Saving Bank Accounts
SB (Savings Bank) accounts help individuals, house-wives, minors and others inculcating a habit of thrift in themselves. The holders of these accounts get various banking facilities from banks while earning some interest on their savings.
The salient features of SB Accounts
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Adult individuals, singly or jointly with other adults
Minors, who have attained 10 years of age.
Trusts, Societies and other organizations approved by RBI.
Introduction by an account holder having a satisfactory account with the bank for atleast six months.
One of the following as proof of identity and proof of address :
- Driving Licence
- Voters' Identity Card
- PAN Card
- Aadhaar Card issued by UIDAI and
- NREGA Card.
One of the above documents is required to be submitted as proof of identity. If these documents also contain address details, then it would be accepted as 'proof of address'. If the document submitted does not contain address details, then another officially valid document which contains address details is required to be submitted.
In absence of above noted officially valid documents, a normal account can be opened by submitting a copy of any one of the following documents:
- Identity card with person's photograph issued by Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;
- Letter issued by a gazetted officer, with a duly attested photograph of the person.
This, however, is not a general rule and it is left to the judgement of the banks to decide whether this simplified procedure can be adopted in respect of any customer.
A 'Small Account' can be opened by submitting recent photograph and putting signature or thumb impression in the presence of the bank official. The small accounts have following limitations:
- Balance in such accounts at any point of time should not exceed Rs.50,000.
- Total credits in one year should not exceed Rs.1,00,000.
- Total withdrawal and transfers should not exceed Rs.10,000 in a month.
- Foreign remittances cannot be credited to such accounts.
Small accounts remain operational initially for a period of twelve months and thereafter, for a further period of twelve months, if the holder of such an account provides evidence to the bank of having applied for any of the officially valid documents within twelve months of the opening of such account. The bank will review such account after twenty-four months to see if it requires such relaxation.
₹ 100/- to ₹ 10,000/-.
The Minimum amount varies from bank to bank. The amount also varies in a bank on the location of the branch, type of branch and type of account (with or without cheque book).
Not maintaining the minimum balance invites penalties and may also lead to closure of the account by bank.
No Maximum limit
The saving Bank interest for resident in Indian has been de-regulated from 25th October 2011. Earlier, the saving bank interest rates were regulated by RBI and were therefore same in all banks. Now, the Savings Bank Interest Rate varies from bank to bank. Many banks are offering higher interest rates on Saving Bank accounts (upto 7% as against 3.5% earlier)
Previously, the interest was applied at prevailing rate on the lowest balance available in the account between the 10th and the final day of the month. From 1st April 2010 onwards, the savings bank interest is calculated based on the daily balance method. This means that interest is calculated on the closing balance of the account every day, giving maximum benefits to the depositor.
The interest is credited to accounts at half-yearly rests. Some banks have started crediting interest on monthly intervals.
▲Taxability of Interest
Interest upto ₹ 10,000/- for individuals & HUFs is exempt from income tax w.e.f 1st April 2012 ( for Assessment Year 2013-14) under section 80TTA.
With effect from 1st April 2018 (AY 2019-20) Senior Citizens (i.e. Residents aged 60 years or above) are eligible for exemption of interest income from Bank / Post Office deposits (Saving accounts / Time deposits / RD accounts) upto ₹ 50,000/- under Section 80TTB. (They are, however, not eligible for rebate under section 80TTA.)
- A pass book is issued in all Savings Bank Accounts. Some banks send statements of accounts at monthly intervals.
- Local and outstation cheques are accepted for realization. Service charges are recovered for cheques returned unpaid.
- Amount can be withdrawn in cash from banks by cheque or withdrawal forms or from ATMs. Pass books are required for withdrawing cash by a withdrawal form.
- Payment of cheques can be stopped by the holder(s) of the account.
- Immediate credit is usually provided for outstation collections up to Rs 20000/- for accounts that are satisfactorily conducted.
- Banks will pay interest for delay in collection of outstation cheques.
- No operation in the account for 12 / 24 months, makes an account 'Dormant' / 'Inoperative'.
- Banks offer various other facilities/services with these accounts like ATM cards, ATM-cum-Debit cards, Credit cards, Online or Internet banking etc.
- Standing instructions are accepted by banks in these accounts, subject to payment of stipulated charges. Service charges and rules vary from bank to bank.
- Overdraft facility is not available in Saving Bank Accounts.
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Updated : Feb 05, 2019