Savings account interest rates are a key factor when choosing a savings account to deposit your money. It helps you earn returns on the money you saved, even though it is idle.
Whether you’re opening your first account or looking to shift to a higher-yielding option, understanding how banks calculate these rates can significantly impact your returns. Understanding the various details offered regarding savings account interest rates across major Indian banks can help you get a better idea of which bank to choose as a safe keeper for your savings.
Read on to learn more about how banks offer rates based on deposit size, and find out which bank gives the highest interest rate on savings accounts in India today.
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Banks in India offer different savings account interest rates based on deposit size. Higher balances often earn better returns, with top rates reaching up to 7.25% in 2025. Rates vary across slabs generally, like up to ₹1 lakh, ₹1–5 lakh, ₹5–50 lakh, above ₹1 crore, etc. |
Types of Savings Accounts
Many banks have various types of savings accounts, focusing on specific customers. These may be zero balance savings accounts, regular savings accounts, savings accounts for senior citizens, etc.
Understanding the distinctions helps in selecting an account that optimises your interest earnings and benefits.
Here is a general overall idea of what savings accounts are provided by the banks:
- Zero Balance Savings Account: A type of savings account that doesn’t require the customer to hold a minimum balance.
- Regular Savings Account: This is the standard account with basic facilities.
- Salary Savings Account: This type of account is for salaried employees with perks like zero minimum balance.
- Senior Citizen Savings Account: This savings account scheme provides higher interest rates and special privileges.
- Women’s Savings Account: Made specifically for women, offering preferential interest rates and cashback offers.
- Family/Joint savings account: Offers specific savings schemes for families, where everyone can access and deposit.
- Digital/Online Savings Account: Quick, paperless account opening with slightly better rates.
Different account types sometimes offer slightly varied interest rates. This creates the need to compare options in order to maximise the savings.
Banks With Best Savings Account Interest Rates
Comparing savings account interest rates across banks can help you understand significant differences in the overall interest rates. Below are the best banks in India offering the best returns on your deposits:
Here is a list of the best savings accounts offered by the banks:
| Bank | Savings Account Interest Rate (as of May 2025) |
|---|---|
| IDFC First Bank | 3.00% – 7.25% p.a. |
| AU Small Finance Bank | 3.00% – 7.00% p.a. |
| IndusInd Bank | 3.00% – 7.00% p.a. |
| Union Bank of India | 2.75% – 4.20% p.a. |
| Kotak Mahindra Bank | 2.75% – 3.25% p.a. |
| Axis Bank | 2.75% – 3.25% p.a. |
| ICICI Bank | 2.75% – 3.25% p.a. |
| HDFC Bank | 2.75% – 3.25% p.a. |
| SBI | 2.70% – 3.00% p.a. |
| Punjab National Bank | 2.70% – 3.00% p.a. |
| Canara Bank | 2.90% – 4.00% p.a. |
| Bank of Baroda | 2.75% – 4.50% p.a. |
| IDBI Bank | 2.75% – 3.50% p.a. |
| Bank of India | 2.75% – 3.10% p.a. |
| Central Bank of India | 2.80% – 4.50% p.a. |
| Indian Bank | 2.80% – 7.15% p.a. |
| Yes Bank | 3.00% – 5.00% p.a. |
| Federal Bank | 2.75% – 6.90% p.a. |
| South Indian Bank | 2.50% – 6.00% p.a. |
| RBL Bank (Ratnakar Bank) | 3.25% – 7.00% p.a. |
| Bandhan Bank | 3.00% – 7.00% p.a. |
Note: Rates vary by account type and balance. Always verify with the bank before applying.
Savings Account Interest Rates Calculation process
Banks calculate savings account interest rates based on daily closing balances, compounded quarterly, following RBI guidelines issued in 2010. However, the actual interest rates are no longer fixed by the RBI and are determined by individual banks based on their policies and market conditions.
There are two key factors included by banks when calculating your savings account interest rates:
- Daily Balance Method: Interest is computed daily based on the end-of-day balance.
- Compounding Frequency: The compounding interest is added typically quarterly, though some banks now offer monthly payouts.
It is done using the following equation:
Daily Interest = (Daily Balance × Annual Interest Rate) / 365
For example, let’s take a case where
Initial balance: ₹10,000
Annual interest rate: 3% (0.03)
Interest compounding: Quarterly (every 3 months)
Using the above-mentioned equation, the interest amount for each day would be about ₹0.82.
Calculating the interest for one Quarter (Assuming 90 Days),
0.82 × 90 = ₹73.8
At the end of 3 months, the bank credits ₹73.80 to your account.
The new principal after Quarter 1 would be
10,000 + 73.80 = ₹10,073.80
Now, for the second quarter, daily interest will be slightly higher because the principal increased.
New daily interest can be calculated by using the same equation. This time, the principal amount will change from ₹10,000 to ₹10,073.80.
The interest rates would come as ₹0.83, a bit higher than the initial interest rate. This is due to the compounding effect. Your amount will get compounded periodically. However, you may not get as much return as a fixed deposit.
