A bank account is a virtual vault to store your money. It is created by the bank on your request. You can safely and securely store a virtual representation of your real wealth in it.
These are the types of account that banks offer:
These are different from one another in terms of usage, such as deposits, withdrawals, interest rates, timing, purpose, etc. Various banks modify the terms and conditions of these different types of accounts according to their norms so that they can meet the needs of different types of customers.
In today’s world, using hard cash is extremely inconvenient and unsafe to deal with daily finances. It is more secure to deposit our money with banks and track the transactions and balances. Earlier, printed passbooks were used for this, but most banks have made it easier for users to track their accounts through net-banking and SMS.
A savings bank account is the most basic product that all banks have that provides all customers to store their money in a secure place.
Savings Account Interest Rates in India
Current account or a trading account is primarily meant for business purposes. Traders, entrepreneurs, business firms, etc., receive multiple payments and receipts every day. They need access to their bank accounts regularly. A current account is the ideal mode of transaction for such requirements. It has minimum restrictions on the number of daily transactions.
A current account can be opened by:
Current Account and Savings Account - The Difference
A fixed deposit account or an FD is a type of account where you store your money for a locked period of time and receive higher interest-rates than your savings account. You can create an FD for a few days or for a few years, but you cannot withdraw the money for the agreed time. Your deposit is fixed till the maturity date. If you close the account prematurely and withdraw the money, the bank will impose penalty charges. The rate of interest for fixed deposit accounts may vary from bank to bank. It also depends on the amount deposited, time period and prevailing market rates.
RDs are deposit accounts meant for people with a regular income to make monthly savings. If you decide to save a particular amount every month, you can create an RD and set up a standing instruction to debit the fixed amount from your savings account and credit it to the RD account. If you fail a monthly payment or delay it, there will be a reduction of the interest payable at maturity.
Savings accounts are the most common types of bank accounts held by individuals across the globe.
Here are the different types of savings accounts available in most banks:
These most common types of savings account and they follow the basic terms and conditions of the bank. These accounts neither require regular deposits of consistent amounts nor withdrawals. These accounts are basically the virtual equivalent of a safe or a vault of the account holder, where the money just waits to be used.
These accounts are created by the banks on the request of companies for the purpose of payment disbursal, to be handled by the employees of the companies. These accounts generally have preferential rates as well as specific terms which the banks specially offer to the employers or companies. The bank withdraws the amounts from the company's account and disburses the specific amounts on the date of salary disbursal to these salary-based savings accounts opened for employees. Most of these salary accounts do not require a minimum balance, but if the salary stops being deposited for three consecutive months, these accounts are converted into regular savings accounts which have a minimum balance requirement.
These accounts are designed for senior citizens, as they offer benefits as well as specific functionality for people in the senior citizen category. These accounts are similar to regular savings accounts in terms of functionality, but offers higher interest rates and exclusive banking privileges. As an additional benefit to the senior citizens, one can easily link these accounts to all other senior citizen savings schemes (such as retirement accounts or pension funds) in order to consolidate all these funds under a single bank account to be easily managed by seniors.
Minor accounts do not generally have a minimum balance requirement. These accounts function in the same way as regular savings accounts do. These accounts are specially designed for the younger generation, to educate about the modern banking system, facilities available, and the nuances of managing a bank account. These accounts are opened for minors and children and supervised by their parents or legal guardians. This facility has encouraged the younger generation to save money. It has also given them a higher sense of responsibility while dealing with money.
These accounts are relatively new concepts started by a few banks. They offer preferential interest rates for particular types of applicants. These accounts have exclusive features to benefit women in particular. Female entrepreneurs can also open this type of account and apply for high-value loans at preferential rates.
These are the benefits of Women’s Savings Accounts offered by various banks:
Get Special discounts on loans.
Get a daily cash withdrawal limit of Rs.25,000.
Get a daily shopping limit of Rs.1.75 lakh.
Avail a 2% lower interest on two-wheeler loans as well as a discount of 50% on the charged for processing the loan.
Get a cover of Rs.10 lakh for accidental death.
