6 Bank Account Types in India With Key Features – Indian Online Services

Bank account types in India help you to save your money but it is not limited to this purpose only. You can also have a good interest rate on your savings.

Apart from that a bank account also helps you to have compound investments on your deposits. This allows you to have a good amount of interest.

The bank types in India fall under four different categories. These include private banks, the public sector, foreign banks, and cooperative banks.

However, it is important to know which type of banking suits your requirements. Therefore one must have a better understanding of the different banks.

Bank Account Types in India

Here are the 6 different types of bank accounts in India:

1. Savings Account
2. Current Account
3. Salary Account
4. NRI Account
   1. Non-Residential Ordinary Account (NRO)
   2. Non-Residential External Account (NRE)
   3. Foreign Currency Non-Residential Account (FCNR)
5. Recurring Deposit Accounts (RD)
6. Fixed Deposit Accounts (FD)

Let’s see 6 bank account types in India with details.

1. Savings Account

The savings account is a very reliable bank account that any individual holding a Pan or Aadhaar card can open. Having both of the cards is necessary for any Indian resident to have a savings account.

Key features of savings account:

Here are some of the important features of a savings account:

Limit

The savings account does not provide any limit to the bank account. An individual can save as much amount as he wants in the account. However, the number of transactions you make may have some limits.

Balance

A person having an Indian bank account is required to have a minimum balance in his account to keep it running. This exception is for those savings accounts that are opened under the federal government’s financial inclusion plan i.e Pradhan Mantri Jan Dhan Yojana.

Furthermore, the bank account under PMJDY opens with zero bank balance, and the transactions are kept at four. This type of account lies under the Basic Savings Bank Account category.

Interest

A consumer earns interest on the deposits in his account. This interest comes from the savings in his account. The interest rate varies for each bank.

Advantages

The individual having a savings account can earn the interest on the idle balance in the bank account. It is the easiest way to earn interest on this type of bank account.

2. Current Account

Current accounts are mostly for business usage. These accounts are used for business purposes. The big organizations use current accounts for making transactions. Moreover, the current accounts are basically for daily business activities.

Key features of current account:

Here are some of the important features of the current account:

Limit

There is no limit on the current account and an individual can deposit as much amount as he wants. Plus, there is also no limit on the transactions in this type of account.

Balance

A current account has a minimum balance requirement than a savings account. An individual having a current account can deposit less amount than a savings account.

Interest

The consumers do not earn any interest using a current account. A current account differs from a savings account in this regard.

Advantages

The current accounts provide the facility of overdrafting when a consumer withdraws an amount from his money. This facility allows him to draw more amount than the present amount in the account.

3. Salary Account

These bank accounts are opened at the request of big organizations or companies who pay their salaries through the bank to their employees. In addition, the company provides a salary to each employee through this account and they are eligible to maintain it for their income.

Key features of salary account:

Here are some of the important features of a salary account:

Limit

There is no limit on how much money an individual can deposit in this type of account. The individuals will receive their salaries from their employees which depends on the amount of disbursal. The number of transactions is also not limited.

Balance

A salary account is a zero balance account when it comes to deposits. The employees can withdraw all of the amounts from their accounts.

Interest

There is no interest rate on the salary accounts. This type of account does not provide any interest on salaries.

Advantages

One of the best advantages the salary accounts provide is that these accounts can be changed to savings accounts at any point. Furthermore, in case of inactivity for more than 3 months, the bank will automatically change the account to a savings account.

4. NRI Account

The NRI accounts are for those individuals who are not residents of India. These people are the ones who wish to maintain a bank account in India.

Here are three types of NRI accounts:

1. Non-Residential Ordinary Account (NRO)
2. Non-Residential External Account (NRE)
3. Foreign Currency Non-Residential Account (FCNR)

a. Non-Residential Ordinary Account (NRO)

These accounts hold the money in Indian rupees. The money in this type of account is an individual’s income through India.

Key features of an NRO account:

Limit

There is no deposit bound in an NRO account. The NRIs can deposit as much amount as they want to.

Balance

Any amount is easy to maintain in this type of bank account. The account does not have any limit for depositing.

