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Personal Finance Blog India –

Effect of Saving Rate Deregulation:


Recently Reserve bank of India,deregulate the saving account interest rates.Banks can pay you 6% as well 1% on your money lying in saving account.

This post is  a small attempt to calculate the effect for different saving rates,with an assumption that Rs.1 Lakh are constantly available in the bank account.

Saving Rate: 6%

Amount(Rs) Interest Rate(%pa) Interest Payment frequency Converted Interest rate for Quarter. Total Interest Paid annually(Rs)
1,00,000 6 Daily 6.0447 6,183

Saving Rate: 5% 

Amount(Rs) Interest Rate(%pa) Interest Payment frequency Converted Interest rate for Quarter. Total Interest paid annually
1,00,000 5 Daily 5.031 5,126

Saving Rate:4%

Amount(Rs) Interest Rate(%pa) Interest Payment frequency Converted Interest rate for Quarter. Interest paid annually
1,00,000 4 Daily 4.0198 4,080

 Saving Rate: 3%

Amount(Rs) Interest Rate(%pa) Interest Payment frequency Converted Interest rate for Quarter. Interest paid annually
1,00,000 3 Daily 3.0112 3,045

Saving Rate:2%

Amount(Rs) Interest Rate(%pa) Interest Payment frequency Converted Interest rate for Quarter. Interest paid annually
1,00,000 2 Daily 2.005 2,020

Saving Rate: 1%

Amount(Rs) Interest Rate(%pa) Interest Payment frequency Converted Interest rate for Quarter. Interest paid annually
1,00,000 1 Daily 1.0012 1,005

Today interest rate cycle is in bullish phase and saving bank interest rates will be higher or at least will remain constant.But when it turn to bearish in future,banks are free to offer min interest rates so saving interest rate deregulation looks more in interest of banks than that of common man.

 



Category: Fixed Income

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