To calculate the monthly interest you would earn on a deposit of 5 million rupees, we need to consider the interest rate offered by the bank and whether the interest is calculated on a simple or compound basis. Here’s a detailed guide to help you understand the process.

Interest Calculation Basics

The formula for calculating simple interest is as follows:

Monthly Interest P times; r divide; 12

Where:

P Principal amount (5,000,000 rupees) r Annual interest rate as a decimal

Example Calculation

Assuming an annual interest rate of 6% (or 0.06 as a decimal):

Monthly Interest (5,000,000 times; 0.06) divide; 12 300,000 divide; 12 25,000 rupees

This means that if the interest is simple, you would earn approximately 25,000 rupees per month in interest.

Compound Interest

When you have compound interest, the calculation is different and the actual amount will depend on the compounding frequency (monthly, quarterly, etc.). If your bank offers compound interest, the calculation would be more complex but can be calculated using the compound interest formula:

Compound Interest P(1 r/n)^(nt) - P

Where:

P Principal amount r Annual interest rate n Number of times interest applied per time period t Number of time periods

Current Interest Rates in Major Banks

According to current data, the interest rates for major banks in India are around 7%-7.25%, with an additional half a percent for senior citizens. Based on these rates, you can expect to earn approximately 30,000 rupees per month in interest.

SBI (State Bank of India)

SBI pays interest on a half-yearly basis with the current interest rate being 3.5% p.a. on savings accounts. To calculate the yearly interest:

Yearly interest 3.5% times; 5,000,000 175,000 rupees Half-yearly interest 175,000 divide; 2 87,500 rupees

Dividing this by 12 months to get the monthly interest:

Monthly interest 87,500 divide; 12 7,291.67 rupees

Fixed Deposits

For a more stable and potentially higher rate of return, consider keeping the money in fixed deposits. For instance, at an interest rate of 6.5%, the monthly payout on 5 million rupees would be:

Monthly payout 6.5% times; 5,000,000 divide; 12 26,938 rupees

This is a significant increase in monthly interest compared to simple interest calculations.

Conclusion: While it's true that Indian Bank has faced financial difficulties in the past, the current government has a backup plan to bail out banks if necessary, so your money is generally secure. However, keeping your funds in fixed deposits or with reputable banks can offer a more reliable return on investment.