SBI fixed deposit calculation: How SBI calculates interest on FDs for senior citizens, others

The State Bank of India (SBI) calculates interest income on fixed deposit at a quarterly interval. The calculation depends on the rate decided by the bank and the period of deposits.

“Interest on term deposits is calculated at quarterly intervals and paid at the rate decided by the bank depending upon the period of deposits,” SBI says on its official website.

If the FD involves monthly payment to the depositors, then the interest is calculated for the quarter and paid at a discounted rate.

Calculation of FD interest for broken periods

The broken period is the remaining days after the completed quarters or deposits of less than a quarter.

SBI website says “the interest for any broken period is calculated on a daily product basis and a year comprises of 365 days.” In other words, the bank considers the exact number of days for which the money was invested, and the interest calculation is done for each day separately.

Furthermore, SBI uses a 365-day year for this calculation. This means, the bank divides the annual interest rate by 365 to find the daily interest rate. Then this daily rate is multiplied by the number of days for which deposits existed.

SBI also provides interest on term deposits on a calendar quarter basis at the request of depositors.

Leap year calculation

SBI considers 365 days as a year for calculation of fixed deposit interest. This applies to both leap year, which has 366 days, and non-leap year, which has 365 days.

Interest on deposits maturing on non-business working days

In case of deposits maturing on non-business working days, following rules apply:

• When fixed deposit matures for payment on a non-business working day, interest is paid “at the originally contracted rate on the original principal deposit amount for the non-business working days, intervening between the date of the maturity of the specified term of the deposit and the date of payment of the proceeds of the deposit on the succeeding working day.”

• In case of special term deposits such as reinvestment deposits and recurring deposits, interest is paid for the intervening non-business working day on the maturity value.

• When fixed deposits mature and proceeds are unpaid, the amount left unclaimed with the bank attracts savings account interest rate or the contracted rate of interest on the matured fixed deposit, whichever is lower.

Interest on FCNR(B) deposit

As per SBI website, FCNR (B) deposits interest is calculated and paid at intervals of 180 days each and thereafter for the remaining actual number of days, based on 360 days to a year.

The depositor can opt to receive interest on maturity with the compounding effect. Furthermore, the bank says, “the interest on balance held in FCNR (B) accounts may be paid half-yearly or on an annual basis as desired in the designated currency in which the deposit was made.”