Bank accounts are primarily used for savings, but at the same time, the bank also pays interest on the amount of your deposit. Bank provides security, safety and convenience for your money. Whether you choose online banking or traditional banking, there are several account options to select.
There are different types of accounts to meet your different needs; numerous accounts allow paying bills or other transactions, while others are designed for short term or long term savings.
There are four categories of Banks operating in India: public banks or nationalized banks, Private banks, cooperative banks, and foreign banks. All these types of banks allow Citizens to open accounts in India.
You have to understand how to choose the correct bank account that suits your requirement. Now you need to know the various types of bank accounts that all these types of banks offer.
- Savings account
- Current account
- Salary account
- Fixed deposit account
- Recurring deposit account
- NRI accounts
- 1. Savings Account
- 2. Current account
- 3. Salary Account
- 4. Fixed Deposit Account
- 5. Recurring Deposit Account
- 6. NRI accounts
- Types of Bank Accounts in India and their Interest Rates
- FAQ – ( Frequently Asked Questions )
1. Savings Account
Savings accounts are most commonly used in India for saving purposes. A person can open it individually or jointly by two people. The benefit of a savings account is that account holders earn interest on their deposits.
Banks provide different Savings accounts such as regular savings accounts, senior citizens, savings accounts for children, institutional savings accounts, family savings accounts, Student savings accounts and many more.
Some Banks also allow opening zero-balance savings accounts with advanced features. Look below to see the features and benefits of a savings account.
Features and Benefits of a savings account.
- Savings Account interest rates :- The account holder can earn interest in the range of 2.5% per annum to its deposits with above 1 lakh Rupee
- Minimum Balance :- Different banks have different minimum balance requirements
- Zero-Balance :- Some Banks also offer zero-balance accounts in India. It means there is no minimum balance requirement.
- Interest :- Bank pay interest on account holder’s deposits
- No Limit :- No matter how long a customer can hold a savings account without limitation
- Internet Banking :- Savings account offer internet banking facilities, allowing the User to check Balance, fund transfer, request for a Cheque book, print e-statement, get details of transactions and many more.
Savings Account Facilities
- Mobile Banking :- in a Savings account, the customer can transfer money to another bank within minutes through NEFT, IMPS, RTGS and SWIFT.
- Payments :- Make bill payments, mobile recharge, DTH Recharge, electricity bill, water bill and many more.
- Loan :- Get loans such as personal loans, home loans, Tractor Loan, Commercial Vehicle Loan, Car loans and many more
- Insurance :- Make health insurance, motor insurance, two-wheeler insurance, accident insurance and ma more
- Withdrawal :- Withdraw cash from any ATM
- Apply online :- Debit Card, Credit Card, Cheque book and many more
2. Current account
The current account is necessary for those who make several transactions in a day. This account is popular among business people and traders. The bank does not pay any interest on the current account.
Features and benefits of current account
- Limit :- No limitations, User can do several transactions in a day
- Interest :- No Interest on current account
- Overdraft :- Overdraft facilities available in the current account
- Phone And Net Banking :- IInternet banking and mobile banking are also public in the current account.
- Minimum Balance :- Higher least balance need in a current bank account
- Open By :- Current accounts are opened by Companies, Businessmen, Traders, Associations and Institutions
3. Salary Account
Salary accounts are mainly provided to salaried person. With this handy way, Companies pay monthly salaries to the employees, and salary account has to open as per tie-up between bank and employer.
Features and benefits of salary account
- Interest :- Salary account earn interest on the deposit.
- Balance :- Salary account holder avail advantage of zero minimum Balance in the account
- Benefits :- Benefits of these accounts varies bank to bank
- Payments :- You can Pay bills via Salaried account
- Facilities :- Get facilities of ATM cards, Debit Cards, Credit Cards and Cheque book. Banks also offer Mobile banking and Net banking in this account. The account holder can transfer money through NEFT, IMPS and RTGS.
