Different Types of Bank Accounts in India

Banking in India started in the 18th century, but became an important tool to facilitate the development of the Indian economy in the 1960s. Since then, there have been numerous banks offering different types of banking accounts. It is important to know how the accounts work and which would fit your needs.

Types of Personal Bank Accounts in India

Savings bank accounts are the most popular account. They promote the habit of saving money, as the fund is locked for a certain period. The rate of interest is around 4 percent. The minimum balance to be maintained in the public sector banks is 100 Indian Rupees, but if you are planning to make more transactions and need a checkbook, the minimum balance to be maintained is 500 Indian Rupees.

Fixed deposit account is also known as Term Deposits. In a Fixed deposit account, a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. The rate of interest depends on the maturity period.

Types of Business Bank Accounts

The current account is a popular account used by the businesses. There is no limitation on the number of daily transactions as long as the funds are available and there is no interest paid by the bank on the current account balance.

A cash credit account is an account where the bank lends money against the security of commodities. The account holder is permitted to withdraw a certain sum called the “limit” or “credit facility,” fixed by the bank based on the percentage of the value of the commodities.

Choose the Right Bank

It is important to have your money secured in a reliable bank. The easiest way would be to go through the performance of the banks with respect to their total deposits, assets, total income, total expenditure, net profit and number of branches in India and abroad. The details are given by banks or they're available every quarter in newspapers and other media.

Documents Required

Some of the standard documents required for opening a bank account with any bank would be passport size photograph, proof of residence, reference from an existing account holder in the bank and the Permanent Account Number card (PAN). A PAN card is issued by the Indian income tax department for tax purposes.

Warning

It is advisable not to deposit money with any unauthorized private financial institutions. These institutions offer a higher interest rate, but are not governed by the Reserve Bank of India (RBI). The RBI is the central bank of India in charge of securing monetary stability in India.

References

• BankNet India: Decide the Bank Accounts you need