Savings Bank (SB) accounts are subject to various restrictions concerning cash deposits, withdrawals, and general account usage. These restrictions, guided by the Reserve Bank of India (RBI) and individual bank policies, aim to prevent misuse of funds and ensure financial transparency.
1. Cash Deposit and Withdrawal Limits
Daily Cash Deposit Limit
Typically, a daily cash deposit of up to ₹50,000 is permitted without requiring PAN details. Deposits exceeding ₹50,000 necessitate PAN submission. If a depositor does not have a PAN, they must submit Form 60 or Form 61 instead.
Daily Cash Transaction Limit (Single Day)
The RBI has capped cash deposits at ₹2 lakh per day per account holder. This limit applies per transaction and per individual.
Reporting to Income Tax Authorities
Banks are required to report to the Income Tax Department if the cumulative cash deposits in an account exceed ₹10 lakh in a financial year, even if the amount is spread over multiple transactions or accounts.
2. Other Restrictions on SB Accounts
Minimum Balance Requirements
Banks mandate maintaining a minimum balance in SB accounts. Failure to maintain the required balance can attract non-maintenance charges, which vary based on the bank’s policy and the branch’s location.
Accounts for Minors
- Minors aged 10 years or above can independently open and operate savings accounts with parental or guardian consent.
- Minors below 10 years can have savings accounts operated exclusively by their natural or legal guardians.
- RBI guidelines support these provisions to encourage financial literacy among young account holders.
Savings Purpose Only
SB accounts are intended strictly for personal savings. Business or commercial transactions are not permitted through SB accounts. Certain entities such as associations, trusts, and societies may open SB accounts, provided they meet the bank’s eligibility criteria.
Maintaining Sufficient Balance for Cheques
Customers must maintain adequate funds to honor cheques issued to third parties. If cheques are dishonored due to insufficient funds, the bank may deny the issuance of new cheque books and, at its discretion, may close the account.
Limits on Number of Transactions
Some banks impose a cap on the number of free transactions (both financial and non-financial) per month. Transactions beyond the prescribed limit may incur additional charges.
KYC Compliance
- Know Your Customer (KYC) compliance is mandatory for all bank customers.
- Banks must verify customer identity, assess beneficial ownership of accounts, and understand the nature and purpose of customer relationships.
- KYC helps prevent fraud, money laundering, and ensures adherence to regulatory norms.
Third-Party Transfers
Banks may impose limits on the amount transferable to third-party accounts, depending on the customer’s profile and registration status.
3. Basic Savings Bank Deposit Account (BSBDA)
As per the Government of India notification dated December 16, 2010, BSBDA-Small Accounts are subject to specific conditions:
- Total credits should not exceed ₹1 lakh in a financial year.
- Maximum balance at any point should not exceed ₹50,000.
- Total debits (withdrawals and transfers) should not exceed ₹10,000 per month.
A simplified KYC process is applicable for BSBDAs, typically requiring:
- Proof of identity and address (e.g., Aadhaar Card, Voter ID, PAN Card)
- Recent passport-sized photograph.
Important:
- Holders of a BSBDA are not permitted to open any other savings account in the same bank.
- If a customer already has a savings account, it must be closed within 30 days of opening a BSBDA.
Related Posts:
