Image Source : Finance Outlook India
Jio Payments Bank has unveiled its innovative new savings account product, Savings Pro, designed to automatically invest customers' idle cash balances into overnight mutual funds. Announced by Hitesh Sethia, Managing Director and CEO of Jio Financial Services, this pioneering offering aims to provide superior returns compared to traditional savings bank interest rates while maintaining liquidity and safety.
Key Highlights of Savings Pro
Savings Pro automatically routes unused deposits into overnight mutual funds, a low-risk, highly liquid investment avenue offering better annualized returns generally ranging between 5% and 6%.
The service combines the convenience and safety of a savings account with the improved yield potential of mutual funds without requiring manual intervention.
Traditional savings rates at Jio Payments Bank were recently reduced from 3.5% to 2.5%, making the auto-investing proposition more attractive for customers seeking yield enhancement.
Overnight mutual funds invested in by Savings Pro allow easy withdrawal with funds typically available by the next business day.
The product is particularly suitable for short-term funds such as emergency buffers or monthly expense cushions, respecting deposit caps of Rs 2 lakh per customer mandated for payments banks.
Jio Payments Bank currently serves over 25 lakh customers with a deposit base exceeding Rs 358 crore.
This offering enhances Jio Payments Bank’s positioning beyond standard payment services into wealth creation, complementing its partnerships with BlackRock for asset management and Allianz for insurance.
How Savings Pro Works and Benefits Customers
Savings Pro leverages technology to monitor idle balances in savings accounts and moves them seamlessly into overnight mutual funds for earning better returns. Customers enjoy the dual benefits of capital safety and liquidity while optimizing their idle money against inflation pressures.
For instance, on a ₹1 lakh idle balance, the difference between 2.5% savings interest and around 5.5% returns from overnight funds could mean an extra ₹3,000 annually, effectively doubling yield without significant risk.
Important Considerations and Caveats
While overnight funds are considered low risk compared to other equity or debt funds, they are not completely risk-free and can experience slight returns fluctuations with interest rate movements.
Withdrawals from Savings Pro might take one business day, unlike instant access in traditional savings accounts.
Payments banks like Jio cannot hold deposits exceeding Rs 2 lakh per individual account, so Savings Pro is ideal for short to medium-term holding rather than long-term wealth accumulation.
Tax implications apply as overnight funds qualify as debt funds, and returns are taxed according to an individual’s income tax slab.
Looking Ahead: Jio Payments Bank’s Growth and Innovation Strategy
Savings Pro is part of Jio Payments Bank’s broader strategy to enrich customer offerings by integrating digital payments, wealth creation, and lending solutions. With an expanding ecosystem that includes insurance, credit, and asset management tie-ups, the bank aims to deliver holistic financial services in a seamless, tech-enabled fashion.
Jio Payments Bank’s digital-first approach dovetails with India’s fintech revolution, catering to evolving customer needs for convenience coupled with enhanced financial returns.
In summary, Jio Payments Bank’s Savings Pro is a game-changing savings solution that empowers customers to automatically earn more on idle funds, blending ease, liquidity, and improved yields. This innovative product reflects the bank’s commitment to leveraging technology to transform traditional banking experiences.
Sources: Jio Bank official website, CNBC TV18, Business Standard, Moneycontrol, Economic Times.
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