Reserve bank of India allowed banks to pay interest on saving account and term deposits on monthly basis. Earlier the interest on saving account and term deposit only be paid on quarterly basis. This is in benefits of customers. RBI issued a note no. 62 dated 2 December 2013 regarding this. Full note is as under.
Periodicity of Payment of Interest on Rupee Savings/Term Deposits
Please refer to paragraph 23 of the Second Quarter Review of Monetary Policy 2013-14 announced on October 29, 2013 (extract enclosed) on periodicity of payment of interest on savings and term deposits.
2. In this connection, a reference is also invited to paragraph 2 (ii) of our circular DBOD.No.Dir.BC.46/13.03.00/2000-2001 dated November 4, 2000 on 'Interest Rates on Rupee Deposits held in Domestic, Ordinary Non-Resident (NRO), Non-Resident Special Rupee (NRSR) and Non-Resident (External) (NRE) Accounts' whereby Regional Rural Banks (RRBs) were advised to pay interest on savings and term deposits at quarterly or longer rests. As RRBs are functioning on core banking platform, it has been decided to review the above instructions. Accordingly, RRBs will now have the option to pay interest on Rupee savings and term deposits at intervals shorter than quarterly intervals.
3. The above revised instructions are applicable to domestic Rupee deposits including Ordinary Non-Resident (NRO) and Non-Resident (External) (NRE) savings and term deposits. As regard FCNR(B) deposits, the existing guidelines issued in this regard will remain unchanged.
4. All other instructions in this regard, as amended from time to time, will remain unchanged.