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Savings Interest Rates by Deposit Amount
Although banks offer attractive interest rates for savings accounts, the interest rates can vary based on the amount deposited. Here are some of the best options you can choose from, based on the loan amount and interest rates:
Savings Interest Rate for amounts up to ₹1 lakh Deposit
Most major banks like SBI, HDFC, and ICICI offer 2.70% – 3.50% p.a. for balances up to ₹1 lakh. This base rate is applicable for the majority of regular customers.
Here is a list of the top 5 options:
| Bank | Interest Rates |
|---|---|
| Unity Small Finance Bank | 3.25% |
| Bandhan Bank | 3.00% |
| IDFC FIRST Bank | 3.00% |
| AU Small Finance Bank | 3.00% |
| IndusInd Bank | 3.00% |
| Yes Bank | 3.00% |
| RBL Bank | 3.00% |
| Federal Bank | 2.75% |
| Bank of India | 2.75% |
| Canara Bank | 2.90% |
Savings Interest Rate for amounts up to ₹5 lakh Deposit
Balances between ₹1 lakh and ₹5 lakh typically see similar rates. Below are some of the best options:
| Bank | Interest Rates |
|---|---|
| Unity Small Finance Bank | 3.50% |
| Bandhan Bank | 3.00% |
| IDFC FIRST Bank | 3.00% |
| AU Small Finance Bank | 3.00% |
| IndusInd Bank | 3.00% |
| Yes Bank | 3.00% |
| Federal Bank | 2.75% |
| Bank of India | 2.75% |
| Canara Bank | 2.90% |
| Kotak Mahindra Bank | 2.75% |
Savings Interest Rate for amounts up to ₹50 lakh Deposit
Amounts to ₹50 lakhs generally get better interest rates compared to the ones below it. Here are some of the best options:
| Bank | Interest Rates |
|---|---|
| IDFC FIRST Bank | 5.00%-7.25% |
| AU Small Finance Bank | 5.00%-7.00% |
| IndusInd Bank | 4.00%-6.00% |
| Bandhan Bank | 5.00%-6.00% |
| Yes Bank | 4.00%-5.00% |
| Unity Small Finance Bank | 5.00%-6.50% |
| Federal Bank | 3.50% (for ₹50L to ₹5Cr) |
| South Indian Bank | 2.75%-4.50% |
| RBL Bank | 4.00%+ |
| Kotak Mahindra Bank | 2.75% |
Savings Account Interest Rate for amounts up to ₹1 Crore Deposit
Deposits of ₹50 lakh and above usually require special relationship manager engagement, often offering 7% or higher, depending on tenure and bank policy. However, there are some banks that provide lower interest rates for higher deposit amounts.
| Bank | Interest Rates |
|---|---|
| IndusInd Bank | 7.00% |
| IDFC FIRST Bank | 7.25% (₹10 lakh–25 crore slab) |
| AU Small Finance Bank | 7.00% |
| Bandhan Bank | 6.00% |
| Yes Bank | 5.00% |
| Unity Small Finance Bank | 6.50% (depends on slab crossing ₹50L) |
| Federal Bank | 5.25% (for ₹5 crore and above, slightly less below) |
| South Indian Bank | 4.50%-6.00% |
| RBL Bank | 4.00%-5.00% |
| Kotak Mahindra Bank | 3.25% |
Savings Interest Rate for amounts above ₹1 Crore Deposit
Many banks offer competitive interest rates for deposit amounts above ₹1 crore, but for some, it might be slightly lower than their best interest rates. Here are some of the best options you could consider:
| Bank | Rate for Above ₹1 crore |
|---|---|
| IDFC FIRST Bank | 7.25% (₹10 lakh to ₹25 crore slab still applies) |
| AU Small Finance Bank | 7.00% (up to ₹25 crore) |
| IndusInd Bank | 7.00% (₹5 crore to ₹100 crore) |
| Bandhan Bank | 6.00% to 6.50% |
| Unity Small Finance Bank | 6.50% (up to ₹250 crore) |
| Federal Bank | 6.90% (for ₹50 crore to ₹150 crore balances) |
| South Indian Bank | 6.00% (₹25 crore and above) |
| Yes Bank | 5.00% (up to ₹100 crore) |
| RBL Bank | 5.00% (for high slabs, as mentioned) |
| Kotak Mahindra Bank | 3.25% (basic rate for high balances) |
Benefits of a Savings Account
Savings accounts provide a foundation for financial security with a range of advantages beyond earning interest. They are the most flexible form of bank account, which can also offer good returns on the deposited amount.
Key benefits include:
- Safety: Insured up to ₹5 lakh by the DICGC.
- Liquidity: Easy access through ATMs, net banking, and mobile apps.
- Additional Earnings: These include interest returns as well as other earnings achieved through promotional offers and linked accounts.
- Flexible Deposits: No commitment to fixed deposit periods.
- Emergency Fund Access: Immediate fund availability.
Savings accounts are a good way to balance safety and earnings efficiently, particularly when optimised for interest rates.
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