Saving Account

Saving Account Retail Banking Chapter 05

Saving AccountIntroductionWho can Open Account & Procedure for ItOperationCheque Book/ Passbook and StatementsInterestStopping Operation, Dormant A/c’s & ChargesNominationDeceased Depositor; TransferClosing of AccountProhibitions & ExceptionsOther Organisations


IntroductionThis chapter describes all features about saving account. The scope

of same can be summarized in following chart.Saving Account

Definition

Who can be Open & Procedure for it

It’s Operation

Cheque book, pass book/statement,interest

Prohibitions

Other Organizations

Stopping Operations

Dormant Accounts

Charges, Nomination

Deceased Depositor

Transfer/ Closing an Account


Introduction

A saving account have been defined as, “a deposit accountwhich is subject to the restrictions as to the number ofwithdrawals as also the amount of withdrawals permitted by the

bank during any specified period.

Saving account is meant to encourage savings and is

focused on individuals.


Who can Open Account & Procedure for ItAn individual open saving accounts with conditions and

procedure.Condition:

1.Balance not exceeding Rs.50,000/- of all accounts2.Advances not exceeding Rs.1,00,000/-3.It cant be opened in the name of Government departmentexcept some specified institutions

Procedure:

1.Introduction from another account holder subject to fullKYC procedure

2.Photograph of the person and his address3.Customer should be advices about keeping minimum balance


Who can Open Account & Procedure for It

Exceptions :In times of calamities RBI permitted to open A/cwith

1. Introduction from another account holder

2. Against electrical bill, document of identity

3. Introduction by two neighbors


OperationThe operation of saving account can be summarized as below:

1. Once account is opened customer can deposit/withdraw cash2. RBI stated that no bank should refuse an acknowledgmentif the deposit is made at the counter.

3. Customer can deposit at ATM’s , but withoutacknowledgment .

4. There is no restriction on depositing amount in savingaccount.

5. The third party cheques may not be deposited in this.6. The restriction on number of withdrawals on S.B. A/c.

The bank transaction tax is also not payable in case of savingsaccounts.


Cheque Book/ Passbook and Statements

When a cheque book is exhausted, customer should fill acheque requisition slip in prescribed format and handover to thebank. Generally, bank sends cheque book by courier. Banks eithergives customer a passbook or monthly statement. The R.B.I. hasstated that the entries in statements/pass books should not be

inscrutable and that brief, intelligible particulars must be entered.


InterestInterest is paid on these accounts as they are intended to

encourage savings. The rate is 3.5% p.a. The interest is normallypaid at quarterly or longer rests. The calculation of interest is thelowest balance in the saving account between the 10th and at theend of the month. The same is credited only if it is one rupee ormore. An additional interest of 1% is also payable to retiredemployee (but not resigned) and the spouse of a retired (deceased)employee. If the amount of interest is above Rs.10,000/- tax mustbe deducted at source. If depositor submit form 15G or 15H or acertificate u/s 197(1) of Income Tax Act, 1961; then the tax neednot to be deducted. The Regional Rural Banks/ Local are banksmay allow additional interest ½ % p.a. on savings deposits.


Stopping Operation, Dormant A/c’s &Charges

The operation of saving accounts will be stopped infollowing cases:1.On receipt of death of a customer2.On receipt of notice of insanity of customer3.On being advised that the customer is insolvent

If there is no customer initiated transaction in the accountfor two years the account will be called as dormant account. Somebanks designate account is dormant if no transaction for sixmonths. These accounts are subject to greater check. The chargesfor not maintaining minimum average quarterly balance are calledservice charges. Customer must be advised of any change in thecharges.


Nomination

According to The Banking Laws (Amendment) Act, 1983inserted section 45ZA to permit the facility of nomination.Nomination in regard to joint account can be made by all thedepositor together and nominate a person to whom in the event ofdeath the amount in the joint account may be paid. Thenomination can be made in favour of individuals only and bevaried or cancelled at any time. On making payment to thenominee the bank is fully discharged from its liability regardingdeposit.


Deceased Depositor; Transfer

When a depositor has utilised facility of nomination oraccount is opened with survivor clause, payment of balance in theaccount to nominee or survivor is valid if;

1.Bank has exercise due care in establishing identity of survivor

2.There is no court order restraining bank for payment etc.

Where deceased depositor has not made any nomination;banks are expected to follow simple procedure for repayment tolegal heirs without inconveniencing them.


Deceased Depositor; Transfer

Banks are expected to settle claims and release thepayment within 15 days from receiving claim along withdocuments such as proof of death of depositor, proof ofidentification of nominee, PAN card etc.

Depositor of senior citizen savings schemes may transferthe account from one deposit office to another on payment of atransfer fee which is Rs.5 per lakh for first transfer and Rs.10 perlakh for second transfer. The fee received is to be credited togovernment.


Closing of Account

For closing of account all the account holders should givetheir intent to close the account by submitting any unused chequesto the bank. The bank may also request customer to close hisaccount if;

a.The customer is no longer a desirable person

b.The account has not been operated for a long time

If the customer can not be traced, the balance is placed inan unclaimed deposit account.


Prohibitions & ExceptionsFollowing are some of the prohibitions:

1. No bank pay a rate of interest higher than stipulated by RBI from timeto time.

2. No bank should pay brokerage or gifts to agents/others for deposit placedat the bank as well as using outsiders for collection of deposits.

3. The banks should not launch price/lottery or other schemes to attractdeposits.

However;

1. Commission may be paid to agents employed to collect door to doordeposits under a special scheme.

2. Incentives may be granted to staff members as approved by RBI

3. The gift may be given but the cost of such gifts should be up to Rs.250/-


Other OrganisationsFollowing organisations can have saving account at bank:

1.Primary cooperative credit society financed by bank2.Khadi & Village Industries Boards3.Agricultural Produce Market Committees4.Societies registered under the societies Registration Act, 18605.Companies governed by Companies Act, 1956 u/s 25 of the Actprovided they should not add the word “Limited” or the words“Private Ltd.”6.Self help groups engaged in promoting saving habits amongtheir member7.Farmers clubs-Vikas Volunteer Vahini

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Saving Account

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