Kotak Mahindra Bank’s newly-launched ‘811’ digital banking initiative that offers a zero balance savings account with zero charges for all digital transactions, couldn’t have picked a better time to make some big noise. SBI — the country’s largest bank — only recently re-introduced charges on non-maintenance of minimum balance. But aside from the zero balance goody, other charges that pinch customers the most — on cash deposits and withdrawals at branches and ATMs — would continue to apply for accounts opened under Kotak’s ‘811’. Also, 811 customers are offered a free virtual debit card. A physical debit card comes with a cost.

What would help though is the zero charge on digital transactions. Banks charge anywhere between Rs 2 to Rs 50 per transaction for electronic fund transfer through Real Time Gross Settlement (RTGS), National Electronic Funds Transfer (NEFT) or Immediate Payment Service (IMPS). These charges would not apply for Kotak’s 811 customers.

The good

The biggest draw for customers for opening an account under Kotak’s new 811 offering, is the zero balance account. Other banks and Kotak itself charges customers for not maintaining a minimum balance on regular savings account.

SBI, with effect from April 1, 2017, levies a charge of up to ₹100 plus service charge (depending on the shortfall), if the monthly average balance falls below ₹5,000 in savings account (in metros). The minimum balance requirement and charges are a tad lower for rural, semi-urban, and urban areas at ₹1,000-3,000 and up to ₹50-80 respectively.

ICICI Bank, charges ₹100 plus 5 per cent of the shortfall in required minimum monthly average balance, while HDFC Bank’s charges range from ₹150-600. Axis Bank charges ₹10 for every ₹100 shortfall or ₹350, whichever is lower.

Under Kotak’s regular savings account (base product), non-maintenance of minimum balance (Rs 10,000 in metros and urban areas and Rs 5000 elsewhere), amounts to a charge of Rs 250-450 per month.

Feel good

For those who have gone digital for most of their transactions, Kotak’s 811 brings good tidings. Those using this account will not be charged for online transactions. Other banks however impose charges for fund transfers.

In most banks, charges are similar across NEFT and IMPS transactions, except for small transactions. For transfers up to ₹10,000, NEFT carries lower charges than IMPS. For instance, ICICI Bank charges Rs 2.5 plus service charge for transfer upto Rs 10,000 under NEFT. Under IMPS charges are Rs 5 plus service charge for upto Rs 1 lakh. There are also limits under IMPS which caps the transaction limit at ₹2 lakh. In case of Kotak’s regular account, IMPS charges are Rs 5 for upto Rs 1 lakh.

Status quo

For those who still make payments mostly through cash, Kotak’s 811 does not offer any additional goody. On opening the account, a customer is given a free virtual debit card. If you want a physical plastic card to withdraw money and make payments, it will be offered to you at a cost.

Beside, charges on cash transactions at branch and ATMs will apply to ‘811’ customers as well. So no respite there.

Transactions up to five in same bank ATMs and three in other bank ATMs (in top six cites) are free, beyond which most banks levy charges. Beyond the limit for free transactions, HDFC Bank, ICICI Bank and Axis Bank charge ₹20.

In case of Kotak though, transactions at its own ATMs are free (without any cap on the number of transactions). But 811 customers will be offered fewer free transactions at other bank ATMs. They will be charged Rs 20 after three free transactions, as against five in case of its regular savings account.

Banks charge on cash deposits and withdrawals, which will apply to Kotak’s 811 customers as well. Kotak offers 4 free transactions or 2 lakh / month, whichever is earlier, beyond which it charges Rs 3.5 per Rs 1000 (subject to minimum of Rs 150).

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