India’s banking system has been working to secure our money and help us reap benefits from it. We deposit money in the accounts and get interest; banks use that money to give loans and charge interest. That is how money circulates. There are many private and public banks in India offering several perks to their customers, and no matter what you do and how much money you make, you must have a bank account as per your need.
In India, the banks offer various types of bank accounts with multiple perks that customers can avail. This article will discuss the 6 major types of bank accounts prevalent in India.
Types of Bank Accounts in India
- Savings Account
If you are someone who wishes to accumulate some money and save it for the future, a savings account is the pick for you. It is the most famous type of bank account; almost every adult has a savings account.
To open a savings account, you only need your passport-size photograph, ID proof (Aadhar Card primarily), and residence proof. You can keep a limited amount of money in your savings bank account and withdraw the same through ATMs, cheques or net banking as per the bank limit. These bank accounts mostly have a minimum balance to maintain, below which the bank charges a penalty to the user. However, there are a lot of banks that also offers zero balance accounts for which the user does not have to maintain a minimum balance.
The interest rate on savings accounts offered by various banks starts from 2.70% per annum.
- Current Account
Current Bank Accounts are used by businesses and companies to carry out business transactions. These accounts are most suitable for traders and business owners who must perform several financial transactions daily. These bank accounts do not have a deposit or withdrawal limit. These accounts must maintain a minimum balance, and the banks pay no interest on the amount deposited. But, these accounts have a perk of an overdraft facility. This means these accounts can withdraw money even if there is no money in their accounts. For the same, the bank charges a fee for these accounts.
- Salary Account
Current accounts have been made for people in business and traders, and salary accounts have been created for employees. A significant portion of the Indian population belongs to salaried employees, and these bank accounts are made to benefit them.
Employers usually provide salary accounts to their employees, but they can also open their salary accounts. The salaries of the employees are credited to these bank accounts. The bank accounts work like savings accounts, and the employees can also carry out personal transactions from these accounts. Also, these accounts are, by default, zero balance accounts, and employees can deposit or withdraw unlimited money in these accounts. The banks pay no rate of interest on these bank accounts.
- NRI Account
Non-resident Indians, or NRI, can also open a bank account in India. These bank accounts are also known as “overseas accounts.” The NRI accounts can be savings, current, or fixed deposits. NRIs can deposit money in these accounts in any currency, but the accounts are managed in only the Indian Rupee as per the ongoing exchange rate. These accounts are not zero-balance accounts, and the NRIs must maintain a minimum balance as required by the banks. There is also no deposit and withdrawal limit to these bank accounts. The banks do not pay interest on NRI accounts, but the principal amount in these accounts are chargeable as per the provisions of the Income Tax Act, 1961.
- Fixed Deposits
Also widely known as FD, a fixed deposit is India’s most famous saving tool. It is also the most traditional way to invest money and grow wealth. It is the safest way to invest and make more money. In an FD, you invest a fixed sum of money into your FD account with any bank for a set number of years at a fixed interest rate. After the completion of FD tenure, the investment amount and the interest amount are paid by the bank to the user. There is no limit to fixing the money in an FD, and you can also withdraw the money before the completion of the maturity period. The maturity period of an FD ranges from 7 days to 10 years. Currently, the interest rate offered by the banks on FD accounts ranges from 5.15% to 6.5% per annum. Both customers and banks benefit from these bank accounts.
- Recurring Deposits
In recurring deposit bank accounts, also known as RDs, you invest a fixed amount of money every month to the RD account for a set number of months to make a principal amount. It is suitable for those who do not have a lump sum but can make small investments monthly. After the tenure of the investment, the user gets paid the principal amount and the interest paid by the bank.
This is a great way to invest and save money simultaneously. You can invest a minimum of INR 1,000 monthly into an RD account.
None of us can think of having a life without a bank account. You can choose among the several types of bank accounts offered by Indian banks and start your banking experience right now! Many banks in India can cater to your bank account needs and equip all age groups and classes to become financially enabled. You can get these bank accounts opened either online by visiting the website of your bank or in person, by visiting the bank. The official bank timings are 10 am to 5 pm, you can plan your visit as per that.
Read more such informative blogs, especially about personal loans and financial products on the Piramal Finance website. Visit now!