Basics of a savings account

11, January, 2012 The main aim of any savings account is to promote the healthy habit of saving money while at the same time allowing individuals to utilise it whenever they wish. The primary advantage of a savings bank account over other forms of saving instrument is that is secured and highly liquid. In addition to it, an individual also earn nominal interest too. The interest rates on these are decided periodically by the GOI. The rate of interest is compounded on a half-yearly basis. These type of accounts can be opened and operated by individual and can be held in joint names alike. Minors over the age of 10 years can have an account opened in their name. pertaining to HUF-Hindu Undivided Family, the savings account can be opened in the name of the head of the family i.e. karta; provided that the HUF is not engaged in any business activity. Ordinary saving bank accounts have a minimum balance criterion that differs from bank to bank. The minimum balance criteria are on the lower side when it comes to public bank as against private bank. Typically a private sector bank will require you to maintain a balance of Rs 1000. These will differ depending upon the type of savings account a customer is holding.

Certain basic things to consider before opening a bank savings account

Amount to be maintained as minimum balance. Penalty in the event the balance falls below minimum balance. Penalty charges in case the cheques issued or other financial instruments are returned. Charges applicable on any collection facilities that the bank offers. Charges for issuing of new cheque books or any limits on cash drawings or number of withdrawals.

Below is the list of documents that a bank will ask you to furnish, as part of their KYC-Know Your Customer procedure, in order to open a savings account.

Residence proof Passport size photographs Pan number An introduction of an existing account holder