Banks offer online savings accounts with discounts on locker rentals, brokerage fees and other benefits. An online savings account also offers a virtual debit card.
A savings account allows individuals to keep their savings safe and earn interest on idle funds. Recently, online savings accounts have become a convenient way for people to manage their finances. With a stable internet connection and a laptop or smartphone, one can do various financial transactions, like paying bills and purchasing online.
Several banks offer online saving accounts, including IndusInd Bank, RBL Bank, IDFC First Bank, and Yes Bank. Large banks like SBI, HDFC Bank and ICICI Bank also provide the facility but with a lower rate of returns. For instance, when RBL promises 4.25 per cent per annum, SBI offers 2.70 per cent interest.
Here are some advantages of online savings accounts over regular savings accounts.
Easy Account Opening
To open an offline savings account, one must visit the bank, fill out the application form, and physically submit all the necessary documents. However, the process for online savings accounts is much easier and can be done from anywhere through a smartphone or laptop. Online savings accounts only require uploading a soft copy of necessary documents such as PAN or Aadhaar cards.
Once the process is completed, the bank will mail a welcoming kit containing a debit card, ATM PIN, and account number.
For instance, when it comes to RBL Bank, any Indian, having his mobile number linked to his valid Aadhaar and holding a PAN, can open an online savings account.
An OTP will be sent to your mobile number linked with your Aadhaar number for proceeding ahead with the online deposit account opening. If you already have OTP based account with any other bank in India, then you cannot open another online account. The aggregate balance in your accounts (including fixed deposits) should be within Rs.1 lakh for accounts opened with Aadhar OTP.
The minimum balance requirement is Rs. 5,000 for RBL online savings account. Such individuals should also not have an existing savings account or fixed deposits with RBL Bank. Choosing a Zero Balance digital savings account is the best option if you are not interested in maintaining a minimum balance. Several neo-banks offer zero balance options.
KYC Process
The KYC process is also an essential step in opening a savings account, and it involves verifying the information on the application form with the documents submitted. While this process is mandatory for offline and online accounts, some banks like SBI Bank or IDFC FIRST Bank offer video KYC for convenience. “When a savings account is opened online, customers are sent a user-specific video KYC link, and the bank’s representative completes the KYC on the video call. The bank has strict controls in place to ensure the security of customer data, in line with regulations,” IDFC FIRST Bank says.
Virtual Debit Card
When opening a savings account offline, a physical ATM-cum-debit card is given. However, there is a risk of losing these cards. Online savings accounts offer a solution to this problem by providing a free virtual debit card in addition to a physical ATM-cum-debit card. The virtual card is accessible through the mobile banking app.
You can use your Virtual Debit Card only for online transactions like shopping, travel, recharge, transferring funds etc. They cannot be used at retail outlets, just like how you swipe your physical debit card. The physical debit card can be used to withdraw cash at any ATM. Upon the first usage of your physical debit card, many banks will block your virtual debit card. Neo Banks like Kotak 811 offers lifetime free credit card, also subject to eligibility.
Other Offers
Many banks also offer benefits with a digital savings account. For instance, YES Bank offers a 10 per cent discount on locker rental or Demat AMC for the first year of account opening. It also provides zero brokerage facility on trading up to Rs. five lakh by YES Securities Ltd.
Overall, while offline and online savings accounts function similarly, online accounts offer convenience, accessibility, and more efficient processes.