Bandhan Bank and AU Small Finance Bank offer the best rates on savings accounts

Amid falling interest rates, newer private banks and small finance banks offering higher interest rates as per data compiled by BankBazaar. Bandhan bank is offering interest rates of up to 7.15 percent. This is followed by RBL Bank offering up to 6.5 percent, IndusInd Bank and IDFC First Bank offering up to 6 percent interest on savings accounts.

The interest rates are comparable with those offered by small finance banks. For instance, AU Small Finance Bank, Equitas Small Finance Bank and Ujjivan Small Finance Bank are offering interest rates of up to 7 percent.

The interest rates offered by small finance banks on savings account are higher compared to leading private and large public sector banks. For instance, HDFC Bank and ICICI Bank offer 3 percent to 3.5 percent interest. The Axis Bank and Kotak Mahindra Bank are offering up to 4 percent interest. The State Bank of India (SBI) is offering 2.70 percent interest and Bank of Baroda is offering up to 3.20 percent interest respectively on their savings account.

Also read: Kotak Mahindra Bank, HDFC offer the cheapest home loans

Minimum balance requirements are higher

The minimum balance requirement in savings accounts of private banks starts from Rs 500 and it goes up to Rs 10,000. At AU Small Finance Bank and Suryoday Small Finance Bank the minimum balance requirement starts from Rs 2,000. It is kept higher by these banks compared to public sector banks because they are more interested in reaching out to the salaried middle class and self-employed professionals with their services. At Bandhan Bank, the minimum balance requirement is Rs 5,000. At leading private banks such as Axis Bank and HDFC Bank, the minimum balance requirement is Rs 2,500 to Rs 10,000.

Choose a bank with a long-term track record, good service standards, wide branch network and ATM services across cities; a higher interest on savings accounts would be a bonus.

Also read: DCB Bank and Yes Bank offer the best interest rates on tax-saving deposits

 A note about the table

Interest rate on savings account for all BSE listed public sector banks and private banks are considered for data compilation. Banks whose websites don't advertise the data are not considered. Minimum balance requirement for regular savings account and excluding basic savings bank deposit (BSBD) account are considered.