Interest

The interest that is earned on an NRO account is taxable. The individual who has an interest in this account is inclined to pay tax.

Advantage

These accounts are not affected by the rate of conversion. The NRI can convert this account to a current account, a savings account, or a fixed deposit account through the NRO.

b. Non-Residential External Account (NRE)

This account also holds money in Indian rupees however the amount that the NRI deposits in this account is not earned from India. The money he deposits is from the country where the NRI lives.

Key features of the NRE account:

Here are some of the important features of an NRE account:

Limit

There is no bound to deposit the amount in an NRE account. The individual can add as much money as he wants.

Balance

The individual can maintain any amount of balance through an NRE account. It is easy to maintain the deposits through this account.

Interest

The principal and the interest amount do not lie under the taxable category. The amount is not accountable for paying taxes.

Advantage

These accounts allow easy conversion. The individual can convert this account to a current account, savings, or a fixed deposit account.

c. Foreign Currency Non-Residential Account (FCNR)

These accounts hold the currency that the Central Bank of India approves. Any individual can deposit the currency that they earn in this account however the Central Bank should approve it of India.

Furthermore, if the currency is not approved then the bank will convert it into an approved currency for proceeding with the deposits.

FCNR accounts are also known as FCNR (B) where B stands for banks.

Key features of FCNR account:

Here are some of the important features of an FCNR account:

Limit

There is no limit to depositing the amount in an FCNR account. The individuals can deposit the amount no matter how big it is.

Balance

The individuals can maintain any amount in the bank. It is easy to maintain the amount in this account.

Interest

The principal and the interest rate that an individual earns through this account do not fall under the taxable category.

Advantage

The accounts allow conversion at any point. The NRI can only be a fixed deposit account with one year of maturity.

5. Recurring Deposit Accounts (RD)

These accounts are for those consumers that are interested in earning interest on their deposits. In addition, the RD account allows the consumer to earn a higher income than the savings account offers.

Key features of savings account:

Here are some of the important features of an RD account:

Limit

The limit of an RD bank account varies from one bank to another. The minimum limit to open this bank account starts from INR 1000 and can open with any bank of their choice.

Balance

RDs are the deposit accounts that allow the consumer to collect the monthly amount that is set at the start of the tenure of the account.

Interest

A fixed amount is deducted each month that goes into the RD account and counts as month-on-month interest. This amount of interest is often higher than the savings account.

Advantage

The RD accounts make a consumer-friendly financial decision. The consumers can choose from six months to up to 10 years to proceed the deposit their money in an RD account. Moreover, the individual can earn interest on the deposit.

6. Fixed Deposit Accounts (FD)

The fixed deposit accounts are opened on the basis of earning interest. Fixed deposits are a great way of earning interest on idle money.

Key features of FD account:

Here are some of the important features of a fixed deposit account :

Limit

There is no limit to depositing the amount in a fixed deposit account. The consumer can fix as much amount as they want. At the end of the month, they can have the interest on the fixed amount.

Balance

An FD account holder has a huge amount as an investment. The more he deposits the more interest he will have.

Interest

The bank pays interest on the deposit of the consumer. The consumer receives the interest once the tenure of the interest is complete. In addition, if a consumer breaks the FD, there is a risk that he might lose his interest and will only receive the principal.

Advantage

FDs are risk-free investments and most Indian banks provide this facility. It is mostly higher than the savings account’s interest rate. On the completion of the tenure, the consumer the sum of interest as the FD completes.

Summary

Banking in India is very convenient for Indian citizens and there is no doubt they are having all the financial benefits. The banks in India provide a financial advantage to all consumers and they can use their accounts according to their requirements. Six different kinds of banking accounts start from a common consumer to big organizations. The accounts are also helpful for salary disbursement and more.

For your convenience, here is the list of bank account types in India again:

1. Savings Account
2. Current Account
3. Salary Account
4. NRI Account
   1. Non-Residential Ordinary Account (NRO)
   2. Non-Residential External Account (NRE)
   3. Foreign Currency Non-Residential Account (FCNR)
5. Recurring Deposit Accounts (RD)
6. Fixed Deposit Accounts (FD)