Recently, Jio Payments Bank has launched “Savings Pro” Savings Account. And although the concept sounds interesting, it comes with many drawbacks no one is talking about. So we have covered everything you need to know about it, including its features, its benefits, its drawbacks and who can benefit from this account.

Jio Payments Bank has launched "Savings Pro," a new type of savings account that automatically invests your savings into overnight mutual funds. Overnight mutual funds are debt funds that invest in money market securities that mature within one day, like government securities, T-bills and corporate debt. These debt instruments are generally highly rated, often AAA, and are issued by governments, banks and big corporations.

With this savings account, Jio is targeting customers looking to keep their savings/deposits in debt mutual funds. It has a total deposit limit of ₹ 2,00,000 and daily investment limit of ₹1,50,000 per customer. Users can set a threshold limit (minimum ₹5,000 in initial phase) to keep in savings, and the surplus amount gets auto-invested in mutual funds daily.

It provides up to 6.5% annual returns on surplus funds by investing your money in debt funds. You can redeem up to 90% of holdings or ₹50,000 on the same day. The remaining amount can take 1-2 working days to process.

Benefits

• Potential to earn higher returns (up to 6.5%), which is more than a regular savings account.

• No lock-in, no entry fees, no exit load and no hidden charges, so that all of your savings get invested rather than getting consumed by fees and charges.

• It has a fully digital setup i.e. activation, tracking and withdrawal is managed digitally via the JioFinance app.

• Although it is not the first bank with auto-sweep facility, it is the first bank that automatically invests your money in mutual funds, thus providing a simple way to earn higher returns without any additional efforts.

Drawbacks

• Other savings account with sweep facility provide higher returns by converting your savings into a fixed deposit without exposing your savings to risk of debt funds.

• As per RBI regulations, jio payments bank/savings account cannot hold over ₹2 lakh in deposits per customer, which might not be enough for a lot of customers.

• Although you can set, modify or even lower your debt threshold, you cannot opt out of it. So if you just want a savings account at any time without exposure to debt markets, you will have to close this savings account.

• In case of default, you can lose your money that was intended for savings. This is a savings account, and there is no capital protection or guarantee by Jio Payments Bank or Jio Financial Services in case of default on debt.

• The withdrawal limit of up to ₹50,000 or 90% on the same day defeats the purpose of emergency funds, since emergency funds should be completely liquid.

• Overnight funds are debt mutual funds, not bank deposits. Therefore, return of 6.5% is variable and it is the maximum possible return. Actual returns might be lesser.

• Earnings will get taxed like any other debt mutual funds i.e. earnings will attract capital gains tax.

So, what does all this mean for you, and should you keep your savings in this savings account? The answer is simple: If you are looking to save for an emergency or just looking to keep your savings in a regular bank account or sweep account, there are many better options available. Invest in this savings account only if you want to invest in debt funds. In other words, treat this as a debt mutual fund and not as a savings account, because this is, indeed, a mutual fund more than a savings account.

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