank	Ujjivan Small Finance Bank	IDFC Bank
Ujjivan Small Finance Bank	ESAF Small Finance Bank	Utkarsh Small Finance Bank	AU Small Finance Bank	AU Small Finance Bank	AU Small Finance Bank
Equitas Small finance bank	Equitas Small finance bank	Jana Small Finance Bank	Equitas Small finance bank	Equitas Small finance bank	Utkarsh Small Finance Bank
Ujjivan Small Finance Bank	Ujjivan Small Finance Bank	Suryoday Small Finance Bank	IDFC Bank	RBL Bank	Yes Bank
Jana Small Finance Bank	Jana Small Finance Bank	ESAF Small Finance Bank	Yes Bank	IDFC Bank	IndusInd Bank

Why Small Finance Banks offer higher interest rates on deposits?

You must have noticed the vast interest gap in payouts between large and small commercial banks. Small Finance Banks always offer a lucrative interest rate on saving accounts and fixed deposits. The main reason they can do that, whereas large commercial banks cannot, is due to supply and demand. Large commercial banks (LCB) already have massive deposits and keep increasing year-on-year. Therefore, it is not possible to pay higher interest in surplus scenarios.

However, for small banks, it is the opposite. Their deposit base is tiny as compared to LCB’s. They need to offer lucrative interest on deposits to attract customers and compete with LCBs. Therefore, they offer higher interest rates in savings accounts and fixed deposits to attract and hold customers. 

Is it safe to put money in a small finance bank?

Like any other bank, Small Finance Banks are governed by RBI and mandated to follow all banking norms, such as Statutory Liquidity Ratio Requirements, Cash Ratio Reserve Requirements, etc. Other criteria include a minimum paid-up equity capital of INR 200 crore. The promoter(s) of a small finance bank should hold a minimum of 40% of the paid-up equity capital, which should be locked in for five years from the commencement date of business. Deposits in any commercial bank under RBI are insured up to INR 5.00 lacs by DICGC, which also includes small finance banks. 

In a nutshell, Small Finance banks are as good as large banks. However, assessing the small bank’s financial health before investing is advisable. And to do so, here are the factors one should check;

1) CASA Ratio: A high Casa ratio resembles that the bank has a high amount of low-cost funds. Ideally, 40% or more is good for the bank’s health.

2) Gross NPA Ratio: This is the bank’s gross NPA ratio against its total loans. A higher GNPA ratio indicates trouble recovering loans, suggesting poor asset quality. 

3) Net NPA: As per RBI, the bank needs to provision against the amount of loans that are turning bad/loss. The provisioning made by banks on the loss assets (NPA) subtracted from Gross NPA gives Net NPA. This Net NPA helps in understanding the bank’s actual position on loss assets.

[NNPA = GNPA – NPA Provisioning]

A high Net NPA is a red flag for customers, and avoiding investing in such banks is better.

Are Small Finance Banks deposits insured?

Yes, deposits in any form with Small finance Banks are insured to the tune of INR 5.00 Lacs (including interest payable) through Deposit Insurance and Credit Guarantee Corporation (DICGC). DICGC is a subsidiary of RBI established to ensure the security of depositors’ funds in banks.

As DICGC will only cover up to INR 5.00 lacs of your deposit in any particular bank. It is strongly advised to have Saving in accounts in different capacities. Lets say, one individual account, another joint account as second applicant, guardian account with kids and so on. This way each of your account will enjoy the cover of INTR 5.00 lacs by DICGC.

How much money is guaranteed if a bank fails? Are deposits in different banks separately insured?

It is to note that DICGC covers the money deposited with any commercial bank to the tune of INR 5.00 lacs only per account holder. A individual may have multiple accounts with any particular bank. However DICGC will cover only the amount up to the limit of INR 5.00 lac including interest payable.

For example, Amit has 02 savings accounts having a cumulative balance of INR 6 lacs and FDR if the amount is INR 2.00 lacs with X bank. Now in this case, if bank X fails DICGC will refund only INR 5.00 lacs. Amount beyond the insurance limit is not covered in case of a bank failure. 

Therefore, it is advised that one always spread their funds in multiple accounts under different capacities. For example, multiple individual savings accounts in the name of family members, joint account/FDR with spouse, joint account/FDR with kids, etc. Each account opened with varying rights and capacities qualifies for Rs 5 lakh insurance cover by DICGC.

Yes, deposits with multiple banks receive separate deposit insurance coverage limits.

What is the limit of cash deposit in a savings account?

There is no such limit prescribed by the regulator for depositing funds in a savings account. However, to keep a check on that, banks themselves have put some restrictions on an account-to-account basis. 

From the taxation point of view, an individual who deposits cash of more than INR 10.00 lacs in a fiscal year may attract scrutiny from the Income Tax Department. For current accounts, the amount is INR 50.00 lacs in a fiscal year.

Diversification of Funds :Tips for Maximizing Savings

Diversifying your funds in SFB and large banks is advised. Putting all your money in one single bank carries a risk, as DICGC only covers up to INR 5.00 lacs. Therefore, to avail yourself of the high interest of SFB, you can upto the coverage amount of INR 5.00 lacs. A good chunk of your deposits is advised to be kept in large banks, as they are too big to fail.

In general, bankers advise people to follow the 50/30/20 rule for income diversification. This means 50% of your income should be used for your needs, 30 % for your wants, and the remaining 20% should be invested for savings. If you follow strict budgeting, you can increase the investment by 20% to a higher percentage.

Conclusion

Choosing a bank is difficult when you have numerous options available. Therefore, I have listed the top 07 banks paying the highest interest rates for your ease of comparison. I advise you to diversify your funds in multiple banks under different capacities to avail yourself of the DICGC cover in all your accounts. Analyze the financial health of a small financial bank before putting your hard-earned money in it. It is better not to exceed INR 5.00 lacs in a single account. For any other queries, feel free to drop a comment.

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