Types of Savings Bank Account
Savings Bank Accounts are the most basic financial product that is available these days. They are the primary business of banks.
Currently, savings bank accounts are offering interest rates around 3.5-4%.
Below is a chart showing the percentage population of India who has a bank account. It also shows the data on percentage of accounts opened by male and female.
Following are some of the key types of savings bank accounts that are available:-
1] No Frills Account –
No-Frill account is only beneficial for low income individuals. A no-frills account is a bank account that can be opened and maintained with a zero balance. It levies zero or very low charges on minimum or average balance.
If the balance in a no-frills account exceeds Rs. 50,000 or if the cumulative value of credit transactions exceeds Rs. 1 lakh in any financial year, the account will no longer be treated as no frills account. No-Frills account does not provide facilities like unlimited transactions, free ATM, online banking, cheque book facility.
2] Salary Account –
A salary account is a type of savings bank account which can only be opened by a salaried individual. Many of the employers deposit their employee’s monthly salary and bonuses directly into this account.
This account has a few additional benefits. These benefits are zero balance feature (or concessions on maintaining minimum balance), cheque book facility and a higher interest rate on deposit amounts. Some banks also offer a free ATM cum debit card.
3] Sweep-in or Multiplier Account –
A sweep-in account also known by multiplier account comes with a higher yield compared to a normal savings account. If one chooses to go with a sweep-in account, any amount above a certain minimum balance in the savings account is automatically converted into a FD. Sweep-in or Multiplier account offers combine benefits of both savings bank account and fixed deposit account.
The balance in this account is never idle. Fixed deposit(s) from the extra funds in the savings bank account, subject to a minimum balance as stipulated by the bank, are created in multiples of sums set by the bank for a tenure of one year or more. Here, banks link customer’s savings account with fixed deposit account. This facilitate automatic transfer of extra funds from saving account to fixed deposit account to make you earn high interests.
This account also provides maximum liquidity. All the linked fixed deposits are enabled for automatic reverse sweep in multiples as set by the particular bank on a last-in-first-out (LIFO) basis when the balance in the savings account falls below the specified minimum balance. This way the amount that is reversed earns interest rates applicable for the period that the deposit was held with the bank.
4] Miscellaneous Accounts –
- Privilege banking –
Privilege banking account offers additional services for a fee or on maintaining a higher minimum balance. Privilege banking account customers enjoy more convenient banking experience. They also enjoy a broad set of products and services.
- Children’s Account –
This type of savings bank account is for minors (children aged less than 18 years old). In case of such an account, children operate the account under the guidance of the parent or guardian of the minor. Conditions are already pre-set by the parent or guardian of the minor.
- Account for Women –
As the name suggests, only women are eligible for this type of savings account. Some of the key benefits available in this account include special discounts, privilege cards, higher rates of interest on the account and many more.
- Senior citizen Account –
Only individuals over 60 years of age are eligible for this type of savings account. And they can avail some key benefits that are not available in case of regular accounts. This account also offers special counters for service at the bank branch. These benefits may include a higher interest rate, a low or no minimum balance requirements and special offers on term deposits.
– Pradhan Mantri Jan Dhan Account –
Pradhan Mantri Jan Dhan Yojana (PMJDY), comes under Prime Minister’s Peoples’ Wealth Scheme. It is a government scheme. Pradhan Mantri Jan Dhan Yojana is national mission for financial inclusion to ensure access to financial services, like savings account, deposit account, credit, insurance, pension in an affordable manner. This scheme was launched in the year 2014.
The Pradhan Mantri Jan Dhan Account is a no-frills account. Its purpose is to provide banking access to all, especially to the poor. It can be opened in any bank with zero balance. But one cannot avail cheque book facility under this account. To get a cheque book, one has to maintain the average monthly balance.