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What are the different types of Bank Accounts?

In India, there have been four types of accounts, Current Accounts, Saving Banking Accounts, Recurring Deposits, and Fixed Deposits. In recent years, due to the increasing competition, few other banks have been introduced with new products that combine the features of the above two or more types of deposit accounts. However, these have not gained popularity among the Indian public.

We will focus mainly on the four types of bank accounts available in the Indian Banking System:

The features of Current/Checking Accounts are:

  1. Current accounts enable limitless withdrawals in line, and the cash transaction fees are levied.
  2. Accounts opened at the bank's home branch, have no restrictions on the number of deposits done into it. Account-holders can deposit their cash at other branches on paying fees as applicable.
  3. For making direct payments to creditors, one can issue cheques, demand-drafts, or pay-orders through their current account. 
  4. Current accounts facilitate the industrial progress of India, and without it, businessmen might face difficulties in operating their businesses.
  5. With this type of account, businesses can also gain benefits by availing facilities such as free inward remittances, deposits, and withdrawals, multi-location transfers, and many more.
  6. Account holders can get overdraft facilities.
  7. Businessmen can do withdrawals from their current accounts without any limit barriers, subject to banking cash transaction tax.
  8. Current accounts have the facility of internet banking and mobile banking that enable the account holders to conduct vital withdrawals and transfers promptly and at ease.
  9. This account has the option of assisting creditors of the account holder who have the access to the information on his credit-worthiness through inter-bank connections.

The features and benefits of a savings bank account are:

  1. If you desire to park surplus funds, then deposit them in a savings bank account because this account acts as a safety box for you. You can store all emergency funds for unexpected situations which could arise in the future.
  2. Funds deposited in this account earns interest quarterly, and the rate of interest is lower than other deposits because these funds aren't invested (locked) for some particular period like an FD. At the moment, the interest rate varies from 4% to 6.55% a year.
  3. Savings accounts are always safe, be it in a nationalised bank or any other financial institution.
  4. This account provides its holders with much liquidity, and the bank will provide debit/ATM cards which can be used to make a certain number of withdrawals.
  5. One vital advantage provided by a savings account is the discounts it offers on locker rental facilities for those who maintain the minimum quarterly balance.

The vital characteristics of RD are:

  1. RDs builds the habit of saving regularly.
  2. They can be made for a minimum of six months to a maximum of 10 years.
  3. Higher rates of interest and good returns.
  4. Banks may offer loan facilities on RD.
  5. If required, RDs can be withdrawn before maturity.
  6. Senior citizens are eligible to get higher interest rates.

The features and benefits of these accounts are:

  1. Attractive interest: The interest rates on fixed deposits are greater as compared to the interest in a regular savings account.
  2. Flexible tenure: Tenure of Fixed deposit varies from 1 month to 10 years.
  3. Investment amount: These accounts offer the flexibility of choosing the amount of money the depositors desire to deposit.
  4. Easy to open: The whole process of applying and opening this account is easy, and not much documentation is required.
  5. Auto-renewal: Banks usually allow the auto-renewal of FDs, ensuring the account holders not to worry on renewals.

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