A bank account

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Last night the caretaker of the building where I live came to my room for some internet help. Later, through a casual talk, I came to know that she does not have a bank account. She is a family of two, living in the terrace of the building in a single dilapidated room along with her 60-year-old father. I got an instinct to tell her that she should open a bank account, but I was short of the points and I partially failed to convince her in doing so. After she left the room, half convinced and half proud that she is better off not having a bank account, I remained in my room, with a vacuum of thought in my head. Well, here are some points why we should have a bank account and I also told her although not convincingly.

First, it won’t harm us at all to have a bank account. There is absolutely no obligation. There is one government scheme which even offers us a number of benefits to open one. The Scheme is Pradhan Mantri Jan Dhan Yojana. It was launched in the year 2014 when the new government came in India. It is one of the flagship schemes of the new government that has done wonder to boost the financial inclusivity of the country and it also holds the Guinness Book of record for opening almost 1.8 crore accounts in a week! It offers insurance, a debit card and also the perk of Rs. 5000 overdraft for 6-month active accounts. Overall, it tried hard to increase the inclusivity.

Let’s say that A does not have a bank account and she has got X rupee with her. A has kept that note in her cub board. It is a general tendency of us that without a strong saving instinct, A will end up spending it. Again, over a period of time, due to inflation in the market, the value of X is bound to decrease. In other words, at the time A got rupee X with her and the time, say 6 months or a year, due to the inflation in the economy, A could buy lesser of the goods. This is a pure loss.

Opening a bank account will save us from inflation also motivate us to save more. Bank offers us some interest rate to keep our money in the account. Besides, there are a number of saving schemes; we could open a recurring account or a SIP and continue to save more. This will help us to build a strong base and help us financially independent. Again, it is beneficial for the country’s economy as the capital base of the bank has increased and the bank can, in turn, lend that money to the people to run business and so on.

Opening a bank account will also help us from the danger of the theft of the paper money kept in the cub board. We don’t have to travel with currency and a card will just do okay. ATMs or bank branches are available countrywide, no worries!

The biggest benefit is when we become part of the formalized financial system, we could get a cheaper loan from the bank that what we used to get from the private individuals at exorbitant rates. Although I hope you don’t ever get in a situation to loan.

Open a bank account.

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