IDBI Bank, Canara Bank and Bank of Baroda offer the best rates on savings accounts

As per data compiled by BankBazaar, public sector bank IDBI Bank offer interest rates up to 3.5 per cent on savings account, followed by Bank of Baroda and Canara Bank offering interest rates up to 3.2 per cent. These interest rates are competitive when compared with what leading private banks offer. For instance, HDFC Bank and ICICI Bank offer 3 per cent to 3.5 per cent interest and Kotak Mahindra Bank offer 3.5 per cent to 4 per cent.

However, large public sector banks give far lower interest rates to their savings account holders. For instance, State Bank of India (SBI) pays just 2.70 per cent on savings account. UCO Bank is at the bottom of the table and SBI couldn’t make it to the top ten FDs.

Also read: Bank of India and Punjab & Sind Bank offer the lowest rates on gold loans

The interest rates offered by small finance banks are to their savings account holders is higher compared to public sector banks. For instance, AU Small Finance Bank and Ujjivan Small Finance Bank offer interest rates of up to 6 per cent and 6.5 per cent, respectively.

Minimum balance requirements are lower

The minimum balance requirement in savings accounts of public sector banks starts from Rs 250 and at the State Bank of India, it’s nil. This is kept much lower compared to the requirements of leading private banks in India because public sector banks are backed by the Government of India and they are more interested in reaching out to the lower and middle class customers with their services. For Axis Bank and HDFC Bank, the minimum balance requirement is Rs 2,500 to Rs 10,000. In the case of ICICI Bank, the minimum balance requirement is Rs 1,000 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 | Complaints on banking services rose 65% in 2019-20: Here are a few lessons for customers

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.