Traditionally banks
in India have four types of deposit accounts, namely Saving Banking Accounts,
Current Accounts, Recurring Deposits and, Fixed Deposits.
1. Saving Account - Saving accounts are opened
to encourage the people to save money and collect their savings. The saving
account holder is allowed to withdraw money from the account as and when
required. The interest on Saving Bank Accounts was fixed by RBI and it was fixed
at 4.00% on daily balance basis. RBI has deregulated Saving Fund account
interest rates and now banks are free to decide the same within certain
conditions imposed by RBI.
Features of Saving Accounts –
1. There is no
restriction on the number and amount of deposits. However, in India,
mandatory PAN (Permanent Account Number) details are required to be furnished
for doing cash transactions exceeding - >50,000.
2. Withdrawals are
allowed subject to certain restrictions.
3. A minimum amount
has to be kept on saving account to keep it functioning.
2. Current Account - Current Accounts are
basically meant for businessmen and are never used for the purpose of
investment or savings.
Features of Current Accounts –
(1) The main
objective of Current Account holders in opening these account is to enable them
(mostly businessmen) to conduct their
business transactions smoothly.
(2) There are no
restrictions on the number of times deposit in cash / cheque can be made or the
amount of such deposits;
(3) Usually banks do
not pay any interest on such current accounts.
(4) The current
accounts do not have any fixed maturity as these are on continuous basis accounts.
(5) Cheque book
facility is provided and the account holder can deposit all types of the
cheques and drafts in their name or endorsed
in their favour by third parties.
3. Recurring Desposit Account: Recurring Deposit is
a special kind of Term Deposit offered by banks in India popularly known as RD
accounts which help people with regular incomes to deposit a fixed amount every
month into their Recurring Deposit account and earn interest at the rate
applicable to Fixed Deposits.
Features of RD Accounts –
1. Recurring Deposit
accounts are normally allowed for maturities ranging from 6 months to 120
months
2. These accounts can
be opened in single or joint names. Nomination facility is also available.
3. Rate of Interest
offered is similar to that in Fixed Deposits.
4. Interest is
compounded on quarterly basis in recurring deposits.
4. Fixed Deposit Account (FD) - The account which is
opened for a particular fixed period (time) by depositing particular amount
(money) is known as Fixed (Term) Deposit Account. The term 'fixed deposit'
means that the deposit is fixed and is repayable only after a specific period
is over. Under fixed deposit account, money is deposited for a fixed period say
six months, one year, five years or even ten years. The money deposited in this
account can not be withdrawn before the expiry of period.
Features of FD Accounts –
1. The main purpose
of fixed deposit account is to enable the individuals to earn a higher rate of
interest on their surplus funds (extra money).
2. The amount can be
deposited only once. For further such deposits, separate accounts need to be
opened.
3. Fixed Deposit
Account may be opened for a minimum period of 15 days and maximum period of 10
years.
4. The minimum amount
required to open a Fixed Deposit is Rs.1000.
5. Withdrawals are
not allowed. However, in case of emergency, banks allow to close the fixed
account prior to maturity date. In such cases, the bank deducts 1% (deduction percentage
many vary) from the interest payable as on that date.
About (BASIC SAVING BANK DEPOSIT ACCOUNT): Under
the guidelines issued on August 10, 2012 by RBI: Any individual, including poor
or those from weaker section of the society, can open zero balance account in
any bank. BSBDA guidelines are applicable to "all scheduled commercial
banks in India, including foreign banks having branches in India".The aim
of introducing 'Basic Savings Bank Deposit Account' is very much part of the
efforts of RBI for furthering Financial Inclusion objectives.
Main Points of BSBDA-Small Accounts:
i. In BSBDA, banks
are required to provide free of charge minimum 4 withdrawals, through ATMs
ii. Total credits in
such accounts should not exceed 1 lakh rupees in a year.
iii. Maximum balance
in the account should not exceed 50,000 Rs at any time
iv. The total of
debits by way of cash withdrawals and transfers will not exceed 10,000 rupees
in a month
v. Foreign
remittances cannot be credited to Small Accounts without completing normal KYC
formalities
vi. 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.