How banks calculate interest on savings account

In India, banks calculate interest on savings accounts daily based on the end-of-day closing balance, as mandated by the Reserve Bank of India. The standard formula used is: Interest = (Daily Balance × Annual Rate of Interest) / 365 Key points include:

• Interest is calculated on the actual balance maintained each day.
• The accumulated interest is typically credited to the account on a quarterly or half-yearly basis.
• Some banks offer tiered interest rates, where higher balances may earn a higher rate of interest.