Wednesday, December 24, 2008

Salary Account

Salary accounts usually offer zero balance, free demand drafts, free international debit cards and a lot more and these are not applicable on regular savings accounts. But when you leave (the company) you leave its perks behind. A lot of people don't know this and this results in some unpleasant surprises.

One such troubled salary account holder, Geeta Rao, reveals, "I had a salary account in a leading private bank. When I left the company, I stopped using the account but did not close it either. Two whole years later, when I deposited a cheque in that account, a hefty fine was deducted for not maintaining the Rs 5,000 minimum balance. So my cheque amount of Rs 6,500 was reduced to a mere Rs 500. Apparently, my salary account had been converted into a savings without my knowledge."

So if you have a salary account, then this is what you should look out for

  • The Fine Print: I personally don't know anyone who reads the fine print on application forms. Yet, this small and common negligence is a big mistake. The account opening form (for salary account) of ICICI Bank clearly states that if no salary gets credited into your account for six months, the bank will convert your account into a savings account. The bank is not obliged to inform you about this.

    HDFC Bank also maintains that since the agreement of salary account is between the employer and the bank they needn't inform the employee.

    Not all banks have this approach. Says Sanjay Silas, VP – retail banking, UTI Bank, "The bank informs the client and the corporate in case the payroll special scheme is discontinued due to non credit of salaries."

  • The Charges: Here is a look at some of the charges (approximate):

    Non maintenance of minimum balance Rs 500 to Rs 750 per quarter

    Debit card fees Rs 99 per annum

    Cash transactions at branch if minimum balance is not maintained Rs 60 per transaction after first 9 months

    Non IVR calls to customer care if minimum balance is not maintained Rs 50 per call

    Cheque books if minimum balance is not maintained Rs 5 per cheque leaf

A low balance account that is continuously hit with charges may run to a negative. That's what happened to Geeta. When she deposited the cheque, the negative balance ate into her cheque amount.


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