Different Types of Bank Accounts in India

Banks give our money with much-needed security. Digital banking also makes the process of managing money so simple that you can accomplish almost anything using the bank’s app. This covers practically all services, including opening an account, managing funds, making transactions, investing funds, and terminating an account. Gone are the days when we had to wait in long lines for ordinary bank transactions.

Should You Have A Bank Account?

You must, of course. This is true regardless of whether or not you are employed. In fact, as soon as you are eligible, you should open a bank account. A bank account allows you to store and track your funds. It also allows you to invest in various types of assets. Because there are several sorts of bank accounts in India, the bank might pay yearly interest on the money depending on the type of account you have.

Money kept in bank accounts is a liquid kind of money. You can utilize it in an emergency or non-emergency circumstance anytime one arises. You can almost immediately withdraw money from your account using your ATM card or a check.

A bank account is a type of identification recognized by some government agencies. In reality, having a bank account is required for certain types of professional work.

However, keep in mind that keeping money in a licensed bank is definitely the safest option. It’s far safer than keeping your cash at home, where it could be damaged or stolen. Furthermore, money held in a bank is insured by the government, ensuring that your funds are protected even if the bank goes bankrupt or another crisis arises.

You can even pay your utility bills immediately through the banking portal with current bank accounts. This covers bills for energy, water, and phone recharges, among other things. If you link your bank account to a licensed lender, they can deduct monthly or annual payments from your account.

Are you curious about the many types of bank accounts available in India? The complete list can be found below.

Types of Bank Accounts in India – Explained 

1) Savings Account 

This is one of the most prevalent types of bank accounts in India, and it’s where most people begin their banking adventure. Savings accounts, as the name implies, can be held by one person or by two people (joint account). A savings account’s main goal is to help you save money. Interest is earned by keeping a given quantity of money in a savings account for a set length of time.

However, you can always use a debit card, passbook, or check to withdraw money from your savings account. You can put money into it whenever you want, either physically at the bank or by transferring funds from another account.

When you open a savings account in India, you will normally be given an account number, a checkbook, a debit card, and net banking information. The savings bank account is usually activated right away. To activate the debit card, you must make your first transaction using an ATM affiliated with the bank where you opened an account (the branch may vary).

As a result, you’ll have the following information for each savings account, which you’ll also communicate to anyone who needs to transfer money to it:

  • Account Number (your account’s unique identifying number)
  • IFSC Code (a unique code that identifies your bank’s branch)
  • Account Holder Name (this is the name you gave your account)
  • Name and location of the bank

Additional information on savings accounts:

  • While there are no restrictions on how many times you can deposit money into your account, there may be restrictions on how many times you can withdraw it. Most accounts, however, will be exempt from this restriction.
  • The interest rate on the money in your account is typically 4% to 6%.%
  • You may be required to maintain a minimum balance (determined monthly, quarterly, or half-yearly) depending on the type of account.)
  • Virtually everyone over the age of 18 can open a bank account (either an individual or joint-party account, depending on their age).

2) Current Account 

A current account is a type of bank account used for business reasons. For their business-related transactions, all businesses registered in India must maintain a current account. Businesses must pay GST and other taxes that they are qualified for as a result of these transactions.

Everyone will have a current account for their day-to-day business transactions, whether they are a startup or a major corporation. Each transaction involving the current account must be supported by a receipt/invoice, which will be utilized for tax purposes later.

It’s worth noting that, unlike a savings account, a current account in India does not pay interest on the money deposited. However, banks will levy their own service fee, which will be deducted monthly or annually. There is usually an overdraft feature with current accounts, however it comes with a fee. As a result, any overdraft transactions should be avoided.

