Kotak launches zero-charge digital bank account

Kotak Mahindra Bank (KMB) announced an offer for opening a zero balance savings account on Wednesday, with zero charges for all digital transactions.

This comes when many of its competitors, such as State Bank of India and HDFC Bank, are either raising or reintroducing charges for transactions. From April 1, SBI is set to introduce a fee for failing to keep a minimum balance in some types of savings bank accounts.

KMB said its new ‘811’ plan, to promote a digital banking system via mobile phones, was aimed at doubling its customer base to 16 million over the next 18 months. An account could, it said, be opened anywhere, anytime, within five minutes, using their mobile banking app. It would use the new Aadhaar-based one-time password authentication process for account opening on a mobile. Only Aadhaar and PAN (income tax) numbers are required to open and operate an 811 account.

All 811 customers would get a free virtual debit card. And, would get up to six per cent annual interest on their savings account balances, said Uday Kotak, executive vice-chairman.

Banks have been aggressive in rolling out products for a digital banking platform. HDFC Bank has unveiled products such as a '10-second' loan, a 'design your own loan against securities' offer through net/mobile banking, and loans at ATMs.

Abizer Diwanji, partner at consultancy EY India, said there was a lot of benefit in migrating to a digital platform. The cost of transactions would be much lower than in conventional physical banking.

KMB said the 811 plan offers access to over 100 features on mobiles, including completing of financial transactions, managing of investments and fund transfer. It would also be an effective app for e-commerce on Flipkart, PVR and Goibibo, and fully integrated with the Bharat Quick Response Code. The app is also Unified Payment Interface-enabled, for instantly sending and receiving money.

Kotak Mahindra and associates are significant shareholders in Business Standard Pvt Ltd.

Kotak Mahindra Group