Kotak Mahindra Bank on Thursday launched the ActivMoney feature, which provides savings account holders fixed deposit-like interest rate of up to 7% per annum. According to a press release, ActivMoney automatically transfers surplus funds in the account above a predetermined level into a fixed deposit.
Once a customer avails of the ActivMoney feature in the savings account, the balance above a certain threshold gets transferred to a fixed deposit of 180 days at an interest rate of 7% per annum. This feature is also available to 811 and current account holders.
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“In case a customer wishes to use the funds, the entire balance in savings and FD is instantly available,” the release said. “Thus, a customer earns higher interest up to 7% p.a. for the time she keeps her savings in FD through ActivMoney and the balance in her savings account earns 3.5% per annum.”
The default minimum threshold over which surplus funds earn a fixed deposit interest rate is Rs 25,000 for savings account, salary accounts and Kotak 811 accounts. It is Rs 50,000 for current accounts.
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“With ActiveMoney, we aspire to change the paradigm of the savings culture of Indians by offering customers FD-like interest rate on their savings accounts, while retaining the flexibility to access funds anytime without any penalty on foreclosure,” said Virat Diwanji, group president and head – consumer banking.
As on March 31, around 35% of bank deposits were in savings accounts. Total bank deposits stood at Rs 187.4 trillion, according to data from the RBI.