Current accounts, like other types of bank accounts, come with the following features:

  • Account Number (your account’s unique identifying number)
  • IFSC Code (a unique code that identifies your bank’s branch)
  • Account Holder Name (this is the name you gave your account)
  • Name and location of the bank

Some things to keep in mind concerning current accounts, which are similar to other kinds of bank accounts:

  • You can deposit as much money as you want and as many times as you want in your account.
  • Current accounts typically have a higher minimum balance requirement.
  • Invoicing, tax filing, and other business-related services are normally available through current accounts’ net banking facilities, which are not available through savings accounts.

3) Salary Account 

In terms of functionality, these are similar to savings accounts in India, but they are one of the types of bank accounts maintained by companies in banks so that they can directly transfer the salary. Every employee of a company that uses this system is entitled to a salary account, into which they will be deposited their monthly pay and any bonuses.

Here’s some information on one of India’s most popular bank accounts:

  • The salary account, unlike most savings accounts, can be kept at zero balance. The employee can withdraw their entire wage for other use without incurring any penalties.
  • The amount of money placed into the salary account by the company has no limit. The holder of these accounts can also transfer funds to other accounts.
  • The amount in the salary accounts does not earn interest.
  • Workers have the option of converting their salary account to a savings account. These salary accounts may be changed to savings accounts after a period of inactivity. Savings accounts have their own set of rules, fees, and requirements.

The pay account also provides the following information, which is comparable to that of other types of bank accounts:

  • Account Number (your account’s unique identifying number)
  • IFSC Code (a unique code that identifies your bank’s branch)
  • Account Holder Name (this is the name you gave your account)
  • Name and location of the bank

4) DEMAT Account 

DEMAT Accounts are one of the types of bank accounts available to persons interested in trading stocks, mutual funds, and other financial instruments. They are essentially electronic accounts where you can buy the equities you’ve purchased. A dematerialized account is the long-form DEMAT account. The goal of a DEMAT account is to make stock trading simple and convenient. You can purchase and sell stocks on the fly with DEMAT bank accounts.

DEMAT bank accounts are usually linked to a trading account as well. Remember that the DEMAT account is where you keep the electronic stocks you’ve purchased. The trading account is the vehicle for buying and selling equities. Your trading account transactions are debited/credited from/to your DEMAT account in India.

You can link your DEMAT account to a savings account where you will deposit trading dollars. When you open a DEMAT account with the same bank that holds your savings account, the two accounts are frequently connected. You can choose which savings account to link the DEMAT account to if the DEMAT account is provided by a non-bank service.

  • DEMAT bank accounts can be accessed via a mobile app or through a online banking interface. The user interface will show you everything you need to know about the stocks, mutual funds, or other financial instruments you’ve bought, including their value.
  • DEMAT accounts typically require extensive documentation and application signing.
  • Selling and purchasing fees (commonly known as brokerage charges) may apply depending on the financial instrument you trade. Every DEMAT account provider charges a different brokerage fee.
  • The DEMAT types of bank accounts are handled by two government entities – the NSDL (National Securities Depository Limited) and the CDSL (Central Depository Services Limited).

5) Fixed Deposit Account 

These bank accounts are used to deposit monies for a set amount of time in order to receive interest when they mature. If you have spare cash, one of the most common ways to earn interest and expand it is to invest it in fixed deposits in India.

  • While there is no limit to the amount you can deposit into these types of bank accounts, you can only withdraw the money once. You will be the principal as well as a specific interest when the loan matures. There may be fees if you withdraw money before the maturity date.
  • Before you sign up for a fixed deposit account, examine the interest rate. The amount of interest earned is determined by the fixed deposit account provider, the original amount, and the time period.
  • Fixed deposits are popular because they often pay higher rates of interest than savings accounts. It benefits banks because they can keep a big volume of money for a certain period of time, and it benefits consumers because they obtain better returns without having to worry about market swings, etc.

6) Recurring Deposit Account 

These bank accounts are for people who desire to earn a set amount of money on a regular basis. In India, unlike fixed deposits, recurring deposit accounts pay a predetermined interest rate every month. This is also a popular investment option for those who want to avoid market fluctuations while earning higher interest than savings accounts.

