Bank Accounts, one of the most important thing that every individual have in either of the banks. It is fundamental knowledge about basic financial literacy. In this article, we are going to cover Types of Bank Accounts in India – Features & Benefits which will add a bit more knowledge about Banking.
An individual whether he or she is a professional, Student, housewife, retired person, NRI, etc Bank important is very important and all of them has a bank account in any of the banks.
An account is chosen by a person based on their needs or purpose, transactions, etc. hence there is an existence of different types of Bank accounts which we will discuss in a bit.
Types of Bank Accounts in India
There are various types of Bank Accounts in India depending upon individual requirements. given below is the list of Bank Accounts.
- Savings Account
- Current Account
- Recurring Deposit (RD) Account
- Fixed Deposit (FD) Account
- NRI Account
We will discuss all of the above bank accounts one by one. let’s begin…
Savings Account (SB Account)
The most common and conventional account an individual has across the country. It is opened by an individual or jointly by two people called a joint account commonly in order to save or deposit money.
So, In simple terms, we can define Saving Account as an account where you can deposit extra money which is not required very soon, in order to earn interest.
Features of Savings Bank Account
- The savings bank account is the most beneficial for students, professionals, housewives, retired persons.
- You can open Zero balance savings bank account as well.
- The rate of interest varies between 3 % to 6 % per annum depend on the banks. few private sector banks offer interest rates of more than 6 % as well.
- A Savings Bank account requires less amount of money or no amount to be kept as a minimum balance in a bank account.
- Savings Bank account holder can get ATM Debit Card if they want to have.
- There is no limit to deposit the amount in your account however there is a limit on the number of times money can be withdrawn from the account. crossing the limit will lead you to an extra charge.
|Read Also SBI Saving Bank Account|
Current Account (CD Account)
A current account is usually opened by the businessman, traders, entrepreneurs who need to do transactions more frequently.
Features of Current Account
- There is no interest paid on current account.
- There is no limit on the withdrawal. you can withdraw money any number of times from your current account.
- The current bank account comes with an overdraft facility i.e. you can withdraw more than what you have in your current account.
- The money in the current account is liquid and always in the flow due to frequent transactions.
- You need to maintain a minimum balance in your current account in order to operate this account.
Recurring Deposit (RD) Account
A Recurring Deposit account is a good option to save some amount of money on a regular basis for a fixed interval of time.
You will get your amount once the RD reaches the maturity date. the amount will be credited to the bank account of the depositor.
Features of Recurring Deposit Account
- It is a single or joint account where you deposit a fixed amount of money every month or once a quarter for a fixed amount of time period.
- you cannot change the tenure of the RD and the amount to be invested each month or quarter.
- Monthly investments can be as low as Rs. 100 depend from bank to bank and the tenure can be from 6 months to 10 years.
- The interest rate can be slightly on the higher side as compared to the regular deposits. You can earn interest between 3 % to 9 % per annum depending on the bank.
- Longer the time period the higher will be the interest. however premature withdrawal can be done but an amount will be deducted as a Penalty.
Fixed Deposit (FD) Account
In India the most common account you can find after a savings account is FD. It is a great way to save your money for a certain interval of time.
You can deposit a fixed amount on a regular basis for 7 days to 10 years and get the amount in your bank account as FD matures.
Features of Fixed Deposit Account (FD)
- It is great instrument to park your money for a fixed interval of time.
- You can earn a fixed rate of interest i.e. 4 % to 8% depending on the bank for keeping a certain amount locked for a given time.
- The amount of FD can be withdrawn all at once not in the installments.
- Premature closure is available provided that you have a penalty for that means you will get less interest on premature withdrawal.
- FDs range between a maturity period of seven days to 10 years.
- The interest rate can vary from time to time but you will get the same interest throughout the tenure which you got at the time of opening an FD account.
This account is for Non-Resident Indians who are from India but staying outside India. these accounts as also called overseas accounts.
There are mainly three types of accounts offered to NRI. check them below.
1: Non-Resident Ordinary (NRO) savings accounts or fixed deposit accounts: NRO accounts are rupee accounts. the amount deposited in this account in foreign currency is converted automatically into the Indian rupee.
It can be opened in the form of a saving account/current account/FD/RD. The income earned on these deposit accounts is taxed.
2: Non-Resident External (NRE) savings accounts or fixed deposit accounts: NRE deposit account is similar to NRO accounts. Any money deposited into this account is converted into Rupee at current exchange rates.
These accounts are only for keeping your earnings from abroad. principal and interest, are transferable. But, the interest earned on these deposit accounts is not taxed in India.
3: Foreign Currency Non-Resident (FCNR) Account: This account is opened to manage the amount in foreign currency. The principal and interest from this account are transferable, but the interest earned is not taxed in India.
You have learned Types of Bank Accounts in India – Features & Benefits. I hope this information will increase your knowledge of the Banking Sector.
Any doubts related to the above information can be asked in the below comment section. I will be happy to answer them.
A current account is usually opened by the businessman, traders, entrepreneurs who need to do transactions more frequently. This account does not earn any interest.
There is no limit on the withdrawal. you can withdraw money any number of times from your current account.
The current bank account comes with an overdraft facility i.e. you can withdraw more than what you have in your current account.
There are many banks that provide zero balance account in India such as HDFC Bank ( Basic Savings Bank Deposit Account), Axis Bank (Basis Savings Account), ICICI Bank (Basic Savings Account), Kotak Mahindra Zero Balance Account(Kotak 811).
Karur Vysya Bank Student Saving Account
IndusInd Student Savings Account
HDFC Bank’s Digi Save Youth Account
PNB Student Savings Account
Axis Bank Youth Savings Account