This move by banks has brought the need to optimise the amount of funds kept in bank savings accounts into sharper focus.Since October 2011, most banks barring few private banks were offering interest rate of 4 percent in these savings accounts. However, recently, banks have started reducing interest rate on savings account.The first salvo was fired by none other than the country's largest bank. Subsequently, eleven more banks have reduced the savings bank account interest rate and more could be expected to follow soon.Here are some of the banks that have reduced rates from the earlier rate of 4 percent for most deposits.According to RBI rules, interest on savings account (for resident rupee accounts) shall be calculated on a daily basis and will be a uniform interest rate on balance up to Rs 1 lakh, irrespective of the amount in the account within this limit. As a savings bank account holder, one needs to keep an eye on the average balance limits as set by the bank. One may keep an amount equal to three months of such needs in savings account and the rest in short term or liquid funds.In order to reduce their cost of funds, banks have started offering lower interest rate in their savings account.

Source: Economic Times August 22, 2017 04:30 UTC