  • The minimum deposit amount required to begin a recurring deposit varies from bank to bank. They can receive a fixed amount plus interest at the end of each month.
  • In India, on the other hand, a fixed sum is deducted from your savings account each month and put in a recurring deposit account. It earns a monthly interest here.
  • The time duration for depositing money in a recurring deposit account might range from six months to ten years. It can also be terminated before the conclusion of the term without losing any interest value.

7) NRI Account 

These bank accounts are designed exclusively for non-resident Indians who want to open a bank account in India. There are three types of bank accounts that fall under this category:

  • Ordinary Account for Non-Residents These bank accounts are used to keep track of their revenue earned in India, which is kept in rupees. While there is no limit to how much money can be deposited in an NRO account, you can keep any balance you desire in such circumstances. Interest is earned on these accounts, and the interest is taxable. The NRI can open a savings, current, or FD account through the NRO account.
  • External Account for Non-Residents These bank accounts are for their income earned outside of India (in their home country), and the money is kept in rupees. While the amount of money that can be put in an NRE account is unlimited, you can keep any balance you desire in such accounts. The principal and interest are not taxed. The conversation rates will apply to NRE account holders. The NRE account, like the NRO account, allows an NRI to open a current, savings, or FD account.
  • Non-Resident Foreign Currency Account These bank accounts allow NRIs to keep their money in the currency they earn, as long as the account is allowed by the Central Bank of India. The NRI can convert from their earning currency to any approved currency if the currency is not approved by the Central Bank of India. The amount of money you can deposit in FCNR accounts is unlimited, and you can keep any balance you wish in them. The principal and interest are not taxed. There may be currency conversions, and the NRI can only open a fixed deposit account through the FCNR account.

Also Read: India’s Private Banks List A Comprehensive Guide

Summary of The Various Types of bank accounts – Comparision

Account Type  Documentation Required General Purpose Interest Provided Average Duration of Account Opening
Savings  Identify Proof + Address Proof + Photographs Savings and expenditure Yes Immediate
Current Identify Proof + Address Proof + Photographs + PAN Card + Cheque from Savings Account + Additional Company Level Documents (Certificate of Incorporation, Company PAN etc.) Business transactions No 1-2 Working Days
Salary  Identify Proof + Address Proof + Photographs Transfer of salary  No 1-2 Working Days
DEMAT Identify proof + address proof + Photographs + PAN Card + Bank account proof + Income proof Stock / Mutual Funds / Other financial instruments trading and holding No 2-3 Working Days
Fixed Deposit Identify Proof + Address Proof + Photographs Grow money through Interest Interest at end of maturity period Immediate
Recurring Deposit  Identify Proof + Address Proof + Photographs Grow money through Interest Interest every month Immediate
NRI Passport copy + PAN copy + NRI proof (work permit or visa or overseas resident card) + Address proof + Cancelled cheque Savings and expenditure / business transactions / grow money through interest Yes 3 Working Days

Conclusion – Types of Bank Accounts

These are the various bank accounts available in India. To get started, choose the best bank in your area (government or private) and look for account creation documentation on their website. While savings accounts can be opened online, current accounts normally need a physical visit to the bank. Share your concerns and comments with them, and get started on your banking adventure.

Frequently Asked Questions

What is the minimum age to open a savings account in India?

10 years under the supervision of a legal guardian.

How to choose the right bank to open an account?

It must be a genuine bank that is easily available to you, has a large number of branches and ATMs throughout the country, and provides excellent customer service.

Can I close my account if I don’t need it?

You certainly can. Some banks allow you to do it online, while others require you to visit your local branch.

How do I get the secret PIN?

The bank will send it to you via courier or postal service. You can use this to create your own new pin via an ATM or the net banking / m banking portal.

Are there any costs for opening an account?

Savings and current accounts usually do not have any fees associated with them. DEMAT accounts, on the other hand, have an initial fee.

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