How To Convert Salary Account To Savings Bank Account?

Written By: Archana L
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    Money plays an integral part in everyone's life. It acts as one of the essential things for survival. Without money, it will be difficult to carry on the typical day to day activities of life. The bank is a financial institution where individuals can deposit or withdraw their money. Banks play a significant role in shaping the financial stability of a country. There are many types of accounts in a Bank. Salary Account is one of them.

    What is a Salary Account?

    A Salary is a form of payment from an employer to an employee, which is usually specified in an employment contract. An account maintained by the employer to pay salary to the employee is known as Salary Account. Most banks in India, have salary accounts of individuals who work in different sectors. It is also known as Zero Balance Account.

    Features of Salary Account

    The following are the features of Salary Account:

    • The employer opens the Salary account on behalf of the employee.
    • The primary purpose is to credit the salary of the employee.
    • No need to maintain a minimum balance in a salary account.
    • No interest will be paid to the salary account.
    • A salary account will be considered as the savings account if the salary is not credited for three consecutive months.

    What is Savings Bank Account?

    Savings Bank Account is a deposit account held at a retail bank which pays interest on the deposited amount, but it cannot be used directly as money in the sense of a medium of exchange. This kind of accounts has to set aside a portion of their liquid assets while earning a monetary return.

    Features of Savings Bank Account

    The following are the features of Savings Bank Account.

    • The account's sole purpose is to encourage savings among the people.
    • Anyone can open a savings bank account.
    • The depositor has to maintain a minimum balance in the account.
    • It earns interest rates on the savings amount.
    • Overdraft facility is not allowed in a savings bank account.
    • It is ideal for a salaried person.

    How To Convert Salary Account To Savings Bank Account?

    An employer will credit the salary to the employee's bank account on a monthly basis. If the salary is not credited to the employees' bank account continuously for more than three months, then the salary account will be treated as savings bank account. The bank will consider the account as savings bank account, and all the rules and regulations which apply to a savings bank account will henceforth apply to such salary accounts which get converted to savings bank account.

    Post Conversion

    Though the agreement of a salary account lies between the bank and the account holder, post-conversion the salary account will no longer offer the individual the same benefits.

    Also Read: Is It Possible To Deposit Cash In Salary Account Of HDFC Bank?

    Things To Remember

    Few things which an account holder has to remember before conversion of Salary to Savings Account are as follows:

    Minimum Balance Requirements 


    Savings accounts usually require the holder to maintain a certain amount known as minimum account balance in the respective savings account. Whenever you are converting a salary account to a savings bank account, it's better to check beforehand the minimum balance requirement for maintaining the account. It is essential because banks levy heavy charges as penalties if the minimum balance is not maintained in a savings bank account. The minimum balance to be maintained in a savings bank account varies across all the banks in India.

    For Example, Private banks like Axis Bank requires the holders to maintain a minimum balance of Rs 10,000. International Banks, like Standard Chartered, requires the account holders to maintain a minimum balance of Rs 25,000.

    Number of Branches and ATM's

    One of the primary factor which influences the choice of bank is accessibility. Before considering to convert salary account to bank account, one has to find out if the bank has accessible branches and ATM network. It is required for the convenience of secure banking especially in times of urgent requirement.

    Also Read: Can I Deposit Cash In Salary Account Of ICICI Bank?

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