Features of a Savings Account
A savings account acts as one of the simplest banking instruments for most people in India. Let us find out some of the most important features of savings accounts:
- Account holders earn interests on the amount in their savings account ranging from 2% to 7%
- In most cases, senior citizens get an additional interest rate of 0.5% above regular interest rates
- High liquidity for withdrawing or transferring money as many times as the account holder wants to
- Accountholders get debit cards or ATM cards that can be used to make payments, online transactions, or withdraw cash from ATM
- Carry out fund transfers using UPI, NEFT, IMPS, or RTGS through net banking, mobile banking, or by visiting the bank branch
- Option to operate the savings account via net banking, mobile banking, phone banking, or SMS banking
- Most accounts have no limit on the amount that can be deposited in the savings account
- Bank deposits up to Rs. 5 lakh are secured by DICGC
- Facility to link savings account with fixed deposits
- Interest payable as per the account holder’s choice – monthly, quarterly, semi-annually, or annually
- Special deals and discounts on various savings accounts and debit cards
- Option to deposit or get cheques issued directly using your savings account
- Accountholders may have to adhere to Monthly Average Balance (MAB) requirements
Loan Against Property Interest Rates offered by Top Banks & HFCs
Savings Account Interest Rates 2023
Banks decide the interest rates offered on savings accounts and update them from time to time. Generally, small finance banks provide the highest interest on savings accounts. Below listed are the savings account interest rates from top banks in various categories.
| Bank Name | Highest Interest Rate | Amount Requirements |
|---|---|---|
| Bank of India | 2.90% | Above Rs. 1,00,000 |
| Bank of Baroda | 3.35% | Rs. 1,000 crores and above |
| Central Bank of India | 2.90% | Up to Rs. 10,00,000 |
| Canara Bank | 3.55% | For outstanding balance of Rs. 1,000 crore & above |
| Indian Bank | 2.90% | Rs. 200 crore and above |
| Punjab National Bank | 2.75% | Rs. 10 lakh and above |
| State Bank of India | 2.70% | Above Rs. 1,00,000 |
| Bank Name | Highest Interest Rate | Amount Requirements |
|---|---|---|
| Axis Bank | 3.50% | Rs. 50 lakh and up to less than Rs. 2,000 crore |
| HDFC Bank | 3.50% | Of and above Rs. 50 Lakh |
| ICICI Bank | 3.50% | Rs. 50 lakh and above |
| IDFC First Bank | 7.00% | > Rs. 10 lakh <= Rs. 5 crore |
| IndusInd Bank | 6.75% | Daily balance above Rs. 25 lakh up to Rs. 5 crore |
| Kotak Mahindra Bank | 4.00% | Balance above Rs. 50 lakh |
| RBL Bank | 7.50% | Above Rs. 25 lakh and up to Rs. 2 crore |
| Bank Name | Highest Interest Rate | Amount Requirements |
|---|---|---|
| AU SFB | 7.00% | Balances from Rs. 25 lakhs to less than Rs. 1 crore |
| Equitas SFB | 7.50% | Above Rs. 50 crore |
| ESAF SFB | 7.50% | Above Rs. 50 lakh i.e for incremental amount above Rs. 50 lakh) |
| Jana SFB | 7.50% | More than Rs. 10 crore and up to Rs. 50 crore |
| Suryoday SFB | 7.00% | Above Rs. 50 lakh up to & including Rs. 2 crore |
| Ujjivan SFB | 7.50% | Above Rs. 5 lakh |
| Utkarsh SFB | 7.00% | Incremental Balance above Rs. 25 lakh |
| Bank Name | Highest Interest Rate | Amount Requirements |
|---|---|---|
| Airtel Payments Bank | 6.00% | Balance of Rs. 1 lakh to Rs. 2 lakh |
| FINO Payments Bank | 2.75% | Balance up to Rs. 2 lakh |
| India Post Payments Bank | 2.25% | Balance above Rs. 1 lakh and up to Rs. 2 lakh |
| NSDL Payments Bank | Up to 5% | On account balance |
| Paytm Payments Bank | 2.5% | On account balance |
Note: Savings account interest rates are updated as on 31st August 2023. Rates may change without prior information.
Eligibility and Documentation to Open a Savings Account
In order to open a savings account, applicants have to fulfill certain requirements such as:
- The applicant should be a resident individual
- Foreigners residing in India can also open certain savings accounts
Maximum Age Limit: 70 years
- Regular savings accounts need the applicant to be at least 18 years old whereas applicants below 18 years of age can open minor/kids savings accounts
- A PAN card is mandatory to open a savings account
- Linking a savings account with an Aadhaar card makes the account eligible to receive government subsidy benefits
- Photograph or live video may be required based on the type of account opened
- A number of other documents such as driving license, voter ID, ration card, etc. can be provided as proof of identity and residence
How to Apply for Savings Account
With digitalization, banks have made it very easy for applicants to open a savings account online or by visiting the bank branch at their convenience. One can opt for opening digital savings account online or visit the bank to open a special savings account such as a senior citizen’s account, minor savings account, women’s savings account, etc.
