If you wish to open a bank account for the purpose of parking your money , you can choose from a range of accounts that the bank offers. In this article, we elaborate on the various types of deposit accounts offered by banks in India, their features and functions, the steps to open an online savings account and the definition of a zero balance account..
What the types of deposit accounts you can open in a bank?
Bank accounts in India can be broadly classified into six types. Each type caters to a different need of the customer and functions based on various rules laid down by the bank or NBFC (Non-Banking Financial Company).
- Fixed deposit (FD) account
A fixed deposit account is a popular investment instrument among Indians because of the lower risk involved. Investors can invest as much of a lump sum as they wish in an FD account. The bank also pays you interest on the amount deposited in an FD account, which is paid after completing the FD’s tenure.
- Recurring deposit (RD) account
A recurring deposit account has similarities to an FD account but more flexible in comparison. You can deposit a fixed monthly income in an RD instead of depositing a lump sum, like in an FD. Certain banks like IDFC FIRST Bank allow you to open an RD account at a minimum deposit amount of ₹100.
- Savings account
A savings account helps consumers increase their total savings since it also incurs interest on the amount deposited at the outset. It is a deposit account that can be opened using an Aadhaar card and a PAN (Permanent Account Number) card. The interest rates offered by banks on savings accounts usually range from 2.70% per annum to 7.00% per annum.
IDFC FIRST Bank offers a savings account interest rate of up to 6% per annum and monthly interest credits, allowing you to save more.
- Current account
Current accounts are used by business owners who need to transfer money between two accounts frequently. Unlike savings accounts, current accounts do not limit the amount of money that can be deposited at a time. However, the minimum balance that needs to be maintained in a current account is much higher than in a savings account.
- Salary account
Companies or organizations open a salary account for their employees to enable them to transfer their monthly salaries to their bank accounts directly. However, no interest is earned by employees through a salary account.
- NRI (Non-Resident Indian) accounts
Banks offer three types of NRI accounts: NRE (Non-Residential External), NRO (Non-Residential Ordinary), and FCNR (Foreign Currency Non-Residential) accounts.
- NRE account
An NRI can deposit as much as they want in an NRE account. Moreover, the principal amount and the interest earned are not taxed.
- NRO account
A bank allows you to deposit as much money as you wish in an NRO account. An NRO account remains unaffected by the rate of conversion.
- FCNR account
An FCNR account holder can deposit money in the account only in the currency approved by the Reserve Bank of India (RBI). If the NRI earns in a currency other than the approved list of currencies by the RBI, then the bank chooses an approved currency for processing the deposit.