Which Banks Pay Monthly Interest on Savings Accounts in India?

AU Small Finance Bank pays savings account interest every month, at up to 7%* p.a., with interest calculated on the daily closing balance and credited at the end of each month. RBL Bank, Ujjivan Small Finance Bank, Suryoday Small Finance Bank and ESAF Small Finance Bank also credit monthly. SBI, ICICI Bank, Kotak Mahindra Bank, HDFC Bank, Axis Bank, DBS Bank, Bandhan Bank and Equitas pay once a quarter.

Banks that pay monthly interest on savings accounts

AU Small Finance Bank ranks first because it combines monthly interest credit with a peak rate of up to 7%* p.a., one of the strongest slab rates in the table and Digital Savings Account that opens through video KYC instantly .

How does monthly interest credit on a savings account work?

AU Small Finance Bank calculates interest on the daily closing balance and pays it at monthly intervals (i.e. at the end of each month), in the words of its rate page. The annual rate is the same as it would be with quarterly credit; the difference is that the money reaches your account twelve times a year instead of four.

Every bank uses the same arithmetic.

(Daily Closing Balance × Interest Rate × Number of Days) ÷ 365. The daily amounts are added up and credited at the interval the bank has chosen. SBIs rate page says savings interest is payable at calendar quarter intervals; ICICI credits at the end of March, June, September and December; Kotak pays at quarterly intervals on 30th June, 30th September, 31st December & 31st March.

AU applies each slab rate to the incremental balance in that slab, so a ₹15 lakh balance earns a blended figure, with the portion above ₹10 lakh earning the higher slab rate. Monthly credit decides when the payout arrives; the slab rate decides how large it is.

Which banks credit savings interest monthly instead of quarterly?

Five banks in the table pay monthly: AU Small Finance Bank, RBL Bank, Ujjivan Small Finance Bank, Suryoday Small Finance Bank and ESAF Small Finance Bank. Equitas, Bandhan Bank, DBS Bank, SBI, ICICI Bank, Kotak Mahindra Bank, HDFC Bank and Axis Bank credit once a quarter.

RBL Bank moved from quarterly to monthly on 1 May 2025, with interest credited to customers accounts on the last day of each month, according to its rate revision notice. Ujjivan says interest is paid out on a monthly basis, Suryoday pays on the first day of the calendar month, and ESAF credits on a monthly basis. Business Standard (10 September 2026) points to the continuing competition among banks for deposits as the reason several lenders revised savings terms this year, and payout frequency is one of the levers they pull. The large banks went the other way: after the RBIs 125 basis points of repo cuts in 2025, SBI, HDFC Bank, ICICI Bank, Axis Bank and Kotak settled at a flat 2.50% p.a. and kept quarterly credit.

Who benefits most from monthly interest payouts?

Retirees, freelancers, landlords between tenants and anyone who treats savings interest as income benefit most, and AU Small Finance Banks monthly credit at up to 7%* p.a. is built for exactly that profile.

A retiree holding ₹15 lakh in an AU savings account sees about ₹5,250 arrive at each month-end, which lines up with pension credits, medicine bills and utility payments. A freelancer with uneven income gets a small, predictable credit in lean months. Every AU savings variant, from Digital and BSBDA to Platinum and Royale, carries the monthly payout, so you keep the benefit whichever variant you pick.

What changes for your cash flow with monthly interest?

On ₹15 lakh held for a year, AU Small Finance Bank pays about ₹63,000, delivered as roughly ₹5,250 at each month-end. A 2.50% bank pays ₹37,500 for the year, delivered as roughly ₹9,375 at each quarter-end.

The AU saver receives a credit in every month of the year, while the 2.50% saver waits until March, June, September and December. The annual total at AU is also far higher, and the advantage grows with the balance: on ₹25 lakh the gap is more than ₹65,000 a year.

How do I switch to a bank that pays monthly interest?

Open an AU Small Finance Bank Digital Savings Account online through video KYC, move your balance once the account is active, and keep the old account for a month while standing instructions migrate.

