Friday, 1 January 2016

Types of Various Bank Accounts

Types of Bank Deposit Accounts in India -  Current, Saving Bank, Recurring Deposit, Fixed Deposit Accounts

Different Types of Bank Accounts


Type of Accounts in banks

Dear experts,
Although banks offer a wide variety of accounts, they can be broadly divided into five types: savings accounts, basic checking accounts, interest-bearing checking accounts, money market deposit accounts, and certificates of deposit. All five are insured by the FDIC (in most cases, up to $250,000 per account). Most banks offer all of these types of accounts, so the bank you choose probably won't restrict this decision, although it does make sense to choose the account type you want first, so you can focus on that type as you shop around to various banks.

Here is a brief description of each type of account:

Primarily Banks have 4 type of accounts:
  1. Saving Bank Accounts

  2. Current Accounts

  3. Deposit Accounts

  4. Loan / Cash Credit Accounts

1. Saving Bank Accounts: They are the most common accounts in banks. They can be opened by any customer, and yield a minimum rate of interest from the bank. For opening a saving bank account the basic necessity is you Aadhaar Card/ Voter ID/ Driving license/ Passport/ Pan Card.
There are different categories of Saving bank accounts from Banks to banks which yield different interest and provide different facilities as per their category. The famous Jan Dhan Accounts are an example of saving bank accounts.

2. Current Accounts :: Current Accounts are usually corporate/salaried accounts. Banks don’t yield any interest on these loans. Current accounts are usually high transaction accounts, maintained by companies. Banks offer many other facilities on current accounts like free transactions etc. To open current accounts different documents are required. It ranges from  Aadhaar Card/ Voter ID/ Driving license/ Passport/ Pan Card  , Certificate of incorporation, local authority certificates etc.


3. Cash credit/ Loan Accounts: Cash credits are limit accounts in which a limit is sanctioned and the beneficiary can transact the account like a normal current account. The beneficiary can withdraw, deposit money. Banks take interest on cash credits. Cash credits are given based on Salary, stocks etc.

4. Loan Accounts: They are the accounts in which bank has advanced a sanctioned amount to the beneficiary on account of an agreement between the bank and the beneficiary which defined as a interest percentage. Banks have different interest rates for different type and purposes of loan accounts. All loan account interest percentages in India are linked to base rate.

Loans in india are given on Fixed and Floating Percentages.
1. Fix rate loans are those loans where the interest rates remain same for the duration of the loan.
2. Floating Rate Loans: Interest on these loans is linked to base rate of the bank. The interest on these loans can increase or decrease depending on the the base rate of the bank. Usually customers take floating rate loans.
Loans in India are given for many purposes ranging from Home loans, education loans, agriculture loans. MSE loans etc.

5. Deposit Accounts: In India saving has been a habit. To enhance savings and get a good rate of interest people invest their money in Deposit accounts. There are primarily 3 type of deposits known in India.

6. Fixed Deposit: In this a fixed amount is deposited in the bank for a fix period of time and the customer gets interest according to the time interval. If a fixed deposit is closed before maturity, banks take charges for the premature closure. Maximum tenure for a fixed deposit can be 10 years.

7. Recurring Deposit: In this type of deposit a customer and the bank comes to an agreement that a customer will deposit a fix amount of money for a fix duration. After completion of the duration, the customer will get the total amount with interest from the bank. This scheme was launched to enhance more saving by people in small amounts on a regular basis.

8. Tax Saver Deposits: These deposits are made to save taxes. They can be opened for a maximum amount of 1.5Lacs and have a locking period of 5 years. In lue of these deposits the customer can reduce his taxable income by Rs 1.5Lacs.

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