The need for banking relationship for someone with a portfolio to manage needs no emphasis. Banking is an integral part of an individual's life even if the individual does not have portfolio to manage. The advent of technology has brought a sea change in the way services are offered by a bank. This is reflected in the portfolio of products offered by a bank and also in the multiplicity of delivery channels through which the products are offered. Considering the plethora of products offered by a bank and their features, the selection of an account has become more difficult for a customer. In the earlier scenario, customers had to accept whatever bank offered, as there was no room for choice. Though the scenario has undergone a substantial change, majority of the customers still take what a bank offers since it is difficult to go through the multiplicity of products and features and analyze the same. However, it is worthwhile to spend sometime to understand the features and the underlying costs. There are of course some new risks, which also need to be understood. Let us try to understand the features that form part of a product and the attendant advantages or disadvantages. The discussion will be generic in nature so that it helps the reader to understand the products offered by any bank, instead of discussing specific products of select banks.
Considering that an individual needs an operating account to manage his/her funds, it is natural that he/she should open a SB account and not a current account, as current guidelines prescribe payment of interest on the balances maintained in the Savinigs Bank account. The current interest rate is 3.5% and the method of calculation of interest is as under:
The minimum balance maintained between 10th of a month and end of the month is deemed as the balance maintained during the month for the purpose of payment of interest. Thus, if a minimum balance of Rs. 10,000 is maintained between June 10, 2004 and June 30, 2004 interest will be paid on Rs. 10,000 for one month even if the balance in the account is zero during the period June 1, 2004 and June 09, 2004. Hence, one should plan the cash flows so that maximum possible balance is maintained from 10th onwards.
|
