There are many types of bank accounts in India, each with its own unique set of benefits. Whether you’re looking for a basic account with no frills or an account that offers more features and perks, there’s sure to be an option that’s right for you.
Here’s a look at some of the most popular types of bank accounts in India:
1. Savings Bank Account
A savings bank account is a great option for those who want to save money and earn interest on their deposits. These accounts typically offer higher interest rates than basic savings accounts and often come with added perks such as free withdrawals and higher deposit limits.
Key Features of a Savings Account
A savings account is a type of bank account where customers can save money and earn interest on their deposits. Savings accounts typically offer higher interest rates than checking accounts and may offer other features such as ATM access, online banking, and debit cards.
Some key features of savings accounts include:
Minimum balance requirements – Most savings accounts require a minimum balance, which is the minimum amount of money that must be deposited in the account in order to open it. This minimum balance may be waived if the customer meets certain criteria, such as maintaining a certain balance or setting up direct deposit.
Interest rates – Interest is paid on money deposited into a savings account. The interest rate may be fixed or variable, and it may change over time. Some savings accounts offer higher interest rates for customers who maintain a higher balance. For example, the interest rate for a savings bank deposit is 2.70% for account balances of up to INR 1 lakh at the State Bank of India. While, the interest rate for savings bank deposits is 3% for account balances below INR 50 lakh at India’s largest private sector bank, HDFC Bank.
Withdrawal limits – Customers are typically allowed to make a limited number of withdrawals from their savings account each month. Withdrawals above the limit may incur fees or penalties.
Overdraft protection – Some savings accounts offer overdraft protection, which means that if customers try to withdraw more money than they have in their account, the transaction will still go through but they may be charged a fee.
FDIC insurance – Savings accounts that are FDIC-insured are protected up to $250,000 per account holder in the event of a bank failure.
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2. Current Account
A current account is a type of bank account that allows businesses to deposit and withdraw funds on a regular basis. Current accounts are typically used by businesses that have a high volume of transactions.
Current accounts come with a number of features, such as checkbook facilities and direct debit facilities. Businesses can also set up standing orders and have multiple signatories on the account.
There are a few different types of current accounts available in India, such as the Basic Savings Bank Deposit Account (BSBDA) and the Small Accounts. The BSBDA is a no-frills account that doesn’t offer cheque book or direct debit facilities. Small Accounts are designed for businesses with a low volume of transactions.
Businesses can choose from a variety of current account providers in India. Some of the leading banks include HDFC Bank, ICICI Bank, and Axis Bank.
Key Features of a Current Account
A current account is a type of bank account that is typically used by businesses. Current accounts offer a number of features and benefits that can be helpful for businesses, including the ability to write cheques, make electronic payments, and earn interest on deposits. Current accounts can also be used to manage business finances and can provide valuable insights into cash flow.
Interest rates – Consumers do not earn any interest on current accounts.
Withdrawal Limit- There is no limit to how much money can be put in a current account. Current accounts also do not have a transaction limit.
Benefit- Basically, this type of bank account is used for business purposes. Where a high amount of transactions can be done.
3. Salary Account
Most salary accounts in India offer a number of key features that are designed to make banking simpler and more convenient for account holders. Some of the most common features include:
Zero balance account- This type of salary account does not require a minimum balance to be maintained, making it ideal for those who are paid monthly and may not always have a large amount of money in their account.
High-interest rates- Salary accounts usually offer higher interest rates than standard savings accounts, making them a good option for those looking to grow their money.
Free transactions- Many salary accounts offer unlimited free transactions, meaning you can make as many withdrawals and deposits as you like without being charged any fees.
Debit card and ATM access- All salary accounts come with a debit card which can be used to make cashless transactions and withdrawals at ATMs.
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4. NRI ACCOUNT
An NRI account is a bank account held by a non-resident Indian. These accounts are typically used for managing money and transactions related to property in India. NRI accounts can be either resident or non-resident accounts.
Resident NRI accounts are for NRIs who maintain a residence in India. Non-resident NRI accounts are for NRIs who do not maintain a residence in India.
The main difference between these two types of NRI accounts is the taxes and regulations that apply to them. Resident NRI accounts are subject to Indian laws and regulations, while non-resident NRI accounts are subject to the laws and regulations of the country where the account holder resides.
