Features of a Savings Account
A savings account is one of the easiest and most common banking tools for many people in India.
Let's explore some key features of savings accounts:
1. Interest Earning: Account holders can earn interest on their savings account balance, typically ranging from 2% to 7%.
2. Senior Citizen Benefits: Senior citizens often enjoy an additional interest rate of 0.5% above the regular rates.
3. High Liquidity: Savings accounts provide high liquidity, allowing account holders to withdraw or transfer money as
frequently as needed.
4. Debit/ATM Cards: Accountholders receive debit cards or ATM cards for making payments, conducting online transactions,
or withdrawing cash from ATMs.
5. Convenient Fund Transfers: Fund transfers can be conveniently carried out using UPI, NEFT, IMPS, or RTGS through net
banking, mobile banking, or by visiting the bank branch.
6. Multiple Operation Channels: Savings accounts can be operated through various channels such as net banking, mobile
banking, phone banking, or SMS banking.
7. No Deposit Restrictions: Most accounts have no restrictions on the amount that can be deposited.
8. Deposit Security: Deposits up to Rs. 5 lakh are secured by DICGC, providing a safety net for accountholders.
9. Linking with Fixed Deposits: The savings account can be linked with fixed deposits, providing flexibility in
managing funds.
10. Interest Payout Options: Accountholders can choose the frequency of interest payouts – monthly, quarterly,
semi-annually, or annually.
11. Special Deals and Discounts: Special deals and discounts are often available for various savings accounts
and debit cards.
12. Cheque Transactions: The option to deposit or issue cheques directly is provided through the savings account.
13. Monthly Average Balance (MAB) Requirements: Accountholders may need to adhere to Monthly Average Balance
(MAB) requirements as specified by the bank.
Savings Account Interest Rates
Banks decide how much extra money they give you (interest) for keeping money in savings
accounts, and they might change this from time to time. Usually, smaller banks that focus on serving
specific needs offer the most interest. Here are the interest rates for savings accounts
from some of the top banks in different groups.
Types of Savings Accounts
Banks have different types of savings accounts for different people. These accounts give special benefits
to specific customers. Let's see what kinds of savings accounts there are and who should get them:
Regular Savings Account
A regular savings account is a basic type of savings account, and anyone can open it. If you keep
money in this account, the bank gives you a little extra money called interest. Sometimes, the bank
might charge a fee every year for taking care of your account. Usually, you need to keep a certain
amount of money in the account every month. They only open these accounts after checking all your
details through a process called KYC (Know Your Customer).
Salary Account
Salary accounts are made for people who receive their salaries every month. With these accounts,
the bank offers special benefits like not needing to keep a minimum balance, giving a free
chequebook and an international debit card, providing better interest rates on loans, and even
including free personal accidental insurance coverage. It's like a special package for those who
get a monthly paycheck.
Instant Digital Savings Account
You can open these digital savings accounts online in just a few minutes using online
banking or a mobile app. But, if you don't finish all the required details (KYC) in a set time,
the account is paused. Also, many of these quick digital savings accounts have a maximum limit
of Rs. 1 Lakh for the total amount you can put in the account.
Zero Balance or Basic Savings Bank Deposit Account
These accounts don't require you to keep a minimum average monthly balance, and you can
have them even if there's no money in the account. Since there's no need to keep a minimum balance,
the bank puts some rules on these accounts, like limiting the number of times you can
take money out from an ATM, the type of debit card you get, and not giving you a chequebook.
Women’s Savings Account
This special account is just for women, and they get extra benefits like a special debit
card, not having to keep as much money in the account, and getting better deals on
loans and credit. Some banks also give women discounts on lockers, let them take out cash
from ATMs as much as they want, and even give them free chequebooks for different
cities. It's like a special club for women at the bank.
Kids’ Savings Account
Parents or guardians can open these accounts for kids under 18 years old. The idea is
to teach children about banking basics and help them learn good money habits early
on. To open these accounts, parents or guardians just need to show their ID and make a formal
statement. These kids' or junior savings accounts come with set limits on how much
money can be deposited or spent, making sure everything stays under control.
Senior Citizens’ Savings Account
A senior citizen savings account is designed for people who are 60 years old or more.
Those with this account get special benefits, like better interest rates when they
put money in the account, paying less interest when they borrow money, and having a
personal manager just for them.
Family Savings Account
A whole family can open different accounts using one family ID, and they can enjoy
various banking services like savings accounts, fixed deposits, and recurring
deposits. Family members covered by these accounts can include spouses, children,
parents, grandchildren, grandparents, in-laws, and more. It's like having a bunch of
different bank accounts, but all under one family umbrella.
Eligibility and Documentation to Open a Savings Account
To open a savings account, you need to meet certain requirements:
1. Resident Status: The person applying should be a resident of the country.
2. Foreigners Welcome: Some savings accounts allow foreigners living in the country to open accounts.
3. Age Criteria: Regular savings accounts usually require applicants to be at least 18 years old, while minors
(those below 18) can open special accounts designed for kids.
