Types of Bank Accounts
A bank account can be a time deposit account or a term deposit account or a no frill account ie BSBDA .
TYPES OF BANK ACCOUNTS
(a) Savings Bank Account
(b) Current Deposit Account
(c) Fixed Deposit Account
(d) Recurring Deposit Account.
a. Savings Bank Account
This type of account can be opened with a minimum initial deposit that
varies from bank to bank. Money can be deposited any time in this
account. Withdrawals can be made either by signing a withdrawal form or
by issuing a cheque or by using ATM card. Normally banks put some
restriction on the number of withdrawal from this account. Interest is
allowed on the balance of deposit in the account. The rate of interest
on savings bank account varies from bank to bank and also changes from
time to time. A minimum balance has to be maintained in the account as
prescribed by the bank. Interest rate is paid to the account holders on
daily balance basis.
b. Current Deposit Account
Big businessmen, companies and institutions such as schools, colleges,
and hospitals have to make payment through their bank accounts. Since
there are restrictions on number of withdrawals from savings bank
account, that type of account is not suitable for them. They need to
have an account from which withdrawal can be made any number of times.
Banks open current account for them. On this deposit bank does not pay
any interest on the balances. Rather the account holder pays certain
amount each year as operational charge. For the convenience of the
account holders banks also allow withdrawal of amounts in excess of the
balance of deposit. This facility is known as overdraft facility.
c. Fixed Deposit Account (also known as Term Deposit Account)
Many a time people want to save money for long period. If money is
deposited in savings bank account, banks allow a lower rate of interest.
Therefore, money is deposited in a fixed deposit account to earn
interest at a higher rate.
d. Recurring Deposit Account
This type of account is suitable for those who can save regularly and
expect to earn a fair return on the deposits over a period of time.
While opening the account a person has to agree to deposit a fixed
amount once in a month for a certain period. The total deposit along
with the interest therein is payable on maturity. However, the depositor
can also be allowed to close the account before its maturity and get
back the money along with the interest till that period. The rate of
interest allowed on the deposits is higher than that on a savings bank
deposit but lower than the rate allowed on a fixed deposit for the same
period.
e. No Frill Account, ie BSBDA
The Basic Savings Bank Deposit Account allows you to bank with a zero
minimum balance requirement. All the existing ‘Nofrills’ accounts
opened by the banks are now converted into BSBDA in compliance with the
guidelines issued on August 22, 2012 by the Reserve Bank of India (RBI).
BSBDA guidelines are applicable to “all scheduled commercial banks in
India, including foreign banks having branches in India”. No charge will
be levied for nonoperation/activation of inoperative ‘Basic Savings
Bank Deposit Account’.
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