A savings account is a basic product that a bank offers to an individual. It is more a savings than an investment. A person can deposit money in their SB account and in return, the bank pays a certain rate of interest periodically (Quarterly/Half-yearly). This interest rate range from 4% – 7% depends on banks. These interest rates are usually marginally higher than the inflation rate.
The amount can be deposited through cash or cheque through banks or ATM/BNAs featured with cash deposit machines and cheque deposit box respectively. There are many types of savings account and in most of it, there are no restrictions for withdrawal, an account holder can withdraw the funds any time through banks or ATMs. Money transfers through NEFT, IMPS, RTGS and UPI can also be used to deposit in SB account.
There is also a separate type of SB account for senior citizens, which offers slightly higher interest than the other types. The following the eligibility and steps involved for opening a savings account in any Indian banks
Eligibility for Opening a Savings Account
He / She should be an Indian citizen
An individual should be 18 years and above to be eligible.
In the case of minors, the parents or legal guardian of the minor can open the account on their behalf.
A valid identity and address proof that is Government approved is required.
Some banks or some type of savings accounts need the applicant to make an initial deposit – depending on the minimum balance requirement as per the chosen type of account.
Documents Required for Opening a Savings Account
- 2 latest passport size photographs
- PAN card
- Form 16 (if PAN card is not available)
- Proof of identity – Aadhar card, Passport, Driving license, Voter’s ID card, PAN card, etc.
- Proof of address – Aadhar card, Passport, Driving license, Voter’s ID card, etc.
Steps to open a savings account by visiting the bank
- Visit the bank
- Request the bank executive for an account opening form.
- Ensure that all the fields have been entered and are correct. The details mentioned in the application form should match those mentioned in the KYC documents.
- The customer will now have to make an initial deposit (this differ from bank to bank and as per the type of SB chosen)
- As soon as the bank completes the verification process, the account holder will be granted a free passbook and chequebook (if eligible)
- If a separate form is required for activating Internet banking. You shall fill and submit it as well.
- Most probably the account will be ready to use within hours. In some cases, it may take a day or two.
Steps to open a savings account via online
Opening an account online is available in many banks but not in all banks.
- Go to the appropriate account opening page of a bank.
- Fill in the application form – name, address, DOB and other various details. click on submit.
- Once the details have been submitted, the applicant needs to visit the branch with KYC documents – proof of identity and address.
- After submission of the documents, the bank will initiate the verification process.
- Following approval, the account will be activated within 3-5 bank working days.
Nomination Facility
Following the Government of India mandate, all savings account customers are required to nominate a beneficiary that can operate the account on their behalf. When filling in the application form, customers will be required to choose a nominee. If in case the nominee is a minor, he/she will be allowed to operate the account only once they turn 18 years old. Following the death of the account holder, the nominee can operate the account on his/her behalf.
Advantage of Savings account in investment point of view
Security – The money invested in SB account is secure and almost Zero risks. I use the word almost because in case if a bank goes bankrupt there is a possibility that your money will get affected. Fortunately, there is a government policy that bank deposits are insured up to ₹1 lakh, even if the bank goes bankrupt.
Liquidity factor – Amount deposited in SB can be withdrawn at any point in time through Banks and ATMs.
Disadvantage as an investment point of view
The major disadvantage of the savings bank investment is the rate of return. Comparing to another form of investments, savings account earns less. So, that is a downside of SB Investments.
Taxation
In case of savings account Interest earned up to ₹10,000 is tax-free under Section 80TTA this is applicable to all savings accounts across banks including Indian Post Office’s savings scheme.
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