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Savings Account - Maximizing Returns

Note - This is in context to banking channels in India.

Is there a way to maximise earnings from Savings Account?

This is my first post, so I will start with a basic idea – Savings account. It is usually the first fundamental instrument that I am sure most of us would already be having. Now, I can guess most of us would be having an account with some major PSB (Public Sector Bank) like SBI or some of other major private banks like ICICI, HDFC etc.

During my initial research about a year back, I thought why can’t we have our primary savings account in any other nationalised bank which offers a lot more benefits with a lot less cost? I shortlisted a few tier-2 private banks, researched and finally went ahead with RBL (Ratnakar Bank Limited).

Benefits – Depending on the type of account. Following are some of the benefits for an account with minimum balance of Rs 25000.

  1. Interest Rates between 5.5% to 6.5% depending on the account balance.
  2. Free NEFT, Free Cheque Books, Free Debit Card and many other ancillary banking services
  3. Free doorstep banking few times a month.
  4. Free Demand Drafts.
  5. Access to most of mainline accessibility features like NetBanking, Mobile App etc.
  6. Freedom to choose your own Account number.

Drawbacks – not major ones but depending on your location and how you perceive it

  1. It’s not present pan India. Only available in 16 states and major cities.
  2. Not a very exhaustive list of branches – But come on, how many times have we really visited branch in recent times?
  3. Safety of Bank? – It is the oldest private bank in India. Wonder how many of us knew about it. It’s publicly traded on Indian stock exchanges like most of the other major private banks. Also, with so much of banking regulations, in my opinion – RBL is not something which will close down overnight!

Here is the benefits comparison with actual numbers:

 

There is clearly an yearly interest benefit of Rs 2,068 when we have an avg account balance of Rs 1 Lac. Other banks would have changed their interest rates that I am not aware of but there is usually a 2% interest gap between RBL and some other major private banks.

This earnings potential is without even taking into consideration the costs involved for other large private banks’ misc. services.

I hope you would find this information useful and helpful if you ever plan to switch banks. There may be quite a few tier 2 banks similar to the above that I have experienced having more benefits than the big names. Feel free to leave your comments / error / suggestions / questions. I will be happy to answer as much as I can.

P.S.– The above information is solely based on my experience and I do have an account with RBL. The info presented above may have changed. So please do look at respective Bank’s websites before taking any decisions. This is not an advise to switch your bank – but just some food for thought to look for Tier 2 banks if you plan to ever do so. 

Thanks for reading!

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Nishith Chandra

Nishith Chandra

Lead Consultant

Infosys

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Bangalore

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