Get a cover of Rs.1 lakh for accidental hospitalization.
Get a 50% discount on Gift Plus Card whenever a minimum amount of Rs.5,000 is added to the card through net banking.
Get lifetime BillPay for free.
Get 3.5% interest rate on maintaining daily balance.
Enjoy a low opening deposit of Rs.10,000
Enjoy a low minimum average balance of Rs.10,000
Get a daily withdrawal limit of Rs.40,000
Get a daily shopping limit of Rs.1 lakh
Get coverage of Rs.2 lakh on personal accident
Kotak Mahindra Bank
Get a daily withdrawal limit of Rs.75,000
Get a daily card swipe limit of Rs.1.5 lakh
Avail a 35% discount on locker rentals
Get an annual interest of up to 6% per annum if you can maintain an average balance of Rs.1.75 lakh.
These accounts provide the perfect amalgamation of a savings and a current account. Although there are limits on withdrawal amounts, the account holders are not penalized if the balance in the account slips below the prescribed minimum, quite unlike the case in other types of savings accounts. Zero-balance accounts were initially set up for the economically weaker section of customers. However, the banks have started offering these accounts as salary accounts as well.
These are savings accounts that are linked either to a Checking Account or a NOW (Negotiable Order of Withdrawal) Account by account number. These are also known as Package Accounts. These allow the account holder the flexibility of transferring funds to their demand account whenever required, while the remaining funds stay in the savings account. These accounts make their customers eligible for free checking and lower service charges. This account consolidates the balances of all the other linked accounts (such as the Checking or NOW Account) and shows the balance in a single account statement.
These accounts are opened at a post office, and they are quite similar to a regular bank savings account. However, Post Office Savings Accounts are stricter and more secure with the account holder’s funds. Unlike banks that may not have branches in every city, post offices are generally found in the remotest of locations that are difficult to access. Hence, Post Office Savings Accounts are becoming increasingly popular options for saving money of late. Any Indian adult can open these accounts. Guardians can open these accounts on behalf of minors.
The Department of Post offers the facility of internet banking to their customers for conducting banking transactions online.
Here are the various features and functions of the DoP internet Banking:
Profile Customization: Users can customize their profile using internet banking facilities. One can set account references, update their Channel ID, view personal details and change passwords through this feature.
Accounts: The internet banking portal has an Accounts section, where users can check the account summary of various accounts (such as their savings account, Recurring Deposit account, Public Provident Fund Account, Time Deposit Account and National Savings Certificate Account). Additionally, users can also check the details of their loans on RD, loans on PPF and the details of TDS or tax deducted at source.
Transactions: The internet banking portal permits the users to perform many account-related actions. They can make requests for managing payees and billers or for transferring funds or for making withdrawals from their PPF accounts. They can also check their transaction history, deposit money into their PPF or RD account. The users can view any recurring instructions through this facility.
General Services: The general services of DoP internet banking include inquiry requests, emails and mailing service related requests.
Applicants should meet certain eligibility criteria in order to create and operate a savings account in any Indian bank. There are a few general requirements that are followed by most banks, but specific banks might have different parameters or require more authentication:
Resident Indians, NRIs, as well as foreign nationals living in India, can open a savings account.
Age: One must be an adult (18 years) in order to open a savings account. Parents or guardians can open minor accounts for children.
Restrictions: Banks generally do not impose any such restriction.
There are a few required documents that a potential customer must submit along with the application for opening a new savings account. Here is a list of all the necessary documents:
Age and Identity Proof: Provide authentic documents that are registered, recognized and issued by a competent authority. It must contain your full name and a recent photograph. PAN Card, Voter’s ID, Passport, Driving license, etc. are universally accepted by all banks.
Photographs: Submit at least two recent passport-sized photographs along with the application form.
Proof of address: Provide authentic documents that are registered, recognized and issued by a competent authority. It must contain your full name and your complete residential address. Driving license, Voter’s ID, Passport, Electricity or Phone bill, etc. are preferred.
Senior Citizen Card: Senior citizens interested in availing special benefits must submit an age proof or a senior citizen card.
