Savings Accounts Overview

Overview - Savings Account-Use, Features & Management

What is a Savings Account?

A savings account is an interest-bearing deposit account held at a bank or other financial institution. Though these accounts typically pay a modest interest rate, their safety and reliability make them a great option for parking cash you want available for short-term needs. A Savings Account is a virtual vault that holds your money. However, unlike a Fixed Deposit, you can access this money whenever required.

Who can open a Savings Account?

Anybody can open a Savings Account. Any Indian national can open a Savings Account, either individually, or jointly with another Indian national, with an application form and the required KYC documents. In fact, even a Hindu Undivided Family is eligible to open a Savings Account. And while banks state Indian citizenship as a requirement for opening a Savings Bank Account, certain provisions have also been made for foreign nationals who stay in the country for a long term, due to business or other work, and need to make or receive payments; these individuals must simply provide the requisite KYC documents along with the application form.

Benefits Of A Savings Account

Easy Transactions You can use your Savings Account to send and receive payments. This can be done by either Net Banking or through your Debit/ATM Card. This feature cuts down the dependency on cash for all transactions, especially when it comes to the payment of bills.

Payment of Bills These days, banks offer payment facilities such as BillPay with Savings Accounts. This enables account holders to make payments for utilities such as electricity, water, and phone recharges directly from their account.

ATM facility Should you feel the need to withdraw cash, then you can do so from your Savings Account via an ATM. Most banks have their ATM branches spread all over the country. But in case you cannot find one in your vicinity, and the need for cash is too pressing, then you can access your account from another bank’s ATM as well. All you need is your ATM/debit card.

NetBanking and MobileBanking Your bank will usually provide NetBanking facilities with your Savings Account. As mentioned earlier, this makes it convenient to conduct transactions. You can send and receive payments by logging in to your account online. Further, you can download the bank’s app on your phone and use mobile banking to make your banking activities more convenient and accessible from anywhere. Mobile banking apps also provide you the facility to interact with bank executives for any queries, without having to make a trip to the bank’s nearest branch.

Debit Card Banks provide Savings Account holders with ATM/Debit Card not just for accessing the account through the ATM, but also for making payments, whether at the merchant’s store or through an online payment gateway.

Savings Interest rates With every Savings Account, banks offer an interest rate enabling your idle money to grow over time.

Cross Product benefits Some banks offer their Savings Account holders cross-product benefits. This means that if you already have a Savings Account with the bank, then you will get special benefits and offers in case you decide to open another account with the same bank or want to avail of any of their other products. E.g. HDFC Bank waives off the first-year maintenance fee for a first-time Demat Account applicant if they already have a Savings Account with the bank..

Types Of Savings Accounts

There are two types of savings accounts explained as below:
Individual or Self: Individual Account means an Account payable to or on the order of one Account Holder while that Account Holder remains living.

Joint Accounts: A joint account is a bank account shared between two or more individuals. Joint accounts are most likely to be used by relatives, couples, or business partners who have familiarity and trust with each other.
A joint account functions like a standard account, such as a checking or savings account, and allows anyone named on the account to access its funds. All owners can withdraw cash, write checks, and make online payments.

Mode of Operation of a Joint Bank Account

Either (Or) Survivor: This is the most common form of a joint account. Only two individuals can operate the account i.e., primary account holder and secondary account holder. Both can access the account and transfer the funds.

The final balance and interest (if any) will be paid to the survivor on the death of any of the account holders. The survivor can opt to continue the account.

If the nominee is a different person then the balance money is paid to him/her after the death of the survivor.

Anyone (Or) Survivor: This is similar to the “either or survivor” option. The only difference is, that more than two individuals can operate the account.
If you want your father, mother, and spouse to be able to access and operate your bank account then this is the best option. In case of the death of any of the account holders, the remaining survivors can continue to operate the account.

Former (Or) Survivor: In this type of joint account, only the first account holder (primary) can access and operate the account till the time he/she is alive. The second account holder (second applicant) can operate the account only on the death of the primary holder (first applicant). The survivor can also get the balance transferred to his/her name (if required).

Latter (Or) Survivor: This is similar to the “former/survivor” option. The main difference is, that only the second account holder can access and operate the account till the time he/she is alive. The primary/first account holder can operate the account only on the death of the secondary account holder.

Jointly: In this type of account, all the transactions need to be signed and mandated by all the account holders. If any of the account holders dies then the account can not be further operated. The balance proceeds shall be payable to the survivor.

Jointly or Survivor: This is similar to the “jointly” option. The only difference is, that the survivor can continue to operate the account. Alternatively, the proceeds of the account can be transferred to his/her name.

Savings Account Transaction Limits as Per KYC:

Min KYC:

As per the Reserve Bank of India's guidelines, a Min KYC account is opened after electronically verifying a customer's credentials (e-KYC). Usually, such e-KYC processes revolve around a one-time password (OTP).
Min accounts have certain regulatory restrictions:

A min KYC user's account balance cannot exceed ₹1 Lakh.
The total amount added to this account (in one financial year) cannot exceed ₹2 Lakh.
Min KYC accounts only have a validity of 1 year, after which it expires & the account is closed.The user needs to complete the full KYC within this period.

Full KYC:

For a Full KYC user, the following upgraded benefits can be availed:

Deposit Limit: No Limit
Account Balance Limit: No Limit
Account Validity: Lifetime