Savings Account

A savings account in a bank allows you to deposit and withdraw money any time you want. The money is not only kept safe in a bank, you also earn interest on it. To open a savings account, all you need to do is approach your local bank with proof of identity (such as your PAN card, ration card, passport, voter ID card, etc.) and proof of residence (such as your electricity or telephone bill, your ration card, etc.) and two photographs. After filling in a form and signing at the right places, you will receive a number - which is called your “savings bank account number” and you have successfully opened a savings account.

Depositing money

Any time you would like to keep more money with the bank, or deposit money into your account –- it gets added to your account. You can deposit the money by filling in something called a “deposit slip”. It asks for information like your name, the date, your account number, the amount of money that you are depositing, etc. The first time you fill in a deposit slip, you can ask a bank employee to help you. They will be happy to show you how it is to be done.

Withdrawing money

Naturally, when you take money out of your account, or withdraw money from your account - it gets deducted from your account balance. To withdraw money from your account, you need to fill in a “Withdrawal slip”. Like a Deposit slip, a Withdrawal slip also asks for similar information – your name, account number, amount that you wish to withdraw, date, etc.

Using cheques

You can also deposit and withdraw money out of your account using cheques. The benefit of using a cheque to pay or receive money is that if the amount is large, you don’t have to worry about it getting lost or robbed while it changes hands. Even if you lose the cheque, your money will be safe if you have taken care to write the cheque in the correct manner. Following is the correct way to deposit money through a cheque:

Depositing money using a cheque

When someone gives you a cheque instead of cash, it could be from any other bank. You need to make sure that

1. Your name is written on the top most line
2. The date is recent (not more than 90 days prior to today)
3. The amount in words and amount in figures are the same
4. There is a signature at the bottom right hand corner of the cheque
5. The cheque has two diagonal lines across the top left corner with “A/C Payee” written in it. The diagonal lines ensure that the bank will deposit the money only in your account.

The amount on this cheque can be credited to your account once you fill in a deposit. The first time you deposit a cheque, you can ask a bank employee to help you fill in the deposit slip. It may take up to three working days for the money to reach your account after you deposit a cheque.

Withdrawing money through cheques

When you have a certain minimum balance in your account, your bank will offer you a cheque-book facility. This means that you will receive a booklet with 10-20 blank cheques in it. You can use these cheques to pay other people money from your bank account. You need to make sure that you fill in the following details:

1. The name of the person you wish to pay is written on the top most line
2. The date is filled in the top right hand corner of the cheque
3. The amount in words and amount in figures is the same
4. Your signature is at the bottom right hand corner of the cheque
5. You cross the top left hand corner of the cheque with two diagonal lines and write “A/C Payee” between those two lines. These double lines ensure that your bank will take money from your account and deposit it only in the account of the person to whom you wish to pay the money.

Here again, it may take up to three working days for the money to be deducted from your account after you issue (pay out) a cheque.

Pass-book: Keeping track of your money

When you open a savings account, the bank will give you a pass book to track your deposits and withdrawals. So, for example, let’s say you have a balance of Rs. 5,300 at the beginning of January 2011 and you deposit Rs. 500 on the 4th of the month, it will appear in the credit column of your passbook. Then, let’s say you withdraw Rs. 200 from your account on the 20th of the month. This will appear in the debit column of your pass book.
Suppose on the 20th of the month you deposit a cheque payment of Rs. 8,000 which has come from your client “Agrofoods”. Also suppose that you issue a cheque for Rs. 4,000 to your supplier, Natwarlal Bhede, on the 25th of the month. Both these transactions will also show in your passbook on the day that they impact your balance.
Assuming no other transactions, your balance at the end of the month will be Rs. 9,600

Sample of a Pass-book

Date	Particulars	Cheque Number	Credit	Debit	Balance
			(Amount Deposited)	(Amount Withdrawn)
1/1/2011					5,300
4/1/2011	Cash deposit		500		5,800
20/01/2011	Cash withdrawal			200	5,600
23/01/2011	Agrofoods	367241	8,000		13,600
28/01/2011	Natwarlal Bhede	901454		4,000	9,600

Debit cards

If you open a savings bank account and are able to sign (as against using a thumb print), most banks give you the option of using a debit card. A debit card allows you to withdraw money from their Automated Teller Machines (ATM) any time of the night or day, all through the year. As a result, you can avoid making a trip to a bank branch during banking hours. To withdraw money from an ATM, you just need to insert your debit card and type in a unique password. The maximum amount that you can withdrawn per day is set by the bank. You can also use the ATM to carry out other financial and non-financial transactions such as finding out your bank balance, depositing money, getting a statement, etc. without visiting the bank branch.