4. PAN Card: Having a PAN card is a must for opening a savings account.
5. Aadhaar Linking: Linking the savings account with an Aadhaar card can make the account eligible for
government subsidy benefits.
6. Photo or Video Verification: Depending on the account type, you might need to provide a photograph or go
through a live video verification process.
7. Additional Documents: Other documents like a driving license, voter ID, ration card, etc., can be used to
prove your identity and address.
How to Apply for Savings Account
With digitalization, banks have made it super easy for people to open a savings account. You can do
it online or by going to the bank when it suits you. Whether you want a regular digital savings
account or something special like an account for seniors, kids, or women, the process has become more
convenient for everyone.
Steps to Apply for Savings Account Online
1. Go to the bank's website or download their mobile app.
2. Choose the type of account you want to open.
3. Fill in basic information like your name, date of birth, address, PAN, Aadhaar number, etc.
4. Verify your KYC (Know Your Customer) by providing necessary documents or through a video verification process.
5. Once your verification is successful, your savings account is ready to use.
Steps to Apply for Savings Account Offline
1.Visit the bank's branch.
2.Complete the savings account opening form.
3.Attach self-attested copies of your proof of address and identity.
4.Deposit the necessary amount based on the type of account.
5.After successful verification, your account will be opened and fully functional.
Top Savings Account Providers
In India, banks can offer savings accounts to people according to the rules set by the Reserve Bank
of India (RBI). Let's explore some of the leading banking institutions that provide savings
accounts to customers.
Public Sector Banks
These are government-owned banks that serve over 50% of the market. The government has the
major ownership in these banks. These banks focus on social welfare and provide services and products
that are friendly to the public.
Private Sector Banks
Private sector banks are banks where most of the ownership is held by private shareholders like
institutions, individuals, or groups. These banks have to follow all the rules laid out by the
Reserve Bank of India (RBI).
Small Finance Banks
These banks offer basic banking services like taking deposits and giving loans, and they
operate under a small finance bank license. They reach out to parts of the community that may not
have access to big government or private banks, helping a lot more people be part of the
financial system.
Payments Banks
These banks are created by the RBI, and they can only accept limited deposits, up to Rs. 2 lakh per customer. They are not permitted to give out loans or credit. However, people can still open
savings or current accounts with these banks.
Regional Rural Banks
These are government-owned banks that are active in specific regions or states in India. They
are part of the scheduled commercial banks and focus on providing basic banking services in
rural areas.
Advantages and Limitations of Savings Accounts
Pros
- You can deposit or take out money as many times as allowed by the account type.
- You can transfer money online or offline.
- You can withdraw money from ATMs across India.
- Up to Rs. 5 lakh is insured by DICGC if the bank faces issues.
- Additional insurance perks like personal accident cover, lost card protection, health insurance, etc., may be available.
- Depending on your account and debit card, you might get special deals and discounts.
- You can set up automatic instructions for bill payments.
Cons
- The interest rate on the money you put in is usually lower.
- You need to keep a minimum balance, which could earn more if invested elsewhere.
- Not maintaining this minimum balance might lead to a penalty.
- After using a certain number of free transactions, there's a fee for ATM withdrawals.
FAQs
You can find out how much money is in your savings account in different ways: use net banking, mobile banking, UPI, get an account statement, use SMS banking, make a missed call, or visit the bank or an ATM.
Any interest you earn on your savings account balance up to Rs. 10,000 is tax-free under Section 80TTA. However, if you earn more interest, there might be Tax Deducted at Source (TDS) applied to the higher amounts.
No, You can open a minor or kids savings account even if you're not 18 years old. However, for a regular, fully-functional savings account, you typically need to be over 18 years old.
all banks provide a cheque facility. However, it's important to note that certain types of savings accounts, like BSBDA (Basic Savings Bank Deposit Account), instant accounts, digital accounts, etc., may not come with a cheque facility.
Yes, having an ATM/debit card usually comes with a yearly fee, which is around Rs.150 plus taxes (this can differ between banks). Some private banks might not charge this fee if you use your debit card to shop for a certain amount during the year, or if you keep a specific amount of money in your account regularly, as per the bank's rules.
An Aadhaar card is a useful document that proves who you are and where you live, making it easy to open a bank account. If you want to get government subsidies and benefits like Direct Benefit Transfer (DBT), you'll need to give your Aadhaar card details to confirm your account and connect it with the scheme.
To open a savings account, the rules say you must give your PAN card details. If you don't have a PAN card, your application won't go through. But if you don't have a PAN, you can still apply by providing Form 60. This form explains why you don't have a PAN.
The bank will send your monthly account statement to the email address you've registered. If you want a physical (hard) copy, you can ask the bank for it, but there might be a small fee.
Interest is calculated at regular intervals, and the specific period is determined when you open the account. This could be monthly, quarterly, annually, or another specified timeframe.