Long-long back, salaries were paid to the employees either through cash or through cheque. Payroll department used to be held responsible for calculating salaries, arranging sufficient cash from the finance department, distributing salaries in proper currency denominations and maintaining records. But with the advent of plethora of banking services, the only change that has been brought in the function of payroll department is that they do not have to arrange for the different denominations of coins and rupees. Salary for all the employees is calculated and a collective sum is transferred to the bank along with the salary sheet. And from there the bank credits the salary in the salary account of individual employees.
What is Salary Account?
A salary bank account or as simply termed as salary account is nothing much different from a regular bank account wherein your employer credits in the amount due to you as your salary.
What you get in a Salary Account?
Just like a normal savings account, you will have to fill a form with the bank. Don’t worry, it is yours’ employer’s responsibility to tie up with the banker and arrange for opening your account. However, while filling the form, you will also be required to attach self attested photocopies of your identify proof, address proof and your passport size photograph. You will be given an account number. In your welcome kit by the bank, you will receive cheque book, ATM card, pin number. There are few banks who offer free credit card with the salary account. You can also open a Demat account with the same bank and can use your salary account for the purpose. In addition you can also avail the following banking facilities:
- Phone banking
- Internet banking
- Anywhere banking
- Open a joint account
- Open term deposit account
- Open recurring deposit account
- Earn the rate of interest as applicable on savings bank account
Charges of a Salary Account
Since a salary account has same terms and conditions as what are applicable for a normal savings bank account, it carries the same kind of charges.
- Though salary account is a zero balance account, but it converts to a normal savings bank account if a salary in the account has not been transferred by your employer for a consecutive period of 3 months. Since it is converted to pure savings account, you will have to maintain a minimum monthly/ quarterly average balance. Non-compliance of which will attract charges for non-maintenance of minimum average balance, which varies from bank to bank.
- Other charges of savings bank account will apply throughout like charges on exceeding certain number of transactions, charges on loss of pin or pin renewal, ATM charges, sms charges, cheque bouncing charges to name a few.
What to do at the time of leaving organization?
When you are leaving your organization, then it becomes important for you to take care of your salary account with the same level of seriousness that you work for your EPF transfer. In such situation, you have two choices to exercise:
- Let your salary account to be continues. It will automatically be converted to normal savings bank account. All you need to do is maintain minimum monthly/ quarterly average balance, as required by the bank.
- If you do not feel the necessity of continuing with the account and expect that you will not be able to maintain minimum monthly/ quarterly average balance, then it is better to take prompt steps to get it closed. This way, you will be able to save yourself from unnecessarily paying penalties. While closing the account, do remember to close all associated accounts with this account like term deposit account, etc.
Stay alert and informative and keep enjoying your salary that is created in your salary account.
Have a happy salary!!!