Savings Bank (SB) account

A Savings Bank account, or SB account, is the everyday bank account most people already think of when they hear the word "savings." It is where a salary or other income sits until it is spent, saved further, or invested elsewhere.

The workbook lists its key features plainly: low interest, but highly liquid. It facilitates a payment mechanism through ATMs, and — a detail worth remembering — there is no Tax Deducted at Source on interest earned in an SB account, although that interest remains taxable in the depositor's hands.

An SB account can be opened alone or jointly, and minors of any age can open one through a guardian; minors above 10 years can even access internet banking, an ATM or debit card, and a chequebook.

The workbook lists the SB account as one entry in its "Types of Bank Deposit and their Key Features" table, alongside the Basic Savings Bank Deposit Account (BSBDA), Fixed Deposit, Recurring Deposit and the Special Bank Term Deposit Scheme — and it is worth reading against BSBDA specifically, because the two are easy to confuse.

An ordinary SB account, as the workbook describes it, carries no restriction on opening another savings account elsewhere, and it does not require a zero opening balance. The BSBDA, by contrast, is a distinct product introduced specifically for financial inclusion: it needs no initial deposit, and a BSBDA holder is not eligible to open any other savings bank deposit account in that same bank. An SB account carries no such restriction.

The workbook gives no minimum balance figure or specific interest rate for an ordinary SB account in this booklet — only that the interest is low relative to other deposit types, and that it is fully liquid.

The minimum balance figure below is illustrative; the workbook gives no such figure for an ordinary SB account.

Ritu opens an ordinary Savings Bank account, keeping a minimum balance of around Rs 2,500 that her particular bank asks for, and earns a low rate of interest on it. She can withdraw or transfer money from it the same day, whenever she needs to — the liquidity the workbook describes.

Her domestic help, Savitri, instead opens a Basic Savings Bank Deposit Account at the same bank, needing no opening deposit and no minimum balance at all. Because Savitri's account is a BSBDA, the workbook's rule means she cannot also open an ordinary SB account at that same bank — she would have to use the BSBDA itself, or open a second account at a different bank entirely.

Ritu, holding the ordinary SB account, faces no such restriction. She later opens a second, joint SB account with her husband at the same bank without any trouble.

Chapter 4 (Savings Related Products) lists the Savings Bank (SB) Account first in its table of bank deposit types, immediately before the Basic Savings Bank Deposit Account. Expect a question distinguishing the two: the one-account-per-bank restriction belongs to BSBDA, not to the ordinary SB account.

• The one-savings-account-per-bank restriction belongs to BSBDA, not to an ordinary SB account. An SB account holder can open further accounts at the same bank.
• No TDS on SB account interest, but the interest is still taxable in the depositor's hands — TDS-free is not the same as tax-free.
• BSBDA is a bank account; BSDA is a demat account. Do not confuse either of these with the SB account.
• Minors above 10 years can access internet banking, ATM/debit cards and chequebook facilities on their own savings account, per the workbook.