Both types of NRI accounts offer many benefits, including:
- The ability to manage your finances and property in India from abroad
- Tax benefits on income earned in India
- Access to banking services and products tailored for NRIs
- Attractive interest rates
If you are an NRI planning to open an account in India, it is important to understand the difference between resident and non-resident accounts so that you can choose the right account for your needs.
Non-Residential Ordinary Account (NRO)
If you are a resident of India but do not have a regular income from an Indian source, then you may opt for an NRO account. You can use this account to manage your earnings and expenses in India. This account is also useful if you want to send money to India from another country.
Key Features of an NRO
Assuming you would like content discussing the features of an NRO Bank account:
An NRO bank account is a Non-Resident Ordinary bank account that is meant for Indian citizens who live outside of India. The main purpose of this type of account is to help manage their income and expenditure while they are living abroad.
Some of the key features of an NRO bank account include:
- The ability to maintain Indian currency in your account, even though you are living outside of India.
- The funds in your account are protected from any kind of exchange rate fluctuation.
- You can use your NRO bank account to make investments in India, as well as pay any debts or outstanding bills that you may have.
- You can also use your NRO bank account to send money back to India, either as a one-time transfer or as a regular remittance.
Benefits
Assuming you would like content discussing the benefits of an NRO:
An NRO account provides many benefits for Indian citizens who live outside of India, including:
- The ability to manage your income and expenditure while living abroad
- Tax benefits on income earned in India
- Access to banking services and products tailored for NRIs
- Attractive interest rates
NRIs often choose to open an NRO account in order to keep their finances separate from their resident account. This can help to avoid any potential tax implications that may arise from having a resident account. Additionally, an NRO account can provide NRIs with access to attractive interest rates and other banking products and services that are designed specifically for them.
Non-Residential External Account (NRE)
A Non-Residential External account is an account that can be opened by a foreign national of Indian origin or a person of Indian origin who is resident outside India. The purpose of this account is to encourage saving in foreign currency by the account holder. The funds in this account can be freely repatriated outside India.
Key Features of an NRE
When you open an NRE account, you are actually opening a foreign currency account with an Indian bank. The main purpose of this account is to hold and manage funds earned in foreign currency. As the name suggests, NRE accounts are best suited for non-resident Indians (NRIs). However, resident Indians can also open this type of account if they wish to manage their foreign currency earnings.
Some of the key features of an NRE account include:
- Interest earned on the account is tax-free in India.
- You can freely transfer funds between your NRE and NRO accounts.
- You can repatriate (transfer) the entire balance of your NRE account to your home country at any time.
- You have the option to maintain your NRE account in either Indian Rupees (INR) or in a foreign currency of your choice.
Foreign Currency Non-Residential Account (FCNR)
If you are a resident of India but maintain financial interests outside of the country, then you may want to consider opening a Foreign Currency Non-Residential Account (FCNR). This type of bank account allows you to hold and transact in foreign currencies, which can be helpful if you need to make payments in another country.
There are a few things to keep in mind if you are thinking about opening an FCNR account. First, you will need to maintain a minimum balance in your account, which is typically $5,000 or equivalent. Second, your interest rates will be variable and subject to change, so you will need to stay on top of trends in the market. Finally, there may be some restrictions on how you can use your account, so be sure to check with your bank before opening one.
Key Features of an FCNR
An FCNR account is a Foreign Currency Non-Resident account that can be opened by Indian citizens living abroad or by foreign nationals living in India. The account can be opened with any of the authorized banks in India and can be maintained in either US dollars, Pound Sterling, Euros, Japanese Yen, Australian Dollars or Canadian Dollars.
The main features of an FCNR account are as follows:
1. The account holder can freely deposit and withdraw funds from the account.
2. The interest earned on the account is exempt from income tax in India.
3. The account holder can freely repatriate the principal and interest earned on the account back to their country of residence.
4. The account comes with a built-in life insurance cover of up to Rs. 5 lakhs.
5. The account can be opened with a minimum deposit of $1000 or it’s equivalent in other currencies.
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5. Recurring Deposit (RD) Accounts
A recurring deposit (RD) account is a type of bank account where you deposit a fixed amount of money every month for a certain period of time. The interest rate on RD accounts is usually higher than the interest rate on savings accounts.
RD accounts are a good option for people who want to save money but don’t have a lot of spare cash every month. You can open an RD account with any bank or financial institution.
