A Bank Account is where people can open to save or transact money for their personal use. It is a financial record that is maintained by a bank or other financial institution. The IFSC code, bank name, branch name, account number, and account holder's name are commonly included in bank account details. These facts are available on your bank's online or mobile banking platforms, as well as in your passbook, checkbook, and bank statements. 

As the banking industry evolved, several new types of bank accounts were introduced. They are

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

The banks are also introduced to save every penny of an individual in the safest way. Banks also provide related services such as individual retirement accounts (IRAs), certificates of deposit (CDs), currency exchange, personal loans, and safe deposit boxes. In this article, the types of bank accounts will help everyone to make a clear statement about the 8 types of bank accounts in India, including their key features. A PDF format is also attached to this page for both English and Hindi candidates, with a download option. For any queries, check the FAQ section given below.

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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.

• The person has the option to pick any of the accounts according to need.

• Different accounts have different benefits, so you can choose according to your comfort and needs.

Types of savings accounts in India are listed below.

1. Regular Savings Account

2. Zero Balance account

3. Women’s Savings Account

4. Kids’ Savings Account

5. Senior Citizens’ Savings Account

6. Family Savings Account

7. Salary-Based Savings Account

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What is a savings account?

The most fundamental sort of bank account that may be opened in any bank is a savings account.

• A 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 Accounts

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.

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2. Current Account

A current account is one of the types of bank accounts in India that is used for daily, limitless transactions.

• 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.

• 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.

Types of current accounts in India are listed below.

There are five varieties of current accounts offered by the bank. These include:

1. The Premium Current Account

2. Standard Current Account

3. Packaged Current Account

4. Foreign Currency Account

5. Single Column Cash Book

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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.

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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.

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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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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 NRIs 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-Residential Account(FCNR)

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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.

Foreign Banks in India

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.

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.

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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.

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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. 

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 principle 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.

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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.

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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FAQs

Q. How many types of bank accounts are explained in this article?

In this article, eight different types of bank accounts are explained.

Q. Which type of bank account is suitable for salary earners?

A salary account is best suitable for salary earners.

Q. How many types of current accounts are in the bank?

There are 5 types of current accounts available in the bank. They are Premium Current Account, Standard Current Account, Packaged Current Account,  Foreign Currency Account, and Single Column Cash Book.

Q. What is the full form of a DEMAT account?