Different Types of Bank Accounts In India - Features & Benefits

Bank accounts are like warm nests for saving, investing, and growing your hard-earned money. Banks offer different types of bank accounts with unique features, catering to specific financial and money management requirements.

Bank accounts are important for many reasons –

• They allow the safekeeping of money.
• Funds can be quickly transferred to other accounts.
• Banks offer interest on money kept in a savings account along with many free/ low-cost services like credit/debit card, cheque facility, overdraft facility etc.
• Having a bank account makes it easier to get loans and other forms of credit.
• Bank accounts offer high liquidity as money can be withdrawn anytime.
• A bank account provides an identity that is acknowledged by many government institutions.
• Financial transactions through bank accounts are trackable and transparent through passbooks and account statements.

Let us learn about different types of bank accounts along with their benefits and features–

Savings Account

A savings account can be opened individually as well as jointly. The primary aim of a savings account is to save money.

Types of Savings Account

• Regular Savings Account
• Salary Account
• Senior Citizen Savings Account
• Women Savings Account
• Children Savings Account
• Zero Balance Savings Account

Benefits of Savings Account

• The bank pays interest on the money kept in a savings account.
• It inculcates a habit of saving.

Features of Savings Account

• Nominal minimum balance to be maintained.
• Provision of Debit/ATM card for easy withdrawal of funds.
• Ideal for service-class professionals, students, senior citizens, and pensioners.

Current Account

This account is mainly for businesses and other commercial institutions.

Benefits of Current Account

• Money can be withdrawn or deposited multiple times in the current account
• The facility of Internet banking

Features of Current Account

• Overdraft facility
• No interest is paid on the amount resting in the current account

Fixed Deposit Account

Popularly known as FD, a fixed deposit account is a popular saving tool. The FD account holder deposits a chunk of the amount in the bank as a fixed deposit for the decided duration and then can withdraw once that span matures.

Benefit of Fixed Deposit Account

• Banks pay attractive interest on the fixed deposit account

Features of Fixed Deposit Account

• Few banks allow partial and premature withdrawal of fixed amounts with interest levied on the balance amount.

DEMAT Account

DEMAT Account stands for ‘De-materialized Account’. Securities and shares are held electronically in this account, managed by two depository organizations - Central Depository Services Limited and National Securities Depository Limited.

Benefits of DEMAT Account

• Easy and smooth trading of bonds and shares
• Reduced paperwork
• Can be handled online from anywhere

Features of DEMAT Account

• Requires KYC of account holders
• Nominal transactional cost

Recurring Deposit Account

Also known as the RD account, this account is pooled with a fixed amount every month until the maturity date is reached (decided at the time of opening this account).

Benefits of Recurring Deposit Account

• A perfect option for saving with or without tax exemptions (tax exemptions for RD over 5 years of maturity)

Features of Recurring Deposit Account

• You can open the RD account individual or jointly
• The periodic amount has to be added to RD account that can be as low as Rs 100 (minimum/maximum amount varies from bank to bank)
• Maturity duration can vary from 6 months to 120 months
• Interest offered as per the recurring amount and the duration
• Nomination facility
• Passbook provided
• Premature withdrawal with a nominal penalty

NRI Account

This account caters to Non-Residential Indians. There are three types of NRI accounts -

NRO (Non-Resident Ordinary Rupees) Account

NRE (Non-Resident External Rupees) Account

FCNR (Foreign Currency Non-Resident) Account

• It is for parking foreign earnings in Indian currency.
• This is to park the income generated by NRIs within India (Rents, Investments, etc.) in Indian currency while they are away.
• This is a term deposit account for your foreign earnings held in foreign currency.