Unlocking the Real Potential of a Savings Account

Praveen Kutty, Retail and SME Banking, DCB BankOver 19 years, Praveen has been managing multiple consumer banking businesses

A savings account is the most basic and essential financial tool offered by a bank or post office. A savings account may not be as sophisticated as other financial instruments in the market,but it is the first step to financial inclusion bringing an unbanked individual into the formal banking sector.

A savings account has six potentially useful advantages. These include:

One it is the safest and least risky of all investments.

Two it inculcates the habit of savings, particularly among the young.

Three it protects your money from loss or theft.

Four, it earns interest though the rate may vary from bank to bank.

Five, you can operate the account from anywhere, anytime, either to deposit withdraw or transfer money both physically and electronically.

Six a savings account helps you to build a corpus or an emergency fund that enables you to fulfil your goals at various stages of life.

Thus, a savings account is one of the smartest and most efficient ways to manage your hard earned money. It is also highly liquid as it allows the account holder to withdraw or transfer cash for personal use or for investment in other instruments, such as fixed deposits, bonds, shares and mutual funds. A savings account can be operated with minimum
stipulated balance. It can also be closed easily and the balance can be either withdrawn in cash or transferred to another account or instrument.

Perhaps, the single most important feature of a savings account is that your money which would have other wise been lying idle at home earns interest ranging from 3.25 percent p.a to 7.00 percent p.a. Senior citizens get a slightly higher rate of interest. If you plan carefully, you can over a period of time accumulate a tidy sum of money that can be utilised for travel, children's education or marriage, home improvement, healthcare and other useful purposes.

technology and digital banking has transformed the banking sector to such an extent that most banking services and solutions are now available at the tip of the finger

Most banks offer locker facilities at minimum annual rates for their savings bank account holders. These lockers can be used to store valuables such as jewellery and documents and operated at any time during regular banking hours.

With growing competition, banks are also becoming more inventive. For example, some banks provide cashback facility where if an account is used smartly, you can earn cashback for every point of sale(PoS) transaction or debit card swipe. A few new age banks have incentivised savings, offering higher cashback benefits savings with better average balance. Some banks even go the extra mile and offer free life insurance policy subject to the amount in the fixed deposit and age of the customer.

Many banks provide savings account holders with international debit cards that enable them to make overseas transactions. These debit cards are usually bundled with a slew of Food & Beverage benefits, entertainment and other attractive deals, thus unlocking the true positional of a savings account.

In the past one decade technology and digital banking has transformed the banking sector to such an extent that most banking services and solutions are now available at the tip of the finger, without the need for the account holder to visit the bank. From user friendly apps to 24x7 customer service, banking operations are literally a mouse click away. Young Indians and especially millennials, have been quick to adopt technology and make smart financial choices.

As evident from the Government of India's continued thrust on financial inclusion, through its Jan Dhan Yojana scheme, a savings bank account is the first important step to a lifelong savings habit and financial independence.
Praveen Kutty is Head-Retail and SME Banking, DCB Bank.)