Savings Bank account (SB Account) is a form of demand deposit account, opened mainly for the purpose of saving and not for any business purpose. Banks are permitted to credit the interest to the account on a regular basis, with regard to the savings bank accounts frozen by the enforcement authorities.The acceptance of interest free deposits in Savings Bank is prohibited irrespective of caste, creed or religion of the depositor. Banks stipulate certain minimum balance to be maintained in savings bank accounts. For SB accounts operated with cheque book facility, normally a higher minimum balance is stipulated by banks, as compared to accounts operated without cheque book facility. There will be ceiling on the total number of withdrawals permitted in SB accounts, during specific time periods. If number of withdrawals are more than a ceiling limits banks would normally charge for excess debit transactions. Banks sometime allow overdrawing in SB accounts, to meet contingencies on exceptional cases and do not give overdraft facility in a saving account as a rule.
Requirements for opening SB Account in a bank:-
The procedure for opening of new SB Account is almost uniform in all the banks across the country. The account will be opened after verification of identity proof and address proof of the person or natural person/s behind an entity. The verification of identity proof and address proof is compulsory for all the new accounts, so as to comply KYC/AMC norms. The photographs of depositors, Introduction of Account, Signature on account opening forms and specimen signature sheet are obtained and there after initial remittance are accepted to open an account.
1. Customer’s Record of profile:
The bank while opening a account will verify any of the ‘Know Your Customer’ related officially valid Documents (OVDs) which contains proof of identity and proof of address .
- Aadhar card
- Driving licence,
- Voters Id card,
- PAN card
- NREGA Job card.
Utility bills, ration cards are no more treated as valid documents
In the earlier definition “any other document as may be required by the banking company or financial institution or intermediary” was considered as the valid document. But this line has now been replaced with “any document notified by the central government”. Therefore, new dispensation changes the scope for accepting utility bills; ration cards etc. for the opening bank account.
However,with a view to helping the common man in opening bank accounts, RBI has recently made some changes in KYC process.
- If officially valid document submitted by the customer contains proof of identity and proof of address then that itself is sufficient document for proof of identity and proof of address. Earlier customers were required to submit two separate documents viz. one for proof of identity and the other for proof of address.
- Now it is not a prerequisite for a customer to submit the proof of current address for opening bank account or while undergoing periodic updation. If the customer does not have the proof of current address which is different from permanent address available on the proof of address, a simple declaration by the customer about his/her current address for communication would be sufficient.
- While transferring accounts from one branch to another of the same bank, no separate KYC documentation is required, if it is already done by one of the branches of the bank. A simple declaration by the customer about her/his current address for communication would be sufficient.
Relaxation regarding officially valid documents (OVDs)
If a person is categorised as ‘low risk’ by the banks, but he/she does not have any of the ‘officially valid documents’ mentioned above. In such cases banks may still open his/her account by obtaining any one of the following documents:
(a.) identity card with applicant’s photograph issued by Central/State Government Departments, Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks, and Public Financial Institutions;
(b.) The letter issued by a gazetted officer, with a duly attested photograph of the person.
2. Photographs of depositors
While opening any type of accounts viz. Savings Bank, Current Accounts, Term Deposits, Recurring Deposits, or loan accounts, all the depositors/account holders have to submit two copies of latest photographs for the bank’s record.
3. Introduction of Account:
All new accounts to be opened in a bank should be properly introduced to the satisfaction of the bank. The accounts are introduced typically from any one of existing account holders who have been maintaining a satisfactorily conducted account for a period of at least six months. The account can be introduced by a respectable member of the public with acceptable, bonafide, and well known to the bank. Upon opening an account it is customary to send a letter to introducer’s address by the bank, thanking him/her for introducing the depositor. This letter would facilitate banker for cross verification, to confirm that he or she has actually introduced the new customer to the Bank. Banks normally send welcome letters to new customers, which will serve the purpose of cross examine the correctness of address furnished by the new customer. Bankers may at their discretion open an account without introduction, if they are satisfied bonafide of the applicant and perceive the account to be opened is of the low-risk category.
4. Signature on account opening forms and specimen signature sheet :
In the account opening form as well as in specimen signature sheet the signature of all the partners/directors/trustees shall sign at appropriate spaces provided for signature/s. The signature(s) must be uniform and well-formed and they shall not differ on cheques and letters issued at all time.
5. Initial Remittance in Cash
The new accounts are normally opened with initial remittance in cash, not by cheques. It is because collecting cheques for a person before opening his account amounts to bank collected a cheque for a non-customer. Banks are not protected under section 131 of Negotiable Instruments act if they collect the cheque for non-customers. Hence there exists an element of risk for banks, in opening an account by cheque, when the cheque which is collected happens to be fraudulent or stolen instrument. However, there is no bar for opening the accounts with the proceeds of bank draft payable to the applicant or his self-cheque drawn on other banks, provided his /her introduction and identification is acceptable to the Bank beyond any doubts.