What Is A Salary Account And Who Can Open A Salary Account
Salary Accounts are a convenient way for the employer to pay the employee’s monthly salary. It not only simplifies the process for the employer but also provides the benefits of a Salary Account to the employee. Your Salary Account is likely to be the hub of all your financial activities as a working professional. Apart from receiving your salary, you can use this account to transfer funds, make investments, and spend on day-to-day expenses.
If you are a new business owner or just starting out in your career, let’s begin from the start by understanding what a Salary Account is, how to open a Salary Account, its benefits and a few other things you should know about them.
What is a Salary Account?
A Salary Account is a type of Savings Account in which the account holder’s employer deposits a fixed amount of money as ‘salary’ every month.
When you ask what is Salary Account, the simplest answer is that these accounts make the transfer and receipt of a salary easier. Major corporations and companies have agreements with specific banks to open Salary Accounts for all their employees.
Because Salary Accounts are interest-bearing accounts, the account holder earns interest on the account balance. In most cases, interest is calculated on a daily basis, and every quarter it is deposited into the account.
Also Read: Section 17 of Income Tax- Salary, Perquisites and Profits In Lieu of Salary
Benefits of a Salary Account
A Salary Account provides more benefits (when compared to a savings account) because it is more profitable to the bank because it receives a fixed amount of money every month.
The benefits that a Salary Account holder receives may differ from one bank to the next. There may be different types of Salary Accounts available within a single bank, each with its own set of benefits. However, certain common benefits of a Salary Account include no minimum balance, free cheque book, Debit Cards, NetBanking, online fund transfer, Phone Banking, and Demat Account/services, credit Card offers, loan conveniences, utility bill payments, and so on.
The following are some of the most common benefits of a Salary Account:
1. Zero Minimum Balance:
The first and foremost of the benefits of a Salary Account is its zero minimum balance policy. A Salary Account typically can have zero balance. Account-holders do not have to worry about exceeding a certain balance or incurring a penalty. Because this account is allowed zero balance, salaried employees have more flexibility in managing their money.
2. Online Fund Transfers and Phone Banking:
Salary Account holders can easily send and receive funds online from anywhere in the world. This eliminates the requirement for cash withdrawals or cheque deposits when transferring funds. Some banks also provide phone banking services, allowing account holders to manage transactions conveniently from their homes.
3. Personalized Cheque Book and Debit Card:
Employees are also given an ATM card, which they can use to withdraw cash from ATMs and make online/offline debit card payments. Salary Account holders are also given personalized cheque books to use for cheque payments.
4. Simple Loan Access:
Banks also provide Salary Account holders with immediate access to a wide range of loans. Having a Salary Account in the same bank will make the documentation process easier and faster whether you are looking for a personal loan, car loan, or home loan. Even the interest rate for existing account holders is generally more competitive.
5. Investment Services:
A salary bank account allows account holders to easily invest in mutual funds, insurance products, government bonds, and other financial products.
Because the features and benefits of a Salary Account offered by banks can vary significantly, employers should choose a bank carefully to ensure that their employees receive the best benefits. Employers can digitally open Salary Accounts for all their employees without having to visit the bank using a simple online procedure and minimal documentation.
Who can Open a Salary Account?
A company/organization (employer) must partner with a bank to open Salary Accounts for its employees. Every month, the amount due as salary is transferred in bulk into all relevant accounts. If you do not have an account with the bank with which your employer has a relationship, the employer can assist you in opening one.
As a result, a Salary Account cannot be opened by just anyone; it must be a collaboration between a business and a bank.
Eligibility Criteria for Opening a Salary Account
To open your Salary Account, you must first meet certain eligibility requirements. Individuals who are eligible can open a Salary Account by:
- Submitting a duly completed and signed application form along with the
documents required for Salary Account. - Your employment offer letter, employment contract, and introduction letter from your company in the Bank’s format (signed and stamped by an authorized signatory is required) are required.
- A Salary Account is only available if you earn a minimum net monthly salary of Rs. 10,000.
How to Open a Salary Account?
A salary bank account is one of the first benefits that newly hired employees of an organisation receive from their employer.
When you ask how to open a Salary Account, only your employer can open the account for you. Employees must complete an application form, which is then submitted to the bank by the employer in order for the Salary Account to be opened. The account can be opened with no balance in it. The employer deposits the employee’s monthly salary into this bank account.
The following methods are how to open a Salary Account:
- Form online: Fill out the online Salary Account form to begin the application process.
- Contact your Relationship Manager: You can ask your human resources team to get in touch with your Relationship Manager and share relevant information for opening a Salary Account.
- Visit your local branch: Bring your KYC documents and passport-sized photographs to your bank and begin the process by filling out the application form.
Documents Required for Salary Account
A Salary Account is one into which your employer deposits your monthly salary. The following are the documents required for Salary Account
- Application form: A completed application form
- Passport-size photos
- Identification documents/ ID proofs such as Aadhaar cards, passports, driving licences, voter ID cards, and so on.
- Proof of Address/Address verification such as Aadhaar Card, passport, driving licence, voter ID, and so on.
- HR employment confirmation letter/appointment letter or salary slips.
Also Read: Salary Advance Loan: Interest Rates, Features, Uses, Eligibility And How to Apply
Final Word
Salary Accounts are a type of special savings account available to employees. It is one of the most convenient methods for the employer to pay the employee a monthly salary. Having learnt what is Salary Account simplifies things for employers, and now they could help you gain its advantages.
FAQs on Salary Account
Ans: A salary savings account has superior features and benefits. It is a zero-balance account, and there is no minimum balance requirement, even at the time of opening.
Ans. Money kept in a Salary Account is secure. The account can be used for all monthly expenses and savings.
Ans: Salary Accounts are a type of savings account that provides numerous benefits. However, there are some distinguishing features.
Ans: Regular employees of the state government, central government, PSUs, semi-government organisations, defence personnel, and so on, as well as educational institutions, MNCs, and selected (trusted) private limited companies, are all eligible to apply.
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This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
