Interest on Savings Bank Deposits is paid half-yearly.

Interest on savings bank deposits is the amount that a bank pays to its customers for keeping their money in a savings account. The interest rate is usually determined by the bank and is a percentage of the total amount deposited. The interest is calculated based on the average balance in the account over a certain period of time.

There are different frequencies at which the interest on savings bank deposits is paid. In this case, the correct option is 'C', which states that the interest is paid half-yearly. This means that the bank will credit the interest to the account twice a year, at six-month intervals.

Reasons for Payment of Interest Half-Yearly

There are several reasons why banks choose to pay interest on savings bank deposits half-yearly:

1. Administrative Convenience: Paying interest half-yearly allows banks to streamline their administrative processes. Instead of calculating and crediting interest every month or quarter, they can do it twice a year, reducing the workload and costs associated with frequent interest payments.

2. Cost of Funds: Banks use the funds deposited in savings accounts to lend to other customers or invest in various financial instruments. By paying interest half-yearly, they can optimize the use of funds and manage their cost of funds more effectively.

3. Customer Expectations: Historically, banks have paid interest on savings bank deposits half-yearly. Many customers are accustomed to this frequency and may prefer it over more frequent or less frequent interest payments.

4. Interest Calculation: Calculating interest on a half-yearly basis is relatively simpler compared to monthly or quarterly calculations. It allows for a more straightforward and standardized method of interest computation.

Conclusion

In conclusion, interest on savings bank deposits is paid half-yearly. This frequency is determined by the bank and offers administrative convenience, cost optimization, aligns with customer expectations, and simplifies interest calculation. It is important for individuals to consider the frequency of interest payments when choosing a savings account to ensure it aligns with their financial goals and preferences.