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TYPES OF BANK ACCOUNTS IN INDIA


Types of Bank Accounts in India (Deposit Accounts) 


Traditionally banks in India have four types of deposit accounts, namely Saving Banking Accounts, Current Accounts, Recurring Deposits and, Fixed Deposits. 

1. Saving Account

Saving accounts are opened to encourage the people to save money and collect their savings. The saving account holder is allowed to withdraw money from the account as and when required. The interest on Saving Bank Accounts was fixed by RBI and it was fixed at 4.00% on daily balance basis. RBI has deregulated Saving Fund account interest rates and now banks are free to decide the same within certain conditions imposed by RBI. 

Features of Saving Accounts


1. There is no restriction on the number and amount of deposits. However, in India, mandatory PAN (Permanent Account Number) details are required to be furnished for doing cash transactions exceeding र50,000. 
2. Withdrawals are allowed subject to certain restrictions. 
3. A minimum amount has to be kept on saving account to keep it functioning.

2. Current Account

Current Accounts are basically meant for businessmen and are never used for the purpose of investment or savings.

Features of Current Accounts

(1) The main objective of Current Account holders in opening these account is to enable them (mostly businessmen) to conduct their business transactions smoothly. 
(2) There are no restrictions on the number of times deposit in cash / cheque can be made or the amount of such deposits; 
(3) Usually banks do not pay any interest on such current accounts.
(4) The current accounts do not have any fixed maturity as these are on continuous basis accounts. 
(5) Cheque book facility is provided and the account holder can deposit all types of the cheques and drafts in their name or endorsed in their favour by third parties.

3. Recurring Deposit Account: 

Recurring Deposit is a special kind of Term Deposit offered by banks in India popularly known as RD accounts which help people with regular incomes to deposit a fixed amount every month into their Recurring Deposit account and earn interest at the rate applicable to Fixed Deposits. 

Features of RD Accounts

1. Recurring Deposit accounts are normally allowed for maturities ranging from 6 months to 120 months 
2. These accounts can be opened in single or joint names. Nomination facility is also available. 
3. Rate of Interest offered is similar to that in Fixed Deposits.
4. Interest is compounded on quarterly basis in recurring deposits.

4. Fixed Deposit Account (FD)

The account which is opened for a particular fixed period (time) by depositing particular amount (money) is known as Fixed (Term) Deposit Account. The term 'fixed deposit' means that the deposit is fixed and is repayable only after a specific period is over. Under fixed deposit account, money is deposited for a fixed period say six months, one year, five years or even ten years. The money deposited in this account can not be withdrawn before the expiry of period. 

Features of FD Accounts

1. The main purpose of fixed deposit account is to enable the individuals to earn a higher rate of interest on their surplus funds (extra money). 
2. The amount can be deposited only once. For further such deposits, separate accounts need to be opened. 
3. Fixed Deposit Account may be opened for a minimum period of 7 days and maximum period of 10 years. 
4. The minimum amount required to open a Fixed Deposit is Rs.1000. 
5. Withdrawals are not allowed. However, in case of emergency, banks allow to close the fixed account prior to maturity date. In such cases, the bank deducts 1% (deduction percentage many vary) from the interest payable as on that date.



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