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Accounts Mode Of Operation In Banking | IPB India

Accounts Mode Of Operation In Banking | IPB India

Understanding how bank accounts operate (Mode Of Operation In Banking) is essential for managing your finances effectively. Whether you’re opening your first bank account or looking to gain a deeper insight into how they work, this guide will break down the various modes of operation in bank accounts in simple terms.

What are the Accounts Mode Of Operation In Banking?

Here is the list of account modes:

A savings account is like a safe place to store your money while earning a little extra in interest. Here’s how it works:

Deposits: You can put your money into a savings account whenever you want. It’s like putting your allowance or paycheck into a piggy bank at the bank.

Interest: The bank pays you a small amount of extra money called “interest” for keeping your money in the account. Think of it as a reward for saving.

Withdrawals: You can take money out of your savings account when you need it. There might be some rules about how often and how much you can withdraw without paying a fee.

Minimum Balance: Some banks might require you to keep a certain amount of money in the account. If your balance drops below this amount, they could charge you a fee.

Current Account

A current account is designed for everyday banking needs, like paying bills and receiving payments. Let’s explore how it works:

Deposits and Withdrawals: You can put money into your current account and take it out whenever you need it. This account is all about easy access to your funds.

No Interest: Unlike savings accounts, current accounts usually don’t pay any interest. They are primarily for managing your everyday expenses.

Checks: Current accounts often come with checkbooks, allowing you to write checks to pay for things. It’s like writing a special note to the bank to move your money.

Debit Card: You’ll also get a debit card linked to your current account. It works like magic—you swipe it, and the money is paid instantly from your account.

Mode of operation In Banking

A fixed deposit (FD) account is a way to earn more interest by keeping your money in the bank for a set period. Here’s how it operates:

Locking Your Money: When you open an FD, you agree not to touch your money for a specific time, known as the “term.” It can be months or even years.

Higher Interest: The bank rewards you with a higher interest rate than a regular savings account because you promise not to take out the money for a while.

Penalties: If you withdraw your money before the term ends, the bank may charge you a penalty or reduce the interest rate.

No Flexibility: FDs are for saving money you won’t need immediately. If you might need to access your funds soon, a regular savings account is a better choice.

Joint Account

A joint account is an account shared by two or more people, like family members or business partners. Here’s how it functions:

  • Multiple Owners: All owners have equal rights to the money in the account. They can deposit, withdraw, and manage the funds together.
  • Access Control: Some joint accounts require all owners to sign off on transactions, ensuring that everyone agrees on how the money is used.
  • Communication is Key: It’s crucial to communicate openly with co-owners to avoid misunderstandings about account activity.

NRI (Non-Resident Indian) Account

NRI accounts are for Indian citizens living abroad. They are specially designed to make managing finances from another country easier:

Types: NRIs can open various types of accounts, including NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts, depending on their needs.

Currency: NRI accounts can hold foreign currencies, making it convenient to manage income and expenses in a different country.

Repatriation: NRIs can often freely transfer money to their home country and back, subject to certain rules and regulations.

Taxation: Tax rules for NRI accounts can be different, so it’s essential to understand the tax implications based on your account type.

Must Read: Types of Bank Accounts in India

Salary Account

A salary account is where your employer deposits your salary. Let’s dive into how this mode of operation works:

Direct Deposit: Instead of giving you a physical paycheck, your employer transfers your salary directly into your salary account.

No Minimum Balance: Many salary accounts don’t require you to maintain a minimum balance, as they’re primarily for salary processing.

Benefits: Some salary accounts offer perks like zero-balance maintenance, a free debit card, and special discounts.

Transition: If you change jobs, your salary account can usually be converted into a regular savings or current account.

Must Read:

Types of Bank Accounts in India: All You Need to Know
Benefits of Having a PPF Account Online: Calculator

Dormant or Inoperative Account

Sometimes, people forget about their bank accounts, leading to dormant or inoperative accounts. Here’s what happens:

Inactive Period: If you don’t make any transactions or contact the bank for a long time, your account might be labeled as dormant or inoperative.

Restrictions: These accounts may have limitations, like not earning interest or charging fees. However, your money is still safe.

Reactivation: To reactivate the account, you typically need to contact the bank, update your information, and start using the account again.

Unclaimed Funds: If an account remains unclaimed for an extended period, the bank may transfer the money to a government authority for safekeeping.


Remember, banks provide various types of accounts to cater to different financial needs. It’s essential to choose the one that suits your goals and lifestyle. Regularly checking your account statements and understanding how each account mode operates will help you make informed financial decisions and keep your money safe and growing. So this is all about the Mode of Operation In Banking, we hope this information is helpful for you.

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