The main benefit of an RD account is that it helps you to discipline your savings. You have to commit to depositing a fixed amount of money into your RD account every month, which can help you to save more effectively in the long run.
Another benefit of an RD account is that it offers you flexibility in terms of how much you want to save each month. You can start with a small amount and increase it gradually over time if you want to.
The main disadvantage of an RD account is that you will pay penalties if you miss a monthly deposit or withdraw money from your account before the end of the term. However, this is not usually a big problem as long as you are comfortable with the monthly commitment.
If you are looking for a safe and easy way to save money, an RD account could be a good option for you.
Key Features of a Recurring Deposit
A recurring deposit (RD) account is a type of bank account in which customers can deposit a fixed sum of money every month for a certain period of time. The key features of an RD account are:
1. Customers can choose their own deposit amount and frequency (monthly, quarterly, etc.)
2. Deposits can be made through cash, cheque or Direct Debit
3. Interest is earned on the deposited amount and is paid out at the end of the term
4. RDs can be used as collateral for loans
5. RDs can be withdrawn prematurely, but may incur penalties
6. RDs typically have a lower interest rate than savings accounts.
6. Public Provident Fund (PPF) Accounts
A public provident fund (PPF) account is a long-term investment option offered by the Indian government. PPF accounts offer a number of benefits, including tax-free returns and a high level of safety.
The main advantage of a PPF account is that it offers you guaranteed returns are the cash flows or other benefits that an investor realizes on investment over time. In fixed-income securities, returns consist of interest payments and/or capital gains., which means that your investment is not subject to market risks.
Another advantage of a PPF account is that it offers tax-free returns, which means that your investment grows faster than it would in a regular savings account.
The main disadvantage of a PPF account is that it has a lock-in period of 15 years, which means that you cannot access your money during this time. However, this can also be seen as an advantage as it encourages you to save for the long term.
If you are looking for a safe and easy way to save money, a PPF account could be a good option for you.
7. National Savings Certificate (NSC) Accounts
A national savings certificate (NSC) is a long-term investment option offered by the Indian government. NSC accounts offer a number of benefits, including tax-free returns and a high level of safety.
The main advantage of an NSC account is that it offers you guaranteed returns, which means that your investment is not subject to market risks. Another advantage of an NSC account is that it offers tax-free returns, which means that your investment grows faster than it would in a regular savings account.
The main disadvantage of an NSC account is that it has a lock-in period of 5 years, which means that you cannot access your money during this time. However, this can also be seen as an advantage as it encourages you to save for the long term.
8. Fixed Deposit (FD) Accounts
A fixed deposit (FD) account is a type of bank account where you deposit a fixed sum of money for a set period of time. The interest rate on FD accounts is usually higher than the interest rate on savings accounts.
There are two main types of FD accounts: short-term and long-term. Short-term FDs have a tenure of up to one year, while long-term FDs have a tenure of five years or more.
The main benefit of FD accounts is that they offer higher interest rates than savings accounts. This means that you can earn more money on your deposited funds.
FD accounts are also relatively safe investment options. This is because the interest rate on FDs is not linked to market fluctuations. This means that your deposited funds are not at risk of losing value if the stock market crashes.
However, there are some downsides to FD accounts. One downside is that you cannot access your deposited funds until the end of the tenure. This means that you cannot use your FD account as an emergency fund. Another downside is that you may lose out on potential earnings if interest rates rise during the tenure of your FD account.
Overall, FD accounts are good investment options
Key Features of a Fixed Deposit
When it comes to choosing a bank account, there are many options available in India. One popular type of account is the fixed deposit, which offers several key benefits.
With a fixed deposit, you can earn a higher interest rate than you would with a savings account. This is because your money is locked away for a set period of time, typically between one and five years.
Another advantage of a fixed deposit is that it can act as security for a loan. This means that if you need to borrow money, the bank may be more likely to approve your loan if you have a fixed deposit in place.
Finally, fixed deposits offer peace of mind. Knowing that your money is safely tucked away for the long term can be reassuring, especially if you are saving for a major purchase or goal.
If you are looking for a bank account that offers security and peace of mind, then a fixed deposit may be the right choice for you.
Conclusion
There are several types of bank accounts in India, each with its own set of benefits and features. It is important to choose the right account for your needs, as some accounts may be better suited for savings while others offer more options for transactions.