What is a Savings Account
Meaning
‘Let your first spending be a saving’ has always been the mantra of modern living. What can be a better saving tool than a Savings Account. Savings account, a type of bank account enables the customers to save their money and it also gives the freedom of withdrawals as this account has more liquidity.
Features
Account Opening
In nationalized banks, the minimum amount for account opening is Rs.100/- and for many of the private banks is Rs.500/-.
Number of Applicants
The account can be either opened individually or jointly with another individual. The cheques can be signed by any of the joint holders for withdrawal of funds, however, the account closure form has to be signed jointly by all the account holders.
Rate of Interest
Initially banks used to pay interest on the lowest balances in the savings account between the 11th and last day of the month. From April 2010, the interest is calculated on a daily basis on the balances in the account and the bank interest paid,varies from 3.5% to 6%. The RBI monitors interest rate only upto Rs.2lacs. Over Rs.2 lacs, the bank can decide the rate of interest to be paid to the account holder.
Transaction Limitations
The transaction refers to the withdrawals or the deposits made in the account. There are usually no limitations on transactions in savings account but few banks do assign limitations.
Minimum Amount in Account
All banks specify a minimum average balance to be maintained in the account. However, some banks immediately penalize the holders for withdrawals below the minimum required balances.
ATM/Debit Card facility
On opening of the account, the ATM/debit card is provided to each of the account holders. This card can be used withdrawing money from the bank at any time 24x7 and also enables purchases from stores.
Online Services
With all banks having online services now, it is easier to access account balances or carry out transactions online.
Account opening procedure
- Fill the account opening form. The vital points are name, address, occupation and the amount to be deposited.
- Provide declaration of accepting the rules and regulations of bank.
- An existing customer of the bank should introduce you to the bank or from a respectable citizen known to the bank.
- The following are the documents to be submitted for accounting opening procedure:
- Photocopy of Voter ID or Passport
- Address Proof
- Passport size photographs – 2
After submission, the bank takes a couple of weeks to complete the paper work and process your account opening form. On its completion the bank will send cheque book and debit card via post.
Note: Savings account can be opened and operated bya minor too who has completed the age of 10 years.
Benefits
- Safety is the foremost advantage, as large amount of money can be secured in the bank instead of storing money at home.
- The money saved in savings account is insured by government so even if the bank is under crisis, the money deposited is safe.
- The bank pays interest to its savings account holder depending on the balances held in the account.
- As the liquidity is high for this account, withdrawing amount on emergency expenses is easier.
Tax on interest
The interest amount earned by the savings account holder is taxable. However, the interest is credited into the account without deducting interest by the bank.
Contributed By: Aruna Sharma |
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Mrs. Sharma holds a Masters in Financial Management from University of Mumbai. She has graduated from the University of Mumbai. | |
Also what are the Agency and general utility service?
How to open minimum balance saving account in Private bank is it fix 10,000 or less than
Thanks
Anil Rawat
I want open the bank account because I have no any proof.
plz reply.