DIFFERENT TYPES OF BANK ACCOUNTS

DIFFERENT TYPES OF BANK ACCOUNTS

We should save our money because it can be used to meet future expenses like education, marriage , purchasing a home, illness, natural, calamities etc. During emergencies only savings could help us.

DEMAND DEPOSIT ACCOUNT

• Current account

• Savings account

TERM DEPOSIT ACCOUNT

• Fixer deposit account

• Recurring deposit account

CURRENT ACCOUNT DEPOSIT

• Current account is basically meant for business / trade purpose and are never used for the purpose of investment or savings 

• The main objective of current account holders in opening these accounts is to enable them to conduct their business transactions smoothly

FEATURES

• Most of the current accounts are opened in the name of firm / company accounts

• No interest is paid by banks on these accounts

• There are no restrictions on the number of transactions in current account and deposits are the most liquid deposits

• A current account is running and active account that may be operated upon any number of times during a working day

• Current account can be opened by individuals, business entities, Institutions, government bodies, societies, trusts etc

• Overdraft facility for a short period or on a regular basis up to specific limits are permitted in current

• Regular overdraft facility is granted as per prior arrangements made by the account holder with the bank

• In such cases the bank would honor checks drawn in access of credit balance but not exceeding the OD limit

SAVINGS BANK ACCOUNT

• Savings bank account are meant for individuals and a group of persons like clubs trust associations self help groups to keep the savings for meeting their future monetary needs and intend to earn income from their savings

• Banks give interest on these accounts with a view to encourage savings habits. This account helps an individual to plan and save for his future financial requirements

FEATURES

• Savings bank accounts are one of the most popular for individuals

• The bank pays interest at present on the daily balance maintained in the account during the month

• Withdrawal are permitted to the account holder on demand, on presentation of cheque or withdrawal form / letter

• Cash withdrawals in excess of the specified amount for transaction / day required prayer notice to the bank branch

• No overdraft is excess of the credit balance in savings bank account is permitted as there cannot be any debit balance in savings account

• Cheque book facility accounts in which withdrawals are permitted by checks drawn in favour of self or other parties

• Nan check book facility accounts where account holders are permitted to withdrawal only at the drawee Bank branch by submitting a withdrawal farm or a letter accompanied with the account passbook requesting permission for withdrawal. In such cases third party cannot receive payments

• Banks put certain restrictions on the number of withdrawals per month / quarter, amount of withdrawal per day, minimum balance to be maintained in the account on all days etc. A fee / penalty is levied if this are violated

• W.e.f. 25th October 2011 RBI has deregulated SB account interest rates and now banks are free to decide the SB account interest rates within certain conditions imposed by RBI

• From FY 2012-13 interest turned up to 10000 in a financial year on SB account is exempted from income tax

SAVINGS BANK ACCOUNT VS CURRENT ACCOUNT

	Savings Bank Account	Current Account
Meaning	A Bank deposit account that encourages savings of a person	A Bank deposit account that supports regular money transactions related to a business
Suitable for	Individuals	Businessman or company
Interest	Yes	No
Withdrawals	Limited	Unlimited

"NO - FRILLS"  SAVINGS BANK ACCOUNT

• No frills savings bank account is a basic account,a no pre-condition, low minimum balance maintenance account with simplified KYC norms

BASIC SAVINGS BANK DEPOSIT ACCOUNT (BSBDA)

• Basic savings Bank deposit account (BSBDA) is a zero balance savings account that takes care of your simple banking needs

• The aim of introducing basic saving bank deposit account is very much path of the efforts of RBI for furthering financial inclusion objectives

• This account will not have the requirement of any minimum balance

• While there will be no limit on the number of deposits that can be made in a month, account holders will be allowed a maximum of four withdrawals in a month, including ATM withdrawals

• All existing no frill accounts opened by the banks are now converted into BSBDA in compliance with the guidelines issued on 22nd August 2012 by RBI

ELIGIBILITY

• Pensioners, agricultural labours, employees of an organised sector, member of SHG, self employed person, students etc

FEATURES

• The services available free in the basic savings Bank deposit account will include deposit and withdrawals of cash; receipt / credit of money through electronic payment channels or by means of deposit / collection of checks at Bank branches as well as ATMs

• Total credits in such accounts should not exceed rs 100000 rupees in a year

• Maximum balance in the account should not exceed 50000 at any time

• The total of debits by way of cash withdrawals and the transfer will not exceed 10000 in a month

• Remittance from abroad cannot be credited to small accounts without completing normal KYC formalities

• Small accounts are valid for a period of 12 months initially which may be extended by another 12 months if the person provides proof of having applied for an officially valid document

