Types of Bank Accounts
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Types of Bank Accounts
Types of Bank Accounts
As the banking industry has evolved, several new bank accounts have been introduced. This page explains the
eight different types of bank accounts.
1. Savings Account
2. Current Account
3. Salary Account
4. NRI Account
5. Recurring Deposit Account (RD)
6. Fixed Deposit Account (FD)
7. DEMAT Account
8. Senior Citizen Account
1. Savings Account
Saving money in a bank account often involves using a savings account.
The individual also receives a salary from the money saved in the savings account.
Because of this, banks place limitations on savings accounts and provide a competitive interest rate, such as
a monthly transaction limit.
Savings accounts come in various forms based on the needs of the individual. We will see what are all the
types of savings accounts in India.
The person has the option to pick any of the accounts according to the need.
Different accounts have different benefits so you can choose according to your comfort and need.
Types of current accounts in India are given in the upcoming sub-topics.
Regular Savings Account
Zero Balance account
Women’s Savings Account
Kids’ Savings Account
Senior Citizens’ Savings Account
Family Savings Account
Salary-Based Savings Account
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Types of Bank Accounts
What is a savings account?
The most fundamental sort of bank account that may be opened in any bank is a savings account.
The savings account is open to save money and take interest in that money.
It is a beneficial account where you can take a small interest.
A savings account enables the user to deposit money into a bank account, eliminating the need for the user
to carry cash around.
Saving money at a bank has the advantage that the user will get a set rate of interest on the funds placed in
the account.
Before October 24, 2011, the RBI established the interest on savings accounts; however, following that
date, the RBI granted banks the authority to set their own savings account interest, subject to certain
limitations.
Additionally, using a simple method, the user may withdraw his money whenever he wants it.
Key Features of Savings Account
Limit: The quantity of money that can be kept in a savings account has no upper limit. Depending on your bank,
the total number of transactions could be limited in specific circumstances.
Balance: Most of the time, to keep a savings account open, a customer is required to maintain a minimum required
amount.
Interest: When money is deposited into a savings account, the consumer receives interest. Different banks have
different interest rates.
Benefit: The simplest way to earn interest on unused bank funds is through savings accounts.
2. Current Account
A current account is one of the types of bank accounts in India that are used for daily, limitless transitions.
The current account does not pay interest and has a higher minimum balance requirement.
Owners of businesses and dealers who need to conduct daily transactions typically utilize the current
account.
Business owners, traders, and entrepreneurs who need to conduct transactions and receive payments more
often than others typically keep this sort of account at a bank.
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Types of Bank Accounts
The majority of current accounts are operated in the names of businesses or enterprises.
Never are savings or investments made in these accounts. Typically, a certain minimum balance must be
kept there at all times.
Key Features of a Current Account
Limit: The amount of money that may be deposited into a current account is unlimited. Additionally, current
accounts do not have a transaction cap.
Balance: The minimum amount needed to open a current account is higher than that of a savings account.
Interest: Consumers do not receive interest on their current accounts.
Benefit: These accounts provide an overdraft feature that enables users to take more money from the account than
is available.
3. Salary Account
A salary account is also one of the types of bank accounts in India.
Large enterprises and companies that pay their employees through banks ask banks to create these accounts
on their behalf.
Each employee is allowed to keep a salary account, which their employer will credit with their monthly
salary.
Key Features of a Salary Account
Limit: The amount of money that may be deposited into a salary account is unlimited. Each employee's pay is
determined by how much money their employees have been paid out. Employees can conduct independent
transactions between one type of bank account and another.
Balance: Employees can withdraw the whole balance of their payment accounts, which have zero balances, at any
time.
Interest: Salary accounts do not accrue interest to employees.
Benefit: These accounts can be changed at any moment into savings accounts. Banks have the power to convert
these accounts into savings accounts, which are governed by a separate set of rules, after inactivity of more than
three months.
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Types of Bank Accounts
4. NRI Account
These accounts are opened by non-resident Indians who wish to maintain a financial bank account in India.
There are three types of bank accounts for NRI that are available in Indian banks.
Types of Bank Accounts for NRI
Presently, there are 3 types of bank accounts for NRI in India. They are
Non-Resident Ordinary Account(NRO)
Non-Resident External Account(NRE)
Foreign Currency Non-Residental Account(FCNR)
Non-Residential Ordinary Account (NRO)
These accounts include deposits that are denominated in Indian rupees. The deposit was made with money made in
India.
Key Features of an NRO
Limit: The amount of money that may be deposited into an NRO account is unlimited.
Balance: Any level of balance may be kept.
Interest: The principle as well as any interest accrued on that principle are taxable items.
