RBI New Rule – In a major move to boost retail savings and make banking more rewarding for the common citizen, the Reserve Bank of India (RBI) has introduced a new rule effective from July 2025. According to this new regulation, select savings bank accounts can now earn interest rates comparable to fixed deposits—without the need to lock in money for long durations. This policy is aimed at encouraging more liquidity while still offering attractive returns, especially for those who prefer to avoid fixed deposits. Here’s everything you need to know about the RBI’s game-changing decision.
What Is the New RBI Rule on Savings Accounts?
The new rule empowers scheduled commercial banks to offer higher interest on certain types of savings accounts without mandatory lock-in periods. Banks can now link interest rates on savings accounts to external benchmarks like repo rate or Treasury Bill yields.
- No need for fixed deposit to earn high interest
- Savings accounts can now offer dynamic, market-linked interest
- More flexibility and liquidity for account holders
- Encourages short-term and medium-term savers
- Immediate implementation from 1 July 2025
- Banks can customize rates based on balance slabs
Who Will Benefit from the New Savings Interest Rule?
This rule is primarily aimed at middle-income and salaried individuals, pensioners, and young professionals who prefer liquidity over long-term commitments.
- Customers with balances above ₹50,000
- Pensioners looking for monthly income without FD lock-in
- Salaried individuals preferring flexible savings
- Small business owners with surplus monthly income
- Students and freelancers looking for better returns on idle funds
Traditional Savings vs. New RBI Savings Rule
| Feature | Traditional Savings Account | New RBI-Linked Savings Account |
|---|---|---|
| Interest Rate | 2.5% – 4% p.a. | Up to 6.75% p.a. (market-linked) |
| Lock-in Period | No lock-in | No lock-in |
| Liquidity | High | High |
| Suitable For | All customers | Mid to high-balance customers |
| Interest Credit Frequency | Quarterly | Monthly or Quarterly |
| Minimum Balance Requirement | ₹1,000 – ₹10,000 | ₹50,000 – ₹1,00,000 |
| Inflation Protection | Low | Moderate to High |
| Linked to External Benchmark | No | Yes |
How Banks Will Offer Higher Interest Rates Without FDs
Banks have now been given flexibility to innovate and offer tailored savings accounts linked to external benchmarks. These accounts can offer tier-based or slab-based interest rates depending on the customer’s balance.
- Balance Slab-Based Interest:
- ₹0 – ₹50,000: 3.5%
- ₹50,001 – ₹2,00,000: 5.5%
- ₹2,00,001 and above: Up to 6.75%
- Repo Rate-Linked Accounts:
- Dynamic rates adjusted with RBI repo changes
- Example: If repo rate increases by 0.5%, savings interest may also rise
- Premium Savings Accounts:
- Targeted at HNIs and professionals
- Value-added services with high-interest rates
- No TDS up to ₹40,000 yearly interest
Repo-Linked Savings Account Rates (Sample Banks)
| Bank Name | Interest Rate (%) | Benchmark Used | Min Balance Required |
|---|---|---|---|
| HDFC Bank | 6.25% | RBI Repo Rate | ₹1,00,000 |
| ICICI Bank | 6.50% | 91-Day T-Bill Yield | ₹75,000 |
| SBI | 5.85% | RBI Repo Rate | ₹50,000 |
| Axis Bank | 6.60% | RBI Repo Rate + Spread | ₹1,00,000 |
| Kotak Mahindra | 6.75% | Market Benchmark | ₹1,00,000 |
| Yes Bank | 6.50% | External Benchmark | ₹25,000 |
| IDFC First Bank | 6.75% | Repo Rate | ₹25,000 |
| IndusInd Bank | 6.40% | 1-Year G-Sec Rate | ₹75,000 |
Eligibility Criteria for High-Interest Savings Accounts
Although this new facility is open to all, banks may set specific eligibility conditions based on account type or balance held. General requirements include:
- Indian resident with valid KYC
- Minimum average balance as per bank policy
- No existing loan default with the same bank
- PAN card and Aadhaar linkage
- Active internet banking or mobile banking registration
Steps to Open a High-Interest Savings Account
To benefit from the RBI’s new rule, follow these simple steps to open a high-yield savings account with your preferred bank:
- Visit the official website or nearest branch of your bank
- Choose a dynamic or repo-linked savings account product
- Submit required KYC documents
- Deposit minimum required balance
- Activate online banking for real-time tracking
- Ensure mobile number and Aadhaar are linked
Pros and Cons of RBI’s New Rule for Savers
While this new rule is widely welcomed, it’s important to understand both its benefits and possible limitations.
Advantages:
- High returns without FD restrictions
- Easy withdrawal anytime
- Regular interest credit
- Liquidity + inflation protection
- Encourages disciplined savings
Disadvantages:
- Rates may fluctuate with market
- Not suitable for low-balance users
- May require higher minimum deposits
- No guaranteed fixed interest like FDs
FD vs. High-Interest Savings Account – Which Is Better?
| Criteria | Fixed Deposit (FD) | High-Interest Savings A/c |
|---|---|---|
| Lock-in Period | 7 days to 10 years | No lock-in |
| Premature Withdrawal | Penalty applicable | No penalty |
| Interest Type | Fixed for tenure | Dynamic/Variable |
| Suitable For | Long-term savers | Flexible savers |
| Liquidity | Low to Moderate | High |
| Risk Level | Very Low | Low to Moderate |
| Minimum Deposit | ₹5,000 – ₹10,000 | ₹25,000 – ₹1,00,000 |
What Should You Do Now as a Customer?
If you are currently earning less than 4% interest on your savings bank account, it’s time to re-evaluate. Visit your bank or explore digital platforms offering high-yield savings accounts. Compare rates, check eligibility, and shift your idle funds accordingly. You don’t need to rely only on fixed deposits anymore.
The RBI’s new rule from July 2025 marks a revolutionary shift in how savings accounts function in India. With banks now allowed to offer FD-like interest without locking funds, customers can enjoy the best of both worlds—liquidity and returns. It is essential, however, to carefully review the fine print and choose the right bank product that aligns with your financial goals. Always compare multiple bank offerings before making a move.
FAQs:
Q1. Can I get FD-like interest without locking my money?
Yes, as per RBI’s new rule from July 2025, you can earn up to 6.75% interest in certain savings accounts without fixed deposits.
Q2. Is there any penalty for withdrawing money anytime?
No, high-interest savings accounts maintain full liquidity and do not charge any penalty for withdrawal.
Q3. Who is eligible for these high-interest savings accounts?
Indian residents with valid KYC and minimum balance (usually ₹25,000 to ₹1,00,000) are eligible, depending on the bank.
Q4. Are these interest rates fixed?
No, the interest rates are mostly variable and depend on repo rate or market benchmarks.
Q5. How can I open such a savings account?
You can apply online or by visiting your bank branch. Complete KYC and deposit the required minimum balance to get started.