Introduction
Salary accounts are an essential financial tool for salaried professionals, offering a convenient and secure means to receive monthly salary credits. These accounts are typically offered by banks in collaboration with employers and come with numerous benefits such as zero minimum balance requirements, free digital banking services, and special loan offers. However, despite these advantages, salary accounts may carry specific bank charges and conditions, especially if they are converted into regular savings accounts due to inactivity or salary discontinuation. Understanding these charges and conditions is crucial for employees to manage their finances efficiently and avoid unexpected deductions.
Zero balance condition and its limitations
The defining benefit of a salary account is the zero balance feature, which means that account holders are not required to maintain a minimum monthly average balance. However, this benefit is contingent upon the regular credit of salary into the account. If salary is not credited for three consecutive months, the bank may convert the account into a standard savings account, and minimum balance requirements will apply from that point onward.
Account conversion to savings account
Upon conversion, the salary account will be subject to standard savings account terms, including:
- Monthly average balance (MAB) requirements (varies by bank and city tier)
- Penalties for non-maintenance, ranging from ₹100 to ₹500 per month
- Loss of salary-specific privileges, such as free ATM transactions and loan offers
This change can impact employees who have switched jobs, gone on extended leave, or retired without notifying the bank or updating account status.
ATM withdrawal charges
Salary accounts typically allow a limited number of free ATM transactions per month. These include both own-bank and other-bank ATM withdrawals. Exceeding the monthly limit incurs charges, such as:
- ₹20 per additional financial transaction
- ₹8 to ₹10 per non-financial transaction
Additionally, ATM usage outside permitted zones or network types may incur extra fees.
Cheque book and demand draft charges
While initial cheque books are often provided free, additional cheque books may attract charges after the free limit is crossed. Similarly, demand drafts (DDs) issued beyond the complimentary quota may be charged at ₹2 to ₹5 per ₹1,000, with a minimum fee.
Fund transfer and NEFT/RTGS charges
Most salary accounts offer free online fund transfers through NEFT, RTGS, and IMPS. However, if limits are exceeded or offline/manual transfers are made at branches, service charges may apply, generally ranging from ₹2.50 to ₹25 depending on the amount and mode of transfer.
Debit card and annual maintenance fees
Salary accounts usually come with free debit cards, but banks may impose annual maintenance charges on premium card variants. These charges vary from ₹150 to ₹750 per year. Charges also apply for card replacement, PIN regeneration, or international usage.
SMS alert and communication charges
Most banks provide SMS and email alerts for transactions. While this service is typically free for salary accounts, some banks charge ₹10 to ₹20 per quarter to continue SMS alert services after account conversion or if salary credits stop.
Loan processing and documentation fees
If you avail of pre-approved loans or overdrafts through your salary account, banks may apply processing fees (typically 0.5% to 2% of the loan amount) and documentation charges. Some banks waive these for salary account holders, while others provide discounts only on select products.
Charges for bounced cheques and ECS
Banks levy charges if a cheque issued from the salary account bounces due to insufficient funds, usually ranging from ₹250 to ₹500. Similarly, ECS or auto-debit mandate failures may attract penalties between ₹250 and ₹750 per failed transaction.
Closure charges and account inactivity
Some banks may charge a nominal fee for account closure if it occurs within six months of account opening. Additionally, if the account remains inactive for more than a year, dormancy charges may apply, and reactivation may require submitting updated KYC documents.
GST and service tax inclusions
All applicable fees and charges are subject to GST, currently levied at 18%. Customers should review the total amount deducted, which includes base charges plus applicable tax, to understand the full impact on their account.
Conclusion
While salary accounts offer a range of attractive benefits, they are still governed by specific bank charges and operational conditions. Most fees are avoidable with regular salary credit and timely use of services within free limits. However, changes in employment, account status, or usage patterns can lead to the imposition of various service charges. To make the most of a salary account, account holders should regularly monitor account activity, stay informed about bank policies, and communicate with the bank during employment transitions to avoid penalties and maintain uninterrupted access to financial services.
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