RBI new savings account rules
In a significant move to empower consumers and enhance transparency in the banking sector, the Reserve Bank of India (RBI) has rolled out a fresh set of rules for savings bank accounts, which came into effect on September 1, 2025. These new regulations are designed to make everyday banking simpler, fairer, and more customer-centric. From how interest is calculated on your savings to the transparency of charges on digital transactions and the rules around inactive accounts, these changes directly impact millions of account holders across the country. This initiative by the central bank is a clear step towards creating a more equitable banking environment where customers are better informed and protected from arbitrary charges and opaque policies.
For the average person, a savings account is the primary gateway to the financial system. It’s where we park our hard-earned money, receive our salaries, and conduct our daily transactions. However, the experience has often been marred by complexities, including confusing interest calculations, unexpected fees, and stringent penalties for not maintaining a minimum balance. The RBI’s new guidelines aim to address these long-standing grievances. By standardizing certain practices and mandating greater transparency, the RBI is shifting the balance of power slightly more in favor of the customer. These rules are not just minor tweaks; they represent a fundamental rethink of the relationship between banks and their depositors, ensuring that your banking experience is not only convenient but also just.
1. Fairer Interest Calculation on Your Savings
One of the most impactful changes is the new method for calculating interest on savings accounts. Effective September 1, 2025, banks are required to calculate interest on the balance at the end of each day. Previously, many banks calculated interest on the lowest balance in the account between the 10th and the last day of the month. This old method was often unfair to depositors, as it didn’t account for funds that were present for most of the month but were withdrawn before the cut-off period.
The new daily balance method ensures a more accurate and equitable interest payment. Every rupee you keep in your account, for every day it is there, will now earn interest. This means you get a truer return on your savings, as the interest calculation reflects your actual account balance throughout the month. This change encourages better saving habits and provides a more transparent and rewarding experience for all savings account holders.
2. An End to Hidden Charges on Digital Transactions
In a huge relief for a digitally savvy India, the RBI has cracked down on the practice of levying hidden charges on digital transactions. Under the new rules, banks can no longer surprise you with unexpected fees for using services like online banking or UPI. They are now mandated to inform you about any applicable charges upfront, before a transaction is completed.
This move is a massive win for transparency. For too long, customers have been frustrated by small, often unnoticed deductions from their accounts labeled as service charges or processing fees for digital payments. This lack of clarity eroded trust and acted as a deterrent to digital adoption for some. With this new rule, you can transact online with confidence, knowing exactly what you are being charged, if anything. This will further boost the adoption of digital payments and strengthen the Digital India initiative by fostering greater trust between banks and their customers.
3. Clearer Rules for Dormant and Inactive Accounts
Have you ever worried about your infrequently used bank account becoming inactive without your knowledge? The RBI has brought much-needed clarity to this issue. An account will now be classified as ‘inactive’ or ‘dormant’ only after 24 months of no customer-initiated transactions. This provides a clear, uniform, and extended timeframe across all banks.
This rule protects customers who may have accounts they use for specific purposes and not on a daily basis. It gives them a generous two-year window before an account is flagged, preventing premature freezing of accounts and the associated hassles of reactivation. This customer-friendly measure ensures that your money remains accessible and your account remains active for a longer period of inactivity.
4. The Ongoing Minimum Balance Debate
While the new rules bring many positive changes, the issue of minimum balance requirements remains a hot topic. Recently, the RBI Governor clarified that setting a minimum balance requirement and the penalties for non-maintenance is “not in the regulatory domain” of the RBI. This means that the decision is left to the discretion of individual banks.
This has led to a stark divergence in policies. On one hand, public sector banks like the State Bank of India (SBI), Bank of Baroda, and Union Bank of India have waived charges for non-maintenance of minimum balance, promoting financial inclusion. SBI has done so since 2020.
On the other hand, some private banks have moved in the opposite direction. ICICI Bank, for instance, recently announced a sharp hike in its minimum average balance (MAB) requirement for new accounts, raising it from ₹10,000 to ₹50,000 in metro and urban branches. This move has sparked a backlash from advocacy groups who argue that it is detrimental to the goal of inclusive banking.
This regulatory stance means that customers need to be more vigilant than ever. When choosing a bank, it’s essential to look beyond the interest rates and carefully read the terms and conditions related to minimum balance requirements and the associated penalties. While the RBI’s new rules provide a safety net in many areas, the onus is on the customer to choose a bank whose policies align with their financial habits.
In summary, the RBI’s new regulations effective from September 2025 are a significant step forward in making banking in India more transparent, fair, and consumer-friendly. From ensuring you get the interest you deserve to eliminating hidden fees, these rules empower the common person and strengthen their trust in the banking system.