You can also use a debit card while shopping at stores such as Apna Bazaar, Sarkari Bhandar and even some privately owned shops. When you give your debit card to the cashier at such stores, he will run it through a machine, which is linked with your bank’s computers. The shopkeeper types in the amount of your purchase. The bank computer debits (or subtracts) the amount of the purchase directly from your account balance. The machine then prints out a receipt which you have to sign. The shopkeeper keeps the signed receipt and hands you a copy for your record. For your safety, the bank sets limits on the amount that you can pay through your debit card per day.

Debit cards are useful as they allow you to access your account details and money in your account any time that is convenient to you. They also protect you from the risks involved with carrying large amounts of money while shopping.

Cautions about using debit cards and checks

• You are responsible for the transactions you make and you must ensure that you have the funds to cover all expenses.
• To avoid becoming overdrawn on your account, you will need to keep track of all withdrawals and deposits. You can do this by using your online banking service or your check register.
• If you don’t keep track of your transactions, you could easily write a check for an amount that is more than you have in your account. If this happens, your check will not clear and you could incur costly overdraft fees from your bank.
• Things you buy may cost more than you expect, due to accumulated overdraft fees.
• Using your debit card will not keep you from becoming overdrawn on your account.

Features of a bank account

• Return: Fixed at 4% per annum. This rate can change from time to time.
• Risk: Minimum risk. Your money is safe in a bank account. Even if somehow the bank gets robbed, you will still get your money as the Government guarantees investments in banks up to Rs. 1 lakh. Plus, banks also insure themselves.
• Liquidity*: Very liquid. You can withdraw any amount, up to the total balance available in your account, any time during banking hours.
• Tenure: No fixed tenure. You can keep your money in the account as long as you wish. This could be for years together or you could withdraw it the day after you deposit it.
• Taxes: The money that you receive as interest on your balance in the savings bank account gets added to your other taxable income and is taxed at the rate of tax applicable to you.

Now pay Rs 20 for more than 3 ATM uses at SBI, HDFC Bank, Axis

Banking consumers will have to pay more if they are prolific with ATM transactions as largest lender SBI and its private sector peers HDFC Bank snd Axis Bank have capped the free-usage at three in six metros.

The capping and additional fees on excess usage come following the recent Reserve Bank circular allowing banks to limit the number of free ATM transactions to five three in the largest six cities and two elsewhere a month.

Under the new norms, which have been accepted by the RBI, a customer can do just three free ATM transactions in the six largest cities at own-bank machines and two elsewhere. The new limits and rates by SBI, HDFC Bank and Axis will be applicable to transactions done in Mumbai, New Delhi, Chennai, Kolkata, Bangalore and Hyderabad. The SBI was the first one to cap ATM transactions at three and impose fees of Rs 20 per subsequent transaction. Since November 1, the new norms are effective at SBI. However, the bank has allowed more free ATM transactions to those who avoid visiting its branches, and unlimited transactions for those with large balances.

The second and the third largest private sector players HDFC Bank and Axis Bank have also followed suit and said effective December 1, they too will be charging Rs 20 per transaction above five a month. While HDFC Bank will charge Rs 20 for cash withdrawals and Rs 8.5 (excluding taxes) for balance enquiry, mini statement, etc, Axis Bank will also charge Rs 20 and taxes for financial transactions and Rs 9.5 for non-financial ones.

Axis Bank, which with a little over 12,000 ATMs is the no. 2 player after SBI, however, is offering 10 free transactions for its Prime Plus savings account and Prime salary account holders. But both these account-holders need to have a minimum opening balance of Rs 1 lakh and they can have first five free transactions at non-home bank ATMs.

Source : The Economic Times