4. Fixed Deposit Account
Fixed Deposit account, also called FD. Anyone can open a Fixed Deposit account in a Public Bank and Private Sector Bank in India.
In an FD account, a user can invest their fund for a specific period of time. The Certain range of Fixed Deposit accounts varies from 5 to 10 years.
You can not withdraw money prematurely; If you want to do so, you have to close the FD account permanently.
Features and benefits of Fixed Deposit accounts in India
- Open with :- Users can open it with Mobile Banking, Internet Banking and through visiting a local branch
- Limit :-Customers can deposit money at once and get it at once. The depositor needs to deposit a fixed amount for a specified period.
- Interest :- The interest rate depends upon the Deposit money’s period
- Interest Comparison :- Interest rates are varied in each bank for FD.
- Benefit :- Banks offer higher interest rates on FD as compared to savings accounts.
5. Recurring Deposit Account
In India, Recurring Deposit Account is also Called RD. Public Sector Bank and Private Sector Bank and Post Office also offer this type of account to their customers for getting a higher rate of interest. Customers can open it with a minimum amount of as less as 100 Rupees.
The Certain Range of RD Accounts can have from 6 months to 120 months. The customer can decide on a fixed amount instalment that has to deposit in the bank every month.
The account holder has to pay instalment amounts regularly every month. Delay in instalment bank can charge penalty.
Features and benefits of Recurring Deposit (RD) Account in India
- Limit :- The minimum limit for Opening an RD varies from bank to bank. You can take instalments as low as 1000 INR.
- Interest :- The interest rate in RD is higher as compared to a Savings account
- Period of RD :- Duration of RD is 6 months to 10 years
- Withdrawal :- No premature withdrawal in RD, Even then, if you wish to close the account before the ending period, then you have to pay the penalty.
6. NRI accounts
Banks provide two types of NRI accounts for Indians living abroad. The first is the NRO account, and the second is the NRE account.
NRO means Non-Resident Ordinary, and NRE means Non-Resident External.
Both NRI accounts include four types of savings account: fixed deposit, current account, and Recurring Deposit. Let’s have a look at various types of bank accounts for NRIs.
NRE account ( Non Resident External )
Users can transfer their foreign currency to an NRE account quickly in Bharat. NRIs can open savings accounts, Fixed Deposit accounts, recurring deposit accounts, and current accounts, which are rupee dominated.
NRO account ( Non Resident Ordinary )
NRO account is rupee dominated, which can open in Savings, Fixed Deposit, Recurring Deposit and Current account.
The purpose of this account is to deposit money that they earn in India, in the form of interest, rent dividend etc. NRIs also can transfer foreign currency in these accounts.
Types of Bank Accounts in India and their Interest Rates
|Type of Accounts||Interest Rates (p.a)|
|Savings Account||up to 6.7%|
|Current Account||Not Applicable|
|Recurring Deposit Account||up to 7%|
|Fixed Deposit Account||up to 7.25%|
|NRI Account||up to 6.75%|
FAQ – ( Frequently Asked Questions )
1. What type of bank accounts pay interest?
Ans:- Savings, Fixed Deposit and Recurring Deposit.
2. Which account pays more interest Savings or Fixed deposits?
Ans:- Fixed Deposit account.
3. What are the different types of Bank accounts in India?
Ans:- 1. Savings Account
2. Salary Account
3. Fixed Deposit Account
4. Recurring Deposit Account
5. Current Account
6. NRI Accounts
4. What types of NRI account in India?
Ans:- NRO, NRE and FCNR
5. Which account requires the lowest minimum balance?
Ans:- Savings account
6. Which account does not pay interest?
Ans:- Current account
7. How many types of bank accounts are in India?
Ans:- There are six types of bank accounts in India
8. Can I open a Savings account with zero balance?
Ans:- Yes, you can open a savings account with zero balance
9. What are the 4 types of banks in India?
Ans:- 1. Public Sector Bank
2. Private Sector Bank
3. Cooperative Banks
4. Foreign Banks