When it comes to managing your finances, one of the fundamental decisions you need to make is choosing the right bank account. Among the various types of accounts available, a savings account is a popular choice for individuals looking to safely store their money while earning interest. A savings account is designed to help you build a financial cushion, meet your short-term savings goals, and provide easy access to your funds whenever you need them. In this guide, we will explore the world of savings accounts, exploring their features, benefits, and considerations to help you make an informed decision. Whether you’re just starting your financial journey or looking to optimize your savings strategy, join us as we demystify the concept of savings accounts and guide you through the process of choosing the right bank account to meet your financial needs.
With the specific context of Indian financial services, We shall discuss below some of the salient features of saving accounts available in India, with a simple introduction to the application process and things to look out for while operating savings accounts.
Why Should I Open a Saving Bank Account?
Got Some Money Aside – If you got some money aside that you don’t need on an everyday basis you should consider a savings account – Most savings accounts offer interest on the balance you maintain in the account. While interest rates can vary, having a savings account allows your money to grow over time. Although the interest rates may not be exceptionally high, it still provides a means of passive income and helps your savings keep pace with inflation.
Cash at Home – Big NO NO – Moreover, you can keep your money secure in a regulated financial institution. Banks are typically insured by government-backed deposit insurance schemes, which provide protection for your deposited funds up to a certain limit. This ensures that even if something happens to the bank, you have a higher chance of recovering your money compared to keeping it in cash at home.
Savings Account in India and Details –
A savings account is a type of bank account designed for individuals to deposit and save their money while earning some interest on the deposited amount. Here are some key silent features of savings accounts in India:
Requirement for Saving Bank Account in India –
The following document is a list of evidence accepted as proof of identity and Address although the list is not comprehensive and the document may change according to needs at specific banks and locations.
Proof of Identity
- Aadhaar Card
- Voter ID card
- Driving License
- PAN card
- Government-issued identity card
Proof of Address
- Aadhaar Card
- Voter ID card
- Driving License
- Recent Utility bills
- Registered sale or lease agreement
- Property tax assessment order
- Letter from a recognized public authority or public servant verifying the address
You may be required to submit a few passport-size photographs along with your account opening application. It is possible that You will need to deposit the minimum initial amount required by the bank to open a savings account. The minimum balance requirement varies among banks and the type of savings account you choose. There may be specific requirements for minors (below 18 years of age) who wish to open a savings account. In such cases, additional documentation, such as the birth certificate or a guardian’s consent, may be necessary.
Various Types of Saving Accounts in India – Which Saving Account?
Regular Savings Account –
This is the basic savings account offered by banks. It allows individuals to deposit and withdraw money while earning a nominal interest on the balance.
Salary Based Account –
Salary accounts are provided by employers to their employees for salary disbursement. They often come with special features like zero balance requirements, higher withdrawal limits, and additional benefits such as debit card and overdraft facilities.
Basic Savings Bank –
BSBDA is a no-frills savings account aimed at promoting financial inclusion. It has low or zero balance requirements and provides essential banking services. It is suitable for individuals who want a simple and basic savings account.
Senior Citizen Savings Account –
This account is designed specifically for senior citizens (usually aged 60 years and above). It offers higher interest rates, additional benefits like priority service, and specialized features catering to the needs of senior citizens.
Women’s Savings Account –
Some banks offer savings accounts exclusively for women. These accounts may have features such as higher interest rates, discounts on certain services, and specialized offerings for women’s needs.
Digital Savings Account –
Digital savings accounts are opened and operated primarily through online channels. They provide convenience with features like instant account opening, paperless transactions, and seamless online banking services.
Joint Savings Account –
A joint savings account allows two or more individuals to operate a single account. It is commonly used by family members, spouses, or business partners for shared financial management.
Salient Features of Saving Accounts in India –
Interest on Deposits –
Savings accounts offer a nominal interest rate on the deposited amount. The interest is typically calculated on a daily or quarterly basis and credited to the account periodically. This is a major benefit for individuals to benefit from their savings and get paid based on interest rates. Make sure you check and research the best account and rate available to you.
Debit Card and Cheque Book –
Many savings accounts come with a debit card and the option of cheque book. These features enable account holders to make payments, withdraw cash, and conduct transactions easily.
Electronic Banking Services –
Savings accounts often provide electronic banking facilities like Internet banking, mobile banking, and SMS banking. These services allow customers to check their account balance, transfer funds, pay bills, and perform other banking activities conveniently.
Nomination Facility –
Account holders can nominate a person to receive the funds in case of their unfortunate demise. This ensures a smooth transfer of funds and avoids legal complexities.
Safe and Regulated –
Savings accounts are regulated by the Reserve Bank of India (RBI), which ensures the safety and security of deposits. The Deposit Insurance and Credit Guarantee Corporation (DICGC) provides insurance coverage for up to Rs. 5 lacks per depositor in case of bank failures.
Few Limitations with Savings Accounts in India –
Most savings accounts have a minimum balance requirement, which is the minimum amount that must be maintained in the account. If the balance falls below the specified limit, the account holder may incur penalties or charges. There may be certain restrictions on the maximum number of withdrawals or the amount that can be withdrawn from a savings account within a specific period. However, these limits vary among different banks.