Benefit: The conversion rate has no impact on these accounts. Through the NRO account, an NRI can open a
current account, a savings account, or a fixed deposit account.
Non-Residential External Account (NRE)
These accounts include deposits that are denominated in Indian rupees.
However, the funds deposited are not from income produced in India; rather, they are savings or earnings
from the nation in which the non-resident Indian resides.
Key Features of an NRE
Limit: Money cannot be deposited into an NRE account more than the allowed amount.
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Types of Bank Accounts
Balance: Any level of equilibrium may be kept.
Principle and Interest: Neither the principle nor the interest accrued on the principle is subject to taxation.
Benefit: These accounts are affected by a potential change in the conversion rate. Through the NRE account, an
NRI can open a current account, a savings account, or a fixed deposit account.
Foreign Currency Non-Residential Account (FCNR)
Deposits are held in these accounts in the currencies that have been authorized by the Reserve Bank of India,
India's central bank.
Any NRI or anyone of Indian descent is eligible to keep deposits in a currency that is recognized as their
source of income.
If the revenue is obtained in a currency, not on the authorized list of currencies, then the profits or proceeds
to be deposited are converted into an acceptable currency.
It's common to refer to FCNR accounts as FCNR (B) accounts, whereas (B) refers to banks.
Key Features of an FCNR
Limit: The amount of money that may be deposited into an FCNR account is unlimited.
Balance: Any level of balance may be kept.
Interest: The principle as well as the interest accrued on that principle are not taxed.
Benefit: These accounts are affected by a potential change in the conversion rate. Through the FCNR account, an
NRI can only open fixed deposit accounts with a minimum maturity of one year.
Government Banks in India
5. Recurring Deposit (RD) Accounts
Customers who want to earn interest on their money create these accounts as deposit accounts.
These accounts sometimes referred to as RDs, are the simplest ways to generate income that is more than
that provided by savings accounts.
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Types of Bank Accounts
Key Features of a Recurring Deposit
Limit: Each bank sets its minimum requirement for opening an RD. Customers may create an RD account with
any bank of their choice and choose a minimum limit of just INR 1,000 each month.
Balance: RDs are deposit accounts that let customers withdraw a fixed sum each month at the start of the account's
lifetime.
Interest: Every month, a set amount is withheld and placed in the RD account, where it accrues interest month
after month. In comparison to savings accounts, this interest is frequently greater.
Benefit: The RD is a consumer-friendly financial choice due to its flexible duration. Customers can choose to
deposit money in an RD for a period ranging from six months to a maximum of ten years, earning interest on the
deposited balance. Before the tenure expires, RD accounts may be closed without losing the interest accrued.
6. Fixed Deposit (FD) Accounts
These accounts are created so that deposits can receive interest for a certain amount of time until maturity. Among
the safest financial tools for saving and earning interest on unused funds are fixed deposits.
Key Features of a Fixed Deposit
Limit: The amount of money that may be deposited into a fixed deposit account is unlimited. After the account's
term, interest is paid in proportion to the amount of money allocated.
Balance: A lump sum of money is invested in an FD account.
Interest: This deposit earns interest from the bank. Once the FD's term is through, this interest is paid. Customers
who terminate their FDs during their term run the risk of missing out on the interest and frequently just receive the
principal payment.
Benefit: FDs are investments with low risk and great returns. Due to the fixed tenure benefit a bank receives in the
case of FDs, the majority of banks in India give an FD interest rate that is greater than the interest rates on savings
accounts and RDs. The financial instrument becomes a win-win for banks and consumers since it allows banks to
keep substantial amounts for a set length of time while allowing customers to earn higher volatility-free returns.
List of RBI Governors of India
7. DEMAT Account
A dematerialized account is referred to as a demat.
In a Demat account, shares are used in place of actual money, exactly like in a bank account.
Opening a demat account is necessary to purchase or sell shares, just as opening a bank account is
necessary to save money or write checks.
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Types of Bank Accounts
Some Features of DEMAT Account
These accounts simplify the trading of shares and securities.
They execute smooth transactions, thereby reducing the associated costs.
Traders have the flexibility to engage in trading activities from any location.
8. Senior Citizens Account
The senior citizen scheme is exclusively available to Indian senior citizens.
Individuals aged 60 years and older are classified as senior citizens according to government regulations.
Senior Citizens accounts function as standard savings accounts, with the difference that they offer an
interest rate benefit ranging from 0.25% to 0.50% per annum.
It is determined periodically by the respective banks for the account holder.
These accounts can be established as joint accounts, with the stipulation that the senior citizen's name must
be listed first to ensure that the benefits are conferred upon them.
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