This article will explain the various kind of bank accounts available in India. In addition, you will learn about the uses of different types of bank accounts.
Types Of Bank Accounts in India:
You always require a bank account whether you are a student, a business owner, a housewife, a retired professional, or an Indian living abroad. Bank accounts proffer simplicity for sending and receiving money. Banks offer many types of bank accounts based on the location of the account-holder, purpose, and frequency of transaction.
List of some types of bank accounts available in India.
1) Savings account.
2) Current account.
3) Salary account.
4) Fixed deposit account.
5) Recurring deposit account.
6) NRI accounts.
1. Savings account
As the name indicates, savings accounts are for saving money. An individual or two people can jointly open a savings account to save money. A savings bank account is also a regular deposit account. The significant advantage of a savings bank account is that the bank pays you 4% to 6% per annum interest for having this type of account with them. Besides, How many times you can withdraw your money in a month is limited in a saving account. Still, there is no limitation on depositing money in this account.
Banks offer many types of savings accounts based on the age or purpose, type of depositor, features of the product, and so on. For example, regular savings accounts, savings accounts for children, senior citizens or women, institutional savings accounts, family savings accounts, and so many more. In addition, you have the option to pick from a range of savings products.
For example, there are zero-balance savings accounts and refined ones with features like debit cards, auto sweep, cross-product benefits, and bill payments. So you can get an ATM/Rupay/Debit card if you want. Finally, The savings bank account is eligible primarily for students, pensioners, and working professionals.
Two types of saving accounts are;
a). Basic Savings Bank Deposit Account (BSBDA)
b). Basic Saving Bank Deposit Accounts Small Scheme(BSBDS).
2. Current account
The second kind of bank account is the current bank account. The current account is a deposit account suitable for business owners, associations, traders, institutions, and companies, who require to make more transactions than other users. In this type of account, internet banking is available. These accounts have more liquid deposits with no daily limit on depositing and withdrawing money.
In addition, they do not have any fixed maturity. Current accounts provide an overdraft facility to withdraw more than what is currently available in your bank account. Besides, unlike savings accounts, no interest is paid on such accounts; these are zero-interest-bearing accounts. To use current accounts, You ought to maintain a minimum balance.
3. Salary account
As the name indicates, a salary account is where your employer credits your monthly salary. Employers who typically tie-up with one bank open these accounts for all their employees. So, you have opened this type of bank account as per the tie-up between your employer and the bank.
In this account, employees get their salaries, and they can pick their kind of salary account based on the features they want. In addition, the bank, where you have a salary account, also maintains reimbursement accounts; you receive allowances and reimbursements in this account.
4. Fixed deposit account
Fixed deposit or FD account is another type of bank account you can open in any Public or Private sector bank. In addition, there are some types of accounts like fixed deposits and recurring deposits that park your funds, and you earn a worthy rate of interest on it.
For example, with a fixed deposit (FD) account, you can make a fixed interest rate for depositing a fixed amount of money locked in for a given time. Banks have to pay interest on the designated deposit account. In this type of bank account, full repayment of the amount is available before the maturity date of FD.
Fixed deposit (FD) can be seven days to 10 years of maturity. The rate of interest you earn on fixed deposits will change according to the term of the FD. Typically, you cannot withdraw money from an FD account before its time is complete.
However, some banks provide an early withdrawal facility for lower interest rates. In other words, The fixed deposit account is a one-time deposit and a one-time takeaway account. Therefore, the interest rate depends upon the amount you deposit and the time duration of the FD.
5. Recurring deposit account (RD)
A recurring deposit or RD wherein the account holder needs to deposit a fixed amount every month or once a quarter for a fixed tenure to earn interest. Unlike an FD account, you need to make a lump-sum deposit. The nomination facility is also available for RD accounts.
The sum you need to invest here can be as low as Rs.50. an Institution or any individual can open a recurring deposit account either separately or jointly. The time range for which a user can open an RD account varies from 6 months to 120 months.
The banks are permitted premature withdrawal of the amount in these accounts. So actually, in the case of RDs, you face a penalty in the form of a lower interest rate or deducted amount for early withdrawal.
Periodic or monthly The installments of RD can be as low as Rs.50/- or vary from bank to bank. The interest rate varies depending upon which bank you choose to open an account. Bank will issue a passbook for this type of bank account.
6. NRI accounts
To fulfill the bank requirements of a Non-Residential Indian or a Person of India Origin, the option of an NRI account is available. There are different bank accounts for Indians or Indian-origin people living overseas. So, Non-Resident Indians (NRI) living abroad can open NRI accounts in India. These accounts are also called overseas accounts.
These accounts include savings accounts and fixed deposits, NRE or non-resident external accounts, and NRO or non-resident ordinary. In addition, many Banks also provide FCNR (foreign currency non-resident) fixed deposit accounts.
So these are the various types of bank accounts for NRIs.
Three types of NRI bank accounts in India
a) NRO (Non-resident ordinary) accounts
NRO (Non-residential Ordinary Rupee) account is for Non-Residential Indian (NRIs) who have earnings sources in India. NRIs can also deposit their foreign earnings in the NRO account. So, a Non-resident ordinary account is a rupee account.
When NRIs deposit money in NRO accounts, typically in foreign currency, it is converted into INR at the prevailing exchange rate. So, NRIs can easily park money earned overseas or in India in these bank accounts.
This bank account shall allow you to transfer your foreign earnings quickly to India.
You can open NRO bank accounts in a Savings/Current/FD/RD account. An individual or two people jointly open these types of bank accounts.
b) NRE (Non-resident external savings accounts) or fixed deposit accounts
When Indian citizen moves abroad to work there, they need to convert (their account) into an NRE account. One can jointly open an NRE account with an Indian resident. Non-resident external deposit accounts are similar to NRO accounts, and the funds in these accounts are in INR.
Therefore, these accounts convert any money deposited into INR at prevailing exchange rates. But, these accounts are only for storing your foreign earnings. Thus, the funds, both principal and interest, are transferable.
NRE accounts are another place for Non-Residential Indians to deposit their foreign earnings and instantly convert money to INR. Besides, NRIs may repatriate all the money deposited in this account into their bank accounts in foreign.
C) Foreign currency non-resident (FCNR) account
People can open This type of account to manage an international currency. However, it can only be in the form of a Term deposit. You can withdraw money after the maturity period only.
As the name suggests, FCNR accounts are open to managing a foreign currency, unlike the other two bank accounts. Therefore, the principal and interest from these accounts are transferable, but the interest earned is not taxed in India.
People use Foreign Currency Non-Resident Account, or FCNR accounts for maintaining foreign currency denominations. Furthermore, an accounts holder can avail of loans in India against their FCNR deposits.
So, guys, you learned about bank accounts in this article. Nowadays, You can now access your bank accounts anytime, from anywhere in the world with the ever-evolving banking industry. In addition, with facilities like mobile and internet banking and UPI payments, you don’t need to go bank to do the transaction. Moreover, today you can get instant mini statements, transfer funds, pay your bills and do a lot more. So, bank accounts are a safe treasury of your hard-earned money.
Moreover, bank accounts are cheaper, and Most banks and financial institutions provide users free or low-cost services. In addition, it offers easy access to credits. Therefore, having a bank account is favorable as banks offer the facility to access credits to their customers for Personal loans, home loans, education loans, etc.
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