BANKING AT YOUR FINGERTIPS
The uncertain benefits of digital bank accounts
For a growing tribe of customers married to their smartphones, banks have a new offering: the digital bank account. It can be opened through an app on your smartphone without the need to visit the bank’s branch. You can transact round the clock and also shop online. Getting started is simple. Complete your Know Your Customer (KYC) formalities using PAN and Aadhaar number and you are on. A lowdown on what digital bank accounts offer.
Minimum balance
Digital bank accounts do not require any minimum balance. DBS Bank’s mobileonly service Digibank and Kotak Mahindra Bank’s ‘811’ digital bank account, which was launched last month, are two examples. However, if your mobile number is not linked to your Aadhaar number, Kotak will open an account but require you to maintain a minimum balance of Rs 10,000.
Charges
Online money transfers (IMPS, NEFT and RTGS) are free. Digital bank accounts also come with a free virtual Visa debit card. Some services, though, might invite a charge, just as for account-holders at any branch. For example, 811 account-holders pay a charge for holding a physical debit card that they can use at merchant outlets. However, the free ATM transactions allowed are the same as for regular accounts.
Transaction limit
Digital accounts may come with restrictions on transactions. For example, NEFT/RTGS through the branch may not be allowed. Cash withdrawal facility at the bank branch may be disallowed. For example, in Kotak’s 811 account, only one cash deposit per month up to Rs 10,000 is allowed. Thereafter, you are charged Rs 3.5 per Rs 1,000, the minimum being Rs 50.
Interest rate
As per the RBI’s mandate, digital bank account-holders enjoy the same rate of interest as customers with the bank’s branches. For instance, Kotak Mahindra Bank’s 811 bank account offers an interest rate of 6 per cent per annum for balance over Rs 1 lakh and up to Rs 5 crore. The rate of interest for balance under Rs 1 lakh is 5 per cent and 5.5 per cent for over Rs 5 crore. Branch customers enjoy the same rates of interest.