The vital role that a savings account has in our financial lives requires us to select it with utmost care and attention. However, with so many banks promising to offer great services, it can become overwhelming to choose the right one.
If you’re looking for a bank to open a new account, then you will come across two types of banks - commercial banks and small finance banks. Which one should you choose?
Small Finance Banks or Commercial Banks?
While commercial banks have been there for decades, small finance banks have been the new entrants in the banking industry, with RBI licensing 10 banks in 2015 after vetting them against stringent regulations. Initially introduced to expand the reach of banking to the rural sector and to those who lie in the economically weaker section, these banks have excelled at offering great services to all the strata of the society. Since both these types of banks are regulated by RBI, licensed only after passing strict regulations and registered under the Deposit Insurance and Credit Guarantee Corporation (DICGC), they are both safe, offering very similar services such as savings account, current account, loans, etc.
Let’s look at some of the top commercial and small finance banks.
Top Commercial Banks
1. ICICI Bank
2. HDFC Bank
3. State Bank of India
4. Axis Bank
5. Kotak Mahindra Bank
Top Small Finance Banks
2. Jana Small Finance Bank
3. Ujjivan Small Finance Bank
4. Capital Small Finance Bank
5. Equitas Small Finance Bank
When you’re opening a new account, don’t limit yourself to one type of bank. Instead, look at various factors before choosing.
Here are 4 factors that you should consider-
1. Interest Rate
One of the most important factors when selecting a savings account is the interest rate. As compared to commercial banks, small finance banks are known to offer higher interest rates on their savings accounts. For instance, AU Small Finance Bank offers an interest rate
of up to 7.45%, which is much higher than the average interest rate of 4-5% offered by most commercial banks.
2. Type of Account
To better meet the banking needs of different customers, banks now offer various types of savings accounts
such as salary accounts, senior citizen accounts, NRI accounts, women accounts, and more apart from the regular savings account. These custom accounts come with a host of additional features and benefits as compared to a standard account. Choose the right type of account based on your needs.
3. Minimum Balance
Check the minimum balance requirements of the savings account you select. If your balance falls below this limit, then you’ll be levied a small charge. While zero-balance accounts are easier to manage, accounts with minimum balance requirements usually come with added perks. Choose the right one according to your needs.
4. Availability of ATMs and Online Banking Facility
Check the total number of ATMs the bank has. Also, check the locations of their ATMs when searching for the best savings account. Moreover, also check the limit on the number of free non-bank ATM withdrawals to ensure you have the flexibility of withdrawing your money without paying a charge. Similarly, the bank should also have a user-friendly and secure online banking portal. A mobile banking app can be an excellent add-on facility.
Selecting the Right Savings Bank Account
A savings account is an essential component of our financial lives. As a result, it is crucial to select one that best meets our financial requirements and offers a host of additional features and benefits. If you plan to open a new savings account
, then make a careful evaluation of banks based on the factors listed in this post.