A Bank is a financial institution. People deposit their money by opening a bank account and get interest on their money. Banks Accounts have helped the people of India to save money as per their needs. The primary function of a bank is to accept deposits from the public and lend it further.
There are 4 types of banks in India.
1. Private Sector Banks
2. Public Sector Banks
3. Cooperative Banks
4. Foreign Banks
Different Types of Bank Accounts Available in India:- The different types of bank accounts available in India are as follows.
- Current Account:- This type of account is specifically for business organizations. Account Holder can perform multiple transactions. A person needs to maintain a certain amount of balance. The non-compliance of which leads to a penalty.
- Savings Account:- People open savings account to deposit their idle funds. The deposit in the bank attracts interest on it. The interest rate varies from bank to bank. There is a limit on withdrawals one can make in a specific period of time. A person needs to maintain a minimum balance on this account. It varies from bank to bank. One needs certain documents such as a PAN card, Aadhar card, etc.
- Recurring Deposit Account:- People willing to deposit a fixed amount of money every month go for a recurring deposit account. One should deposit a minimum of Rs. 1000 every month. It helps to attract interest in it. This type of account is beneficial for people who want a lump sum amount at a specific period of time.
- Fixed Deposits:- People who have idle lump sum cash and want to invest somewhere go for fixed deposits. The funds are locked for a period of 1-10 years attracting interest on it. The interest rate may vary from bank to bank. Interest is charged at a higher rate in this type of account. Withdrawal of funds before said tenure leads to a penalty.
- Salary Account:- These are bank accounts with zero balance i.e. it is not necessary to maintain a minimum balance in this account. This type of account is open for employees of a company or business. The salary of employees is credited to this account. No interest is given on this account. Rather than interest, the bank provides various offers on a salary account if transactions are done through a debit/credit card linked to it.
- Non-Resident Indian (NRI) Account:- Any NRI who wishes to open an account in India can go for an NRI account. There are 3 types of NRI accounts in India which are as follows.
- Foreign Currency Non-Resident Account (FCNR)– Under this account NRIs tend to deposit currency approved by RBI. The currencies allowed by RBI are- US Dollar, Australian Dollar, Canadian Dollar, Pounds Sterling, Euro, Japanese Yen. Interest is paid on this account. It also minimizes the exchange rate fluctuation risk.
- Non-Resident External Account (NRE A/c)- NRIs can save the money they earn outside India. This account doesn’t attract any taxes and interest. The savings are done in rupees.
- Non-Resident Ordinary Account (NRO A/c)- This account is for NRIs who have a source of earning in India. The interest is payable on this account and is also taxable under Tax Act, 1961.
Indian banks offer various types of bank accounts to cater to the different financial needs of people. Banks have helped the people of India to save money as per their needs. Not only Indian residents but NRIs can also save their money as per their needs. More savings in bank accounts will ultimately lead to the increased flow of money in the economy.