Complete guide of Bank account in INDIA

Types of Bank account in INDIA

Dear Friends,

There are multiple types of accounts provided by bank which caters to the various needs of the customers. Today we will go through the details and features of such accounts.


1.      Savings Account:
·         This is the most common type of bank account. It is the sophisticated form of the Piggy bank which we all would have used in our childhood. Savings account allows us to withdraw or deposit money multiple times. There are some added facilities like ATM card, Cheque books, Withdrawal forms which help us to do monetary transactions. There are limited numbers of transactions available in savings account.
·         Savings account is generally used to keep our money in a bank. It earns us an interest of 4-6% per year.  Most PSU banks give 4% interest but some private players have made the market better for customers by giving 6 to 7% interest (based on some conditions).
·         Most banks keep a minimum amount limit which must always be maintained in account else the customer needs to pay some penalty.
·         Savings account can be opened individually or jointly with a partner.

Some sub-varieties of Savings account

A.      Salary account: This is a variety of Savings account where the monthly salary of a person is getting credited to a Savings account and if the bank and the company have some tie-up then the person will be entitled to some benefits like lower home loan rate, lower or no NEFT / RTGS/ IMPS charges.

B.      No Frills account: In No frills account the minimum balance requirement is not there. There is no penalty levied on customer even if the amount in account becomes Zero.

C.      Sweep-in account: This is the best form of Savings account which provides the liquidity of Savings account and returns of a fixed deposit. In this type of account, User can select the maximum amount that he/she wish to keep in Savings account and move the surplus amount in automatic Fixed deposits. User is given the option to choose the tenure for which the FD needs to be created. Once user provides all this input, the surplus balance is converted to FD. But the best thing is, whenever user need the money he can readily withdraw the amount without waiting for the FD to break in a day or two.

2.       Current Account:
·         Current account is not meant for savings. It is used to park money for short term.
·         It is mostly used by businessmen or Firms.
·         There are no restrictions on the number of transactions done through these accounts.
·         Generally, No interest is paid for parking money in Current account. Rather the bank charges some Annual fee for maintaining the Current account.
·         Cheque book facility is available for current account also.


3.       Recurring deposit: (RD)
·         Recurring deposit are small saving account where we need to put a fixed amount monthly and earn interest on the deposited amount.
·         Banks usually provide the time duration from 6 months to 10 years to serve a RD.
·         Minimum amount which need to be deposited in a RD is Rs. 100 and its multiples thereafter.
·         Now, some banks give the option of flexible RD also where we can add some amount as per our wish on top of the monthly fixed amount that we deposit. One such example is iWish account facility provided by ICICI bank.
·         Interest earned in RD is from 4 to 8%


4.       Fixed deposit: (FD)
·         Fixed deposits are the deposit accounts used by customers to lock their money for “fixed” time duration. This money deposited earns interest in tune of 4 to 8%.
·         This is one of the favorite saving options of Indian household. Simple and easy to use.
·         If user wish to take out the money before the fixed duration is over, then he needs to pay a penalty of 1% to withdraw the money.

5.       Demat Account:
·         This account is used to keep the Shares of a company in dematerialized form. This account is not used to keep any direct money.
·         If a user wishes to do trading in share market he needs Demat account to buy and sell shares. He just needs to provide the information to his broker about his Demat account.
·         There are various charges associated with Demat account like Account opening fee, Annual maintenance Charges, Transaction charges etc.


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