Steps to Apply for Savings Account Online
- Visit the bank’s website or download the mobile app
- Select the type of account you want to open
- Provide basic details such as name, date of birth, address, PAN, Aadhaar number, etc.
- Verify your KYC by providing documents or video KYC
- After successful verification, your savings account will be fully operational
Steps to Apply for Savings Account Offline
- Visit the bank’s branch
- Fill the savings account opening form
- Attach self-attested copies of your proof of address and identity
- Deposit the required amount as per the account type
- Your account will be opened and shall be fully functional after successful verification
Types of Savings Accounts
Banks provide a number of savings account options to applicants. These accounts are designed to provide special benefits to specific customers. Let us find out various savings accounts offered and who should open such an account:
Regular Savings Account
A regular savings account is one of the simplest savings accounts and any person can open this account. The account holder earns some interest on the amount present in this account and the bank may charge an annual fee for the maintenance of these accounts. Most banks require account holders to maintain a minimum average monthly balance in these accounts. These accounts are opened only after a complete KYC is done.
Instant Digital Savings Account
These digital savings accounts can be opened online within a few minutes via online banking or a mobile app. However, if the account holder does not carry out complete KYC within a specified period, the account is put on hold. Many instant digital savings accounts have a maximum limit of Rs. 1 Lakh on the total amount deposited in the account.
Zero Balance or Basic Savings Bank Deposit Account
These accounts do not have the limitation of maintaining the minimum average monthly balance and the account holder can have these accounts with no amount deposited in the account. As there is no MAB requirement, the bank applies certain restrictions on these accounts such as a cap on the number of withdrawals from the ATM, type of debit card available, no chequebook facility, etc.
Women’s Savings Account
This account is provided exclusively to women who get special privileges on these accounts such as a special debit card for women, relaxed minimum balance requirements, preferential loan and credit offers, etc. Many banks provide discounts on lockers, unlimited ATM cash withdrawals, complimentary multicity chequebooks, and other privileges to women account holders.
Kids’ Savings Account
These accounts are opened in the name of children below 18 years of age by their parents or guardian. These accounts are meant for children to understand the basics of banking and inculcate disciplined financial behaviour from the very beginning. Parents or guardians need to provide their identity proof and declaration to open such accounts. Kids’ or junior savings accounts are accompanied by regulated deposit and spending limits.
Senior Citizens’ Savings Account
A senior citizen savings account is meant for those above 60 years of age. Accountholders get special privileges such as preferential interest rates on deposits, lower interest on credit, dedicated relationships manager, etc.
Family Savings Account
People of one family can open multiple accounts under one family ID and avail facilities of multiple banking instruments such as savings accounts, fixed deposits, recurring deposits, etc. People covered in these accounts can be spouse, children, parents, grandchildren, grandparents, in-laws, etc.
Salary Account
Salary accounts are designed for salaried accountholders who would get their salaries every month in these accounts. The bank provides special privileges with these accounts such as zero balance accounts, free chequebook, and international debit card, preferential interest rates on loans, complementary personal accidental insurance cover, etc
Top Savings Account Providers
In India, banks are allowed to provide savings accounts to accountholders as per RBI’s mandate. Let us find out about various top banking institutions that offer savings accounts to customers.
Public Sector Banks
These are nationalised banking institutions and cater to more than 50% of the market. The government has a majority stake in these banks. The main objective of these banks is social welfare and thus offer public-friendly services and products.
Private Sector Banks
Banks where a majority stake is held by private shareholders such as institutions, individuals, groups of persons, etc. are known as private sector banks. All regulations set forth by RBI are binding upon all private sector banks as well.
Small Finance Banks
These banks provide basic banking services such as deposits and lending under the small finance bank license. These banks cover those sections of the society that are not covered by the big public sector or private sector banks and help in the financial inclusion of a large section of the society.
Payments Banks
These banks are conceptualised by the RBI to accept restricted deposits up to Rs. 2 lakh per customer. These banks are not allowed to issue credit or loans. However, people can open savings or current accounts in these banks.
Regional Rural Banks
These are government-owned scheduled commercial banks that operate on a regional level in various states of India. These banks are meant to serve rural areas with basic banking services.