Proof of income: The bank might ask for proof of income and employment. However, it isn't mandatory and depends upon the type of account you are applying for.
Other documents: Specific types of accounts might call for certain other documents. Sometimes you might also be asked to submit multiple identity proofs and address proofs.
Most of your banking needs are met online these days, but certain official work might need you to visit the bank. In case you are stuck without an online portal for online creation of a bank account, here are the steps for opening a savings account offline:
Step 1: Find out the interest rates and account types offered by different banks. Then select the bank that suits your requirements.
Step 2: Visit the nearest branch of the bank with a photocopy of your identity proof, address proof, age proof, two photographs, and other necessary documents.
Step 3: Contact the designated clerk and seek help with the process of opening a new account. You will be given an account opening form.
Step 4: Submit the duly filled up form along with the necessary documents.
Step 5: You might have to deposit a nominal amount during the creation of your account.
Step 6: The clerk will take over and process your request. Your account will be opened within 1 to 12 working days. It could happen on the same day too. You will receive an account opening kit from the bank.
The most convenient way of conducting banking operations is online. The procedure for opening a savings bank account online is quite simple.
Step 1: Find out the interest rates and account types offered by different banks. Then select the bank that suits your requirements. Make sure that the chosen bank has an online account opening facility.
Step 2: Visit the website of the bank and log in.
Step 3: Submit the duly filled up form along with the necessary documents like a scanned copy of your identity proof, address proof, age proof, two photographs, and other necessary documents. Some banks might ask for hard-copies of the documents - a bank executive will visit you to collect the same.
Step 4: The bank's back-end team will verify your documents and you will be given a bank opening kit to begin transactions.
When you choose a bank to open your account in, you should definitely look for the one offering the best interest rate. However, you must also check if the bank has a good track record in terms of efficiency, dedication to customer service, approachability and security provided in the net-banking or mobile app facilities. Each person has different needs and one cannot tell you which bank is best for you. You might want an account for everyday transactions or a safe place to park your money so that it grows. Here are a few options that are preferred by a majority of Indians.
SBI Savings Accounts are the most popular ones in India. They have innumerable branches all over the country and always offer the competitive interest rates.
ICICI Bank Savings Account might not offer the highest rate of interest, but offers unparalleled service and ease of use. The mobile app s extremely intuitive and user-friendly. The multifaceted online banking facilities are impressive.
HDFC Bank Savings Account Offer a marginally higher rate of interest and has the largest number of ATMs in the country.
Similarly, each bank offers unique perks and you need to find one that suits your specific needs.
You check the balance in your savings accounts through the online portal of the bank or by visiting an ATM or by visiting the bank. These days, most savings account transactions are conducted online. Banks have set up their secure servers where you can safely log in using your own id and password and carry out basic and recurring transactions. These online portals can be accessed through the bank's website as well as mobile apps.
Through these facilities, you can pay bills, check your account balance, transfer funds and manage your finances in real-time, without visiting the bank at all.
Ans: The interest amount arising from your savings accounts up to Rs. 10,000 is tax-free. This applies to all savings accounts in all banks and even in Indian Post Office savings bank accounts.
Most of the banks offer 4% interest per annum, and the interest amount is computed on a half-yearly basis and credited to your account twice a year. The interest rates may vary.
All bank accounts follow the concept of nomination. In case of the sad demise of the account holder, the person appointed as the nominee will take care of the assets. You can nominate a family member, a close friend or anyone you trust. The person must be above 18 years of age. Each account can have a single nominee.
Internet banking allows you to view all details of your personal savings account from your home. You can not only view monthly account statements but also check your balance, transfer funds, inquire cheque status, update your contact information and even open a deposit account without visiting the branch.
The average monthly balance is calculated as the average of the closing credit of each day for the calendar month. If the average monthly balance is not maintained, the customer is charged a penalty fee.
BSBA or Basic Savings Bank Deposit Account was introduced by RBI. It requires minimal documentation (KYC Documents only) and also has zero minimum balance requirements. All Indian residents over 18 years of age can open this type of an account in a bank of their choice. The customers can avail services like cash withdrawal, deposits and free debit cards.