What is a Savings bank account?
A savings bank account is an interest-bearing deposit account that can be opened by an individual with a bank or financial institution.
It is suitable for parking short-term money for day-to-day uses. Indian Banks such as the State Bank of India, ICICI Bank, HDFC Bank Ltd and other PSU banks are offering the facility.
It is a convenient way of dealing with your money, as it would give you a modest rate of interest.
Normally in our country, the rates go between 2 and 5% per annum, which are paid monthly or quarterly to the account.
A savings bank account can be opened by any individual, irrespective of age. It’s reliable and safe, besides giving you a decent interest rate. For parking short-term funds, the SB account is the best. It would meet all the requirements of normal transactions.
With your savings bank account, you would be able to pay daily household payments such as utility bills, grocery purchases, gas refills, etc.
The benefits that you get from having it are many. These include the facilities of ATM cards, internet banking, chequebooks, SMS alerts, phone banking, doorstep banking, etc., but all these facilities come with a cost. ATMs have an annual maintenance charge that depends on the type of card, which again varies among the banks.
Along with its benefits, a savings bank account has its own limitations. Such as the limited number of transactions you can do per month. Not all SB accounts are the same. Only 4 to 5 monthly transactions can be done with the Tiny account, which is basically a zero-balance account for the low-income group.
The maximum amount is capped at ₹2 to ₹5 lacs, which you can maintain for a year. Likewise, salary package accounts are loaded with benefits. Normal savings bank account charges may include charges and fees such as ATM AMC, SMS charges, transaction charges, cash handling charges, cheque issuance charges, etc.
Knowing its pros and cons, one has to think before owning a Savings Bank account. As far as it is concerned, banks such as SBI, ICICI, and HDFC are offering good deals under this product.
Here, we have prepared a few points that will help you decide which bank to go with.
Choose the Bank
Choosing the right Bank would give you satisfaction later on. There are a number of banks that are doing exceedingly well in the market, and choosing between these banks might be tricky too.
The brand name is one such thing that people normally consider when choosing. Deciding just by brand name would be a mistake. There are other factors that need to be considered too.
It might be worth considering the following factors while choosing a Bank to open a savings bank account. These are
- Rate of interest.
- Monthly average balance or Quarterly average balance.
- Net banking facility.
- Availability of a chequebook, ATM card, SMS alert, and telebanking.
- Transaction limits.
- Various charges and AMCs are going to be levied on you.
Find out the rate of interest
You have got to know what the Bank is offering you. As you are going to keep your funds in this bank, it’s necessary to know well in advance what you’re going to get in return.
Savings bank account rates are different for different banks. The State Bank of India offers 2.7%. Likewise, ICICI and HDFC banks are offering a range of 3% to 3.5% per annum.
See the trend of interest rates banks offer and decide accordingly while choosing the best one. Normally, a stable bank has low rates, while banks that need your deposit might give you higher SB rates. So, basically, you are safer if you go with banks that are stable.
Decide whether it’s a single or joint account
A savings bank account can be opened in ways that can be operated by multiple persons or you can just open it in your name. Decide in which manner you would like to open an account. For instance, you might like to open a savings bank account along with your spouse or with your son/daughter, and whoever you think of, it can be arranged accordingly.
Account operation is another area that you would be required to consider. In a single account, it’s, of course, only you. So you will be operating this account. In a joint account, you can choose the mode of operation.
You can mandate the following mode of operation in your joint account.
- Either or Survivor
- Former or Survivor.
- Jointly
- Specific mandate stating who will operate the account.
- By executing a power of attorney.
Keep ready KYC documents
To open an account at the bank, you may need a few documents to recheck. These will serve identification purposes. Make sure that your name, date of birth, and address are correct on your ID card.
Banks normally see the following documents to establish proper KYC for onboarding fresh customers. You may refer to the list
- Aadhaar card
- Voter Card
- Driver’s license
- Passport
In addition to PAN or Form 60/61.
Keep these documents ready so that while processing your savings bank account, no issues arise.
Latest photograph
Keep ready your latest photograph, preferably 2/3 copies. While filling out the form, you have to paste it properly.
What benefits are you getting?
There are a number of services that banks usually provide at no cost. Try to learn as much as you can about those facilities.
Look for the following details before you finalize: Such as,
- Is an ATM card facility available, and what are its charges and AMC? What transaction limit are you going to get with your ATM?
- Is Internet banking available? Almost all banks give access to Internet banking at no cost. Know about the transaction limit you are getting. Various discounted rates are set for Internet banking users. By the way, do you know that transactions over the Internet are cheaper than doing them by visiting the bank?
- Know about the number of free cheque leaves you get per year. Beyond that, the bank normally charges you. Rates may be in the range of ₹3 to ₹10 per cheque leave.
- See for account keeping a charge. A bank such as the State Bank of India, does not charge account-keeping charges on a savings Bank account. But you may find that a few other private banks may charge you besides service tax charges.
Accessibility
The Bank where you maintain your account should be easily accessible. This is a very important aspect to consider when choosing your favorite bank. If your bank is not accessible during working hours, you will face lots of issues later on. There are certain banks where the penetration level is quite low. These banks are available only in metropolises. Whereas banks such as SBI, ICICI, and HDFC are people’s favorite banks as these banks are found in every nook and corner of the country.
The indication points are mentioned below in the chart. The list is just indicative data, as these figures keep changing from time to time. For that, please refer to the bank’s official website.
| Bank | Rate of interest | Net banking | Chequebook and ATM card | MAB (minimum average monthly balance) |
|---|---|---|---|---|
| State Bank of India | 2.7% | Yes | Yes | Nil |
| ICICI | 3 % | Yes | Yes | ₹ Nil/1000/2500/5000/10000 |
| HDFC | 3-3.50% | Yes | Yes | ₹ 2500/5000/10000/25000 |
| Kotak Mahindra Bank | 3.50% | Yes | Yes | ₹ 2000/5000/10000/20000 |
| Axis bank | 3-3.50% | Yes | Yes | ₹ Nil/10000/25000/100000 |
| RBL Bank | 4.25-6% | Yes | Yes | ₹ Nil/500/1000/2500 |
| IndusInd Bank | 4-5% | Yes | Yes | ₹ Nil/10000/25000/250000 |