Types of Bank Accounts

The Indian banking system is extremely different from other countries as it comprises both public and private banks. You shall have a wide range of bank options, from India’s most popular and widespread State Bank to the private Axis Bank. According to your feasibility, you can choose any bank that suits your needs the most. Most organisations offer different bank accounts, from savings to recurring accounts. So, you will have a myriad of options to choose from. Each account type has different utility and features. While utilities of bank account types are similar across different banks, their features are very different. For a better understanding of these banks and their functions, a user must know everything about these bank accounts and their aspects. 

What are bank accounts?

According to the core definition, a bank account is any financial account that records transactions between a customer and the organisation. Each financial organisation has the right to set its terms and conditions. Every user must abide by these rules to avoid compensation and other charges. It is mandatory to know about these rules to prevent any form of miscommunication. 

Every bank account has different features that vary from one bank to another. For example, interest rates differ across different banks for the savings account. As of 2022, HDFC bank has issued an interest rate of 3.5%, while SBI decided to lower their interests to 2.75%. Similarly, you need to keep INR 1000 as the minimum balance in the SBI account while the zero balance feature is available for the PNB savings. 

List of Indian banks

Indian banks have three categories: National banks, Private-sector banks, Regional rural banks and Foreign banks, we have listed only the national banks below. 

• State Bank of India
• Punjab National Bank
• Canara Bank
• Union Bank of India
• Bank of Baroda
• Indian Bank
• Bank of India
• Central Bank of India
• Indian Overseas Bank
• UCO Bank
• Bank of Maharashtra
• Punjab & Sind Bank

What are the types of bank accounts?

There are, in total, six different types of bank accounts, each having different features and utilities. A brief detailing has been represented in the following section. 

Savings account 

The savings account is the most common type of banking account that almost all banks have. It allows a user to deposit and withdraw funds in the quickest possible manner. A minimal interest rate is charged per annum. At the end of each financial year, the interest will appear in your account as an add on. When you make any deposit account or want to transfer the matured funds, you have to use the savings. 

In India, there are different types of savings accounts, like: 

1. Zero-balance savings account: In this, you won’t have to keep any minimum balance. 
2. Minor savings account: The first holder will be minor, but the second holder must be an adult. 
3. Senior citizen savings account: Once the user’s age is 60 or above, they can apply for the senior citizen savings account with more flexibility. 

Features

• You can issue a debit and credit card for the savings account. 
• Online and retail banking is possible with a savings account only. 
• The transactions are quicker and can be done within minutes. 
• You can also avail the cheque facility. 

Current account

The current account serves as the daily savings account, with the only difference in transaction volumes. A current account has a higher transaction daily limit. It also accepts many numbers of cheques with higher amounts. Transactions get processed much earlier to meet different needs. There are many different types of current accounts like:

1. Premium current account: With this account, you will receive a lot of tailored options to suit your transaction needs. 
2. Foreign current account: This account enables the user to send or receive money via international currencies to and from an overseas account. 
3. The packaged current account offers flexibility between a premium and a standard current account. 

Features

• Daily limit transactions are more for the current account. 
• Cheques accepted can have higher amounts.
• The deposit amount is also more than the savings account limit.

Deposit Account

There are two types of deposit accounts that most Indian banks allow. These are: 

1. Fixed deposit account: You need to deposit a certain principal for a fixed tenure like 11 months, 36 months, and more. Interest will be charged based on the time duration and amount of deposition. You can opt for a simple interest rate or a compound rate. 
2. Recurring deposit account: You have to deposit a fixed sum of money every month in a recurring deposit account. You will get the total principal deposited plus the interest rate at the end of the entire tenure. The Punjab National Bank has a special Flexi recurring account where you can deposit any amount to ten times the initial deposited money. 

PPF Account

The Public Provident Fund is a special account type that acts as long-term savings for salaried and employed people. It also acts as one of the best methods for tax exemption. You can deposit money monthly or annually, maintaining the minimum limit. There is no maximum deposit limit for the PPF account. No matter what, pre maturing the PPF deposit before 15 years will not be possible. 

Conclusion

With the demand for more bank accounts, the Indian banks have introduced many reforms. These reforms have made it feasible for users of all classes to deposit their funds, transfer them to another person, and more. As there are different bank accounts, one needs to know the specific rules according to the bank declaration or bulletin. The account types also differ according to the purpose. For example, both fixed and recurring accounts are deposit types. But fixed deposits need a lump sum amount as the principal, while the entire principal is divided into monthly premiums for recurring.