Saving Account

Savings accounts are accounts maintained by retail financial institutions that pay interest but cannot be used directly as money in the narrow sense of a medium of exchange (for example, by writing a check). These accounts let customers set aside a portion of their liquid assets while earning a monetary return. For the bank, money in a savings account may not be callable immediately and in some jurisdictions, does not incur a reserve requirement, freeing up cash from the bank's vault to be lent out with interest.

What is Saving Account?

A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate. Depending on the specific type of savings account, the account holder may not be able to write checks from the account (without incurring extra fees or expenses) and the account is likely to have a limited number of free transfers/transactions. Savings account funds are considered one of the most liquid investments outside of demand accounts and cash. In contrast to savings accounts, checking accounts allow you to write checks and use electronic debit to access your funds inside the account. Savings accounts are generally for money that you don't intend to use for daily expenses. To open a savings account, simply go down to your local bank with proper identification and ask to open an account


The main features of saving account in bank are as follows:

  • The main objective of saving account is to promote savings.
  • There is no restriction on the number and amount of deposits. However, in India, mandatory PAN (Permanent Account Number) details are required to be furnished for doing cash transactions exceeding र50,000.
  • Withdrawals are allowed subject to certain restrictions.
  • The money can be withdrawn either by cheque or withdrawal slip of the respective bank.
  • The rate of interest payable is very nominal on saving accounts. At present it is between 4% to 6% p.a in India.
  • Saving account is of continuing nature. There is no maximum period of holding.
  • A minimum amount has to be kept on saving account to keep it functioning.
  • No loan facility is provided against saving account.
  • Electronic clearing System (ECS) or E-Banking are available to pay electricity bill, telephone bill and other routine household expenses.
  • Generally, equated monthly installments (EMI) for housing loan, personal loan, car loan, etc., are paid (routed) through saving bank account.

The advantages of saving account are as follows:

  • Saving account encourages savings habit among salary earners and others who have fixed income.
  • It enables the depositor to earn income by way of saving bank interest.
  • Saving account helps the depositor to make payment by way of issuing cheques.
  • It shows income of a salaried and other person earned during the year.
  • Saving account passbook acts as an identity and residential proof of the account holder.
  • It provides a facility such as Electronic fund transfer (EFT) to other people's accounts.
  • It helps to do online shopping via facility like internet banking.
  • It aids to keep records of all online transactions carried on by the account holder.
  • It provides immediate funds as and when required through ATM.
  • The bank offers number of services to the saving account holders.

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