Saving account (SB) has been the unique link that joins a common person with a bank. It has come up with lots of changes from the past when people had the choice of few banks that too with one type of saving bank account in an offer. Now people have a variety of options to choose from to select the type of the most suitable savings account according to its requirement. The flexibility in the modern-day savings account structure has attracted a huge number of customers and also allowed banks to fulfill its financial inclusion duty.
The Evolution Phase
The saving bank account has witnessed lots of changes to reach the current state. Earlier banks had norms to get the new account introduced by the existing clients but now such a model has been replaced with KYC (Know your customer) forms. The RBI’s saving bank account’s interest rate regulation has been removed and provided banks to offer its own rate. Now all the banks offer their own interest rate for the saving account, which is around 4% for most of them from an earlier rate of 3.5%. The saving bank account replaced the monotonous single offering structure with new age accounts customized based on customer demand and operation style. At present, every bank has multiple saving bank accounts to attract clients with diverse requirement profile. The banks have segregated customers on the basis of demographic segmentation, i.e. age, income and gender. Following are some important type of saving bank accounts offered by the banks:
1> Senior Citizen Savings bank account
2> Young Citizen Savings bank account
3> Women Savings bank account
4> Regular Savings bank account
5> No Frill Savings bank account
6> Student Savings bank account
7> Preferred Savings bank account
With multiple products in offering and increase in the service level, the bank’s operating cost has also increased manifold. To recover the cost, banks charge service fees on its entire product by its predefined mechanism. Now a savings bank account requires maintaining stipulated balance as per bank’s norms. Such balance is called average quarterly balance (AQB) or minimum average balance (MAB) etc. Banks also offer anytime liquidity through debit/ATM cards, online banking, At Par Cheques, Mobile banking, phone banking, bill payment facility, DEMAT services, investment in Mutual funds, insurance, etc. and charges for such services according to its norms. The charges and offers by some of the prominent banks for Regular Savings bank account are as follows:
| REGULAR SAVINGS BANK ACCOUNT (URBAN AND METRO CITIES) | |||||
| DETAILS | SBI Bank | ICICI Bank | IDBI Bank | HDFC Bank | AXIS Bank |
| Savings Bank Account Interest Rate | 4% | 4% | 4% | 4% | 4% |
| Minimum Account Balance | NIL | Minimum Monthly Average Balance (MAB) of Rs. 10,000 in Metro | Average quarterly balance (AQB) for TIER I cities is Rs. 5000 | Average Monthly Balance (AMB) of Rs. 10,000 | Average quarterly balance(AQB) for Metro/Urban Branch is Rs. 10,000 |
| Penalty On Non Maintenance of Minimum Balance | No Minimum Balance Requirement | Rs. 250 per month if MAB is between Rs. 5,000 and Rs. 10,000 and Rs. 350 per month if MAB is less than Rs. 5,000 | NA | If AMB in the account is between Rs 5,000 to Rs 10,000, a charge of Rs 250/- per month and less than Rs 5,000, a charge of Rs 350/- per month would be levied | Rs.750 |
| Other Customer centric facilities | 50 Multicity cheque leaves (plus cheques given along with welcome kit) free in the first instance | Call and Collect a Demand Draft or Pay Order | Free any branch cheque deposits and account to account transfers | Free Payable-at-Par chequebook, without any usage charges. | 2 DDs/POs free per month at Axis Bank |
| Service charges for debit card Usage at Non Branch ATM | Free Upto 5 transactions and Rs 20 on above usage | Rs 20 for withdrawal and Rs 8.5 for non-financial transaction above first five transactions | 5 Transactions Free Per Month thereafter Rs 20 Per transaction | 5 free cash withdrawal transactions per month at Non-HDFC Bank ATM. Additional transactions done at Non-HDFC Bank ATM – Rs 20/- per transaction Per transaction limit will be Rs 10,000/- and Rs. 8.50/- (exclusive of taxes) per transaction for ATM non-financial transactions |
6th transaction onwards `20/- per transaction for withdrawal and 9.55/-per transaction for non-financial transactions. |
Source: From the Website of respective banks/institutions
The above table is just a glimpse of services and offering by the banks. Some institutions are even offering a zero balance saving bank account to attract a larger customer base. Obviously, the banks that have less ambiguity in an offer will appeal more to a prospective customer. Similarly, banks have designed distinctive product offers for senior citizens that suit their needs according to their age. In such accounts the banks have either relaxed on the minimum balance criteria by lowering it or removed it completely. Senior citizens saving account (SCSA) has been framed with keeping in mind the account holder’s age and limitations. Banks like IDBI have no minimum balance requirement for senior citizens whereas HDFC and ICICI have lowered such constraints to half.
Basic Requirements to open a Savings Account
– By a person in his / her name;
– By two or more persons in their joint names payable to :
- Both or all of them or the survivor or survivors of them; OR
- Either or any more of them or the survivor or the survivors of them; OR
- Former / latter or survivor of a particular person during his lifetime or survivors jointly or survivor.
– Certain non-profit welfare organizations are also allowed to open Savings bank accounts with banks.
Best Criteria to choose a suitable Savings Bank Account
With so many diverse products offered by the banks, it becomes very difficult for the customer to select the most suitable savings account. Following are some important points to consider while choosing a savings bank account:
1> Monthly Balance Requirement: It is very difficult to maintain the minimum balance requirement as per bank’s norms and if the customer doesn’t adhere to such a rule, then they are liable to pay a penalty. Zero balance saving accounts should be preferred over others.
2> Debit Card Charges: Debit/ATM cards are now the necessity of every account holder, so before selecting an account, the associated charges with debit cards should also be noted. Sometimes the cards’ issuance and annual charges are nil but there are transaction limitations so one should opt according to frequency of card’s transaction.
3> Cheque book facility: It is the basic facility that everyone needs. If the outstation transaction is more than a saving account with more number of free ATPAR cheques/quarter should be preferred.
4> Online Banking: Online banking helps in ticket booking, bill payments and most of the banking operations with a click of the mouse button. The customer should opt for a saving bank account that enables them to handle all the major financial operations such as investment, bill payment, bank enquiries, etc. without any technical glitch and free of cost.
5> Sweep facility: It helps the account holders to earn more interest on the bank balance by transferring an amount over the predefined level to the fixed deposit account. The FD interest is paid on the basis of number of days for which amount is kept in FD.
6> Other facilities: There are some other facilities specially customized for its customer needs, like the cheque collection at door, third party cash deposit, accidental insurance and add-on card for shopping, etc. Such offers should be judged as per one’s own need and application.
Future Prospects of Savings Bank Accounts
The usage of saving banks account has picked up quickly in last few years because of RBI’s initiatives and financial institutions increased penetration into rural areas. Saving accounts are well set to grow further with better financial inclusion initiatives expected to be taken by the banks in coming years. It has now become a necessity for all i.e. a poor or rich, man or women, young or elderly; everybody needs saving banks account for a basic operation like school fees to pension cheque clearance. Saving accounts is proving to be a most effective tool that can reach and connect the life of 1.2 billion Indians and spread growth through valuable financial inclusion in their lives.