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Kotak Mahindra Bank launched 'Kotak Junior', a savings bank (S/B) account for children and recurring deposit (RD) scheme. Kotak Junior is meant to encourage parents to save for their children by linking it to a RD or a Systematic Investment Plan (SIP) said K V S Manian, President-Consumer Banking, Kotak Mahindra Bank.
“Usually RD does not look attractive when interest rates are low. But now interest rates are reasonably high and that is why we decided to offer it now,'' he said.
Under the Kotak Junior account, if parents make continuous payments towards a RD or SIP, the bank offers rewards in the form of free movie tickets or book vouchers. The bank is also offering discounts for retail stores of kids' products. While the minimum balance is Rs 5,000, if the RD or SIP is regular, then the bank will waive off the minimum balance requirement, Manian added.
The account cannot be operated alone by the child and has to be operated by the guardian. Instead of a debit card, the child will be given a membership card, to which the bank will add offers later on. The minimum withdrawal limit on the debit card is lower than on regular debit cards.
Along with this account and the Silk programme exclusively for women customers, the bank hopes to add 4,000-5,000 savings accounts every month, Manian added.
The bank has been seeing a year-on-year growth of 40-50% in its savings bank accounts, and is likely to maintain this rate.
Interest rates are headed downwards, but it will be gradual, Manian said. In the current fiscal the bank is unlikely to reduce the rate on S/B rate from the current 5.5% (for accounts having up to Rs 1 lakh) and 6% (for accounts having more than Rs 1 lakh).