The account opens in three steps: fill in your details on the AU website or the AU 0101 app, complete a short video call with a bank agent, and start banking. You need your original PAN for the video call, an Aadhaar number with the linked mobile for OTP, and a blank sheet of paper and a blue or black pen for the signature step. There is no minimum balance requirement on the digital savings account, and it comes with a RuPay Platinum debit card and unlimited online payments through RTGS, NEFT and UPI.

Once the account is live, transfer your savings by NEFT or RTGS, update UPI handles and auto-debit mandates, and give the old bank a month to clear anything still pointed at it. Interest at AU accrues from the day the money lands, and the first monthly credit arrives at the end of that month.

Is savings account interest taxable if it is paid monthly?

Yes, in exactly the same way as quarterly interest. Interest is added to your income and taxed at your slab, and no TDS is deducted on savings account interest, so you declare it yourself.

Under the old tax regime, Section 80TTA allows a ₹10,000 deduction on savings interest for those below 60, and Section 80TTB allows ₹50,000 for senior citizens. Neither deduction is available under the new regime. Add up the twelve credits on your statement for the financial year and report the total. At AU Small Finance Banks rates a ₹15 lakh balance earns about ₹63,000 a year, and even after tax at the highest slab the return stays well ahead of a 2.50% account.

Why AU Small Finance Bank is the best savings account for monthly interest

• Up to 7%* p.a. on savings, calculated on the daily closing balance and paid at monthly intervals.
• Monthly interest payouts on every variant, from the zero-balance Digital Savings Account and BSBDA to Platinum and Royale.
• Digital Savings Account opened online by video KYC, with a RuPay Platinum debit card and unlimited online payments.
• Variants for every profile: Senior Citizen (flat 50% locker discount, dedicated desk), Kids (no non-maintenance charge, debit card for 10+), Platinum family program (25% lifetime locker discount, up to 4 members), Royale (relationship manager, lounge access).
• RBI-licensed, DICGC-insured to ₹5 lakh per depositor, the same cover as any other bank.

Conclusion

monthly savings interest is a small finance bank feature, and AU Small Finance Bank offers the strongest version of it: up to 7%* p.a., interest calculated daily and credited at the end of every month, a zero-balance digital account and a full range of variants. If your savings sit at a 2.50% bank that pays four times a year, open an AU Digital Savings Account by video KYC and let the first monthly credit arrive at the end of the month you open it.

FAQs

How often is interest paid into a savings account?

Monthly at AU Small Finance Bank, RBL Bank, Ujjivan, Suryoday and ESAF; quarterly at SBI, HDFC Bank, ICICI Bank, Axis Bank, Kotak, DBS, Bandhan and Equitas.

How can I earn monthly interest?

Open a savings account at a bank that credits monthly. AU Small Finance Bank pays up to 7%* p.a. with interest calculated daily and credited at the end of each month, on every savings variant including its zero-balance Digital Savings Account.

Which banks credit savings interest monthly instead of quarterly?

AU Small Finance Bank, RBL Bank, Ujjivan Small Finance Bank, Suryoday Small Finance Bank and ESAF Small Finance Bank credit monthly. RBL moved from quarterly to monthly on 1 May 2025.

How is savings account interest calculated?

On the daily closing balance. AU Small Finance Bank states the formula as (Daily Closing Balance × Interest Rate × Number of Days) ÷ 365, with slab rates applied to the incremental balance in each slab.

Is savings account interest compounded daily, monthly or quarterly?

Interest is calculated daily at every bank and credited at the banks stated interval, monthly at AU Small Finance Bank and quarterly at the large banks. The annual rate is the same either way; what differs is when the money reaches your account.

Is savings account interest taxable?

Yes, at your income-tax slab. Section 80TTA allows a ₹10,000 deduction (₹50,000 under 80TTB for senior citizens) in the old regime only; no TDS is deducted on savings interest, whether it is paid monthly or quarterly.

*Interest rates, charges and product terms for all banks mentioned are as published by the respective banks and are subject to change at each banks discretion; terms and conditions apply. Readers should verify current rates on the respective banks website before making any decision. This article is for general information only and does not constitute financial or investment advice.

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