Different types of bank accounts in India you need to know

A bank account is a necessity in today’s life whether you are a student, a homemaker, a salaried individual or a business owner. It ensures your money is safe and helps you manage daily transactions and long-term savings. Moreover, having the right account helps you manage your money more easily and reach your financial goals.

Let’s discuss different types of bank accounts in India and their features in detail below.

Different types of bank accounts in India

Here is the list of bank accounts to choose from depending on your needs and financial goals:

Savings Account

A Savings Account is a basic bank account that allows you to save money while earning interest on deposits.

Key Features:

• The Savings Account interest rate can vary from bank to bank and a higher interest rate can help you grow your savings.
• It allows convenient access to your funds through ATMs, online banking, or branch withdrawals.

Current Account

A Current Account is designed for companies, public enterprises and traders who make transactions more frequently than others. It ensures seamless cash flow for businesses.

Key Features:

• There is no restriction on the number of transactions in a day.
• It comes with an overdraft facility, allowing you to withdraw more money than what is available in the account.

Salary Account

Businesses and corporations open this account for their employees for salary distribution. Additionally, you can convert a salary account into a Savings Account anytime.

Key Features:

• It comes without a minimum balance requirement as long as you receive a salary every month.
• Many banks offer benefits like higher transaction limits, lower loan interest rates and special offers.

Fixed Deposit Account

A Fixed Deposit Account allows you to deposit a lump sum amount for a fixed period and earn interest till maturity.

Key Features:

• The tenure of a fixed deposit can range between 7 days to 10 years, and you can earn interest at a fixed rate according to the tenure.
• Usually, premature withdrawals are not allowed. While some banks let you withdraw funds in the middle, interest earned is low in such cases.

Recurring Deposit Account

A Recurring Deposit Account allows you to deposit a fixed amount regularly instead of a lump sum and earn interest.

Key Features:

• You are expected to deposit money at regular intervals (monthly or quarterly) for a fixed period.
• The maturity period ranges between 6 months to 10 years. However, the tenure, once set, cannot be altered. Also, there is a penalty for premature withdrawals.

Non-Resident Indian (NRI) Account

As an NRI, you can manage your savings and income in India through the following NRI accounts:

1. Non-Resident Ordinary (NRO) account:
2. It allows you to manage income earned in India.
3. The interest earned is taxable in India.
4. You can repatriate funds up to USD 1 million in a financial year after paying taxes.
5. Non-Resident External (NRE) account:
6. It allows you to deposit your foreign earnings.
7. The interest earned is not taxed in India.
8. You can repatriate the funds without any restrictions.
9. Foreign Currency Non-Resident (FCNR) account:
10. It is maintained in foreign currencies like USD, EUR, etc.
11. The interest earned is not taxable in India.
12. You can repatriate the funds without restrictions.

 Conclusion

Understanding various bank account options in India is crucial to making informed decisions. Each is tailored according to varying requirements. You can pick the best option after assessing your financial needs and goals.

The most common among them is the Savings Account, which offers a secure place to keep your funds while earning interest on deposits.

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