• Banks should offer the ATM debit cards free of charge and no annual fee should be levied on such cards

• In BSBDA, banks are required to provide free of charge minimum 4 withdrawals, through ATMs and other modes including RTGS/ NEFT/ clearing/ branch cash withdrawal/ transfer/ internet debits/ standing instructions/ EMI etc. It is left to the banks to either offer free or charge for additional withdrawals

• Balance enquiry through ATM should not be counted in the four with roles allowed free of charge at ATMs

FIXED DEPOSIT ACCOUNT

• Fixed deposits are repayable on the fixed maturity date along with the principal and aggrade interest rate for the period and no operations are allowed to be performed by the customer against the deposit as is permitted in demand deposits

FEATURES

• Fixed deposits are accepted for specific periods at specific interest rate as mutually agreed between the depositor and the banker at the time of opening the account

• Since the interest rate on the deposit is contractual, it cannot be altered even if the interest rate fluctuates - upward or downward during the period of deposit

• As per the directives of RBI, minimum period of fixed deposit is 7 days and maximum period of 10 years

• Fixer deposit is not a negotiable instrument, nor is it transferable like a cheque

• UN maturity of a deposit, the principal and interest can be renewed for another term at an interest rate prevalent at that time and a fresh deposit receipt is issued to the customer, evidencing a fresh contract

• Many banks prepay fixed deposits, at their discretion to accommodate customers request for meeting emergent expenses

RECURRING DEPOSIT ACCOUNT / CUMULATIVE DEPOSIT ACCOUNT

• Recurring deposit account a certain amount of savings are required to be compulsory deposited at specific intervals for a specific period

• Recurring deposit accounts are intended to inculcate regular and compulsory savings habit among the low / middle income group of people for meeting their specific future needs

FEATURES

• The customer deposits the effects some in the account at prefixed frequency (generally monthly / quarterly) for a specific period (6 months to 120 months)

• The interest rate payable on recurring deposit is normally the applicable rate of fixed deposits for the same period

• The total amount deposited is repaid along with interest on the date of maturity

• The depositor can take advance against the deposits up to 75% have the balance in the account as on the date of the advance for meeting emergent expenses

FIXED DEPOSIT ACCOUNT VS RECORDING DEPOSIT ACCOUNTS

	Fixed Deposit Account	Recurring Deposit Account
Saving	Lump sum	Instalments
Minimum amount to be deposited	Slightly high	Nominal
Returns	Comparatively high	Low
Advantage	It's enables the depositor to earn higher returns on his surplus funds	It develops the habit of savings in depositor

DEMON DEPOSIT ACCOUNT VS TERM DEPOSIT

DEMAND DEPOSIT	TERM DEPOSIT
payable on demand	Repaired after expiry of deposit period
Low interest rates or no interest	High interest rates which vary according to period
It include current and savings accounts	It include fixed and recurring deposit accounts
Interest paid on daily basis with respect to savings bank account	Interest paid quarterly and is cumulative over quarter

FOREIGN CURRENCY NON RESIDENT (FCNR) ACCOUNT

• An FCNR account is a term deposit account that can be maintained by NRI and PIOs in foreign currency. Does fcnr are not savings accounts but fixed deposit accounts

• This accounts can only be maintained in the form of term deposits for maturities of minimum 1 year to maximum 5 years

ADVANTAGES OF FCNR DEPOSITS

• FCNR fixture deposits are an excellent investment option for NRIs looking to retain their money in foreign currency and good returns on foreign currency earnings

• Principal along with interest freely transferable in the currency of your choice

• Flexibility in opening account in a choice of 9 currencies at present

• Interest airnet is not taxable in India

• No exchange risk as the deposit is maintained in foreign currency

• No wealth tax and income tax is applicable on these deposits

NOMINATION FACILITY

• Nomination facility is available for all deposit accounts, articles in safe custody and safe deposit vaults

• Nomination is available for accounts opened in individual capacity (i.e. single / joint accounts as well as accounts of a sole property concern) only i.e., not for accounts opened in representative capacity

• Nomination can be done in favour of one person only. However, nomination in favour of more than one person is permissible in giantly operated locker accounts

• Nomination can be made cancelled or varied by the account holder anytime during his / her lifetime

• The right of nominee to receive payment from the bank arises only after the death of the depositor in single account and death of all depositors in case of giant accounts

NOSTRO ACCOUNT

• Nostro is an Italian word which literally means our

• A bank account held by an Indian originated bank with a foreign bank is known as nostro account i.e., ours account with you

VOSTRO ACCOUNT

• Vostro is an Italian word which literally means your

• A bank account held by a foreign bank with an Indian originated banks is known as Vostro account.i.e., yours account with us