Advantages and Limitations of Savings Accounts
Pros
- Money can be deposited or withdrawn any number of times through a savings account (may vary based on the type of account)
- Option to transfer money online and offline
- Option to withdraw funds anywhere in India through ATM
- Amount up to Rs. 5 lakh insured by DICGC in case the bank defaults
- Add-on insurance benefits such as personal accident insurance cover, lost card liability, health insurance, etc.
- Special offers and discounts based on the type of account and debit card provided
- Option to set standing instructions for bill payments
Cons
- Relatively lower rate of interest on the money deposited in the bank
- The accountholder has to maintain the minimum balance in the account that can be used for better returns in other investment instruments
- Failure in maintaining a minimum balance or Monthly Average Balance (MAB) may incur a penalty
- A fee is charged on ATM withdrawal after exceeding the maximum number of free transaction
How to Choose the Most Suitable Savings Account
It is very important to make a well-researched choice for suitable savings account as it is hard to pick an account by just looking at the account features. It is advisable to compare the savings account options against diverse parameters in order to maximize your earnings and earn better rewards. Here are listed some important parameters that can help you in making the right choice.
1.Savings Account Interest Rate
Most banks offer an interest rate starting from 2.5% on savings bank accounts. But, there are many banks that offer a higher interest rate up to 7% provided you maintain a specific balance in the savings account.
2.Minimum Balance Requirement
Some banks require you to maintain a minimum balance in your savings account, while others do not. If you fail to maintain the minimum account balance, the bank might charge a penalty. Therefore, it is best to check what suits you the best, a savings account with a minimum balance or a zero balance savings account.
3.Debit Cards Features
Many banks provide debit cards that come with benefits such as joining benefits, travel benefits, complimentary movie tickets, discounts on purchases, no-cost or low-cost EMIs, etc. If these features meet your lifestyle, you can select an account that can provide you with these offers and deals.
4.Additional Features
Banks offer a number of facilities with a savings account such as net and mobile banking, doorstep cash deposit/withdrawal, free cheque book, etc. Such facilities help complete bank transactions without visiting the bank and from the comfort of your home or office. Check for the facilities attached to the savings account before making a choice.
Low Account Maintenance Charges
There are a number of fees and charges applicable to the daily operations of a savings account such as fund transfer charges, chequebook issuance charges, ATM withdrawal fees, statement issuance charges, ATM card annual fees, etc. You should select an account that provides you with an optimum balance of services and the cost of availing them.
FAQs
Do I need to be over 18 years of age to open a savings account?
No, you can open a minor or kids savings account if you are not 18 years old. However, if you want to open a fully-functional regular savings account, you need to be over 18 years old.
Do all banks provide a cheque facility?
Yes, all banks provide a cheque facility. However, in case of several savings accounts such as BSBDA, instant, digital accounts, etc., you do not have the cheque facility. Read more about cheques.
Are there charges for an ATM card linked to a savings account?
Yes, ATM/debit cards have an annual fee of approximately Rs.150 plus applicable taxes (varies from one bank to another). However, many private sector banks waive the annual fee provided you use your debit card for shopping transactions of a specified denomination during the year or you maintain the minimum average balance requirement specified by the bank.
How can I check my savings account balance?
You can check your savings account balance online through net banking, mobile banking, UPI, account statement, SMS banking, missed call service, or by visiting the bank or any ATM.
Is saving account interest taxable?
Interest earnings of up to Rs. 10,000 accrued on your savings account balance are tax-free under Section 80TTA. Higher amounts earned as interest are subject to TDS. To know more, click here.
Do I need to link the Aadhaar card with the savings account?
An Aadhaar card is a valid document proof of identity and residence and helps in getting the bank account opened easily. However, if you want to receive government subsidies and DBT benefits, you will have to provide your Aadhaar card to validate your account and link it with the scheme. Click here to know how to link Aadhaar card with Bank account.
Can I open a savings account without a PAN card?
As per the regulatory guidelines, it is mandatory to provide the PAN of the applicant to open a savings account. Without PAN card, the application would not be processed. However, if the applicant does not have PAN, he/she will have to provide Form 60 mentioning the reason for not having a PAN.
When would the account holder receive the account statement?
The bank would send the monthly account statement on the registered email address. In case you need a hard copy, you will have to request it from the bank and pay a nominal fee for it.
When is the interest credited in a savings account?
The interest is calculated on a periodical basis. This period is specified at the time of account opening. It can be monthly, quarterly, annually, etc.
Can I use UPI if my mobile number is not linked with the bank account?
UPI can be accessed only when your mobile number is registered with the bank account. If you have not registered your mobile number with the bank, please do it on priority.
Can I open bank accounts in UAE and operate in India?
When you open bank accounts in UAE, you can operate it either by visiting the bank branch within the country or by internet banking from anywhere across the globe, including India. Additionally, if the bank operates any of its branches in India, you can visit the branch for assistance.