Types of bank accounts in India

Navigating the financial landscape in India can be complex, especially when it comes to understanding the various types of bank accounts. For individuals and businesses alike, selecting the right type of account is crucial for managing finances effectively. Let’s explore the different types of bank accounts available in India, including their key features and benefits.

Different types of bank accounts

Savings Account

A Savings Account is the most common type of bank account in India, designed for individuals who wish to save money while earning interest on their deposits. It's a fundamental financial instrument aiding in handling various needs, such as money transfers, bill payments, shopping, addressing unforeseen situations, and investment.

They are ideal for salaried individuals, seniors citizens, pensioners, and those with a regular income. Savings Accounts provide easy access to funds. They usually offer features like Debit Cards, internet banking, and mobile banking facilities. Some savings accounts also provide additional lifestyle advantages such as discounts for online shopping, cashback incentives, and a range of other perks.

Axis Bank offers a range of Savings Accounts with features like higher transaction limits, free online transactions, and easy access through its vast network of branches and ATMs.

Also Read: 6 things to consider before opening a Savings Account

Current Account

Current Accounts are primarily used by businessmen, firms, companies and public enterprises to handle a high number of transactions. This includes deposits, withdrawals and contra transactions. They are ideal for handling large volumes of receipts or payments for their day-to-day operations of businesses.

A current account holder can freely make numerous deposits, withdrawals, or transfers without concern for transaction limitations. These features empower businesses to seamlessly oversee their cash flow, handle vendor payments, and receive customer payments.

You do not earn interest on these accounts. They usually require a higher minimum balance compared to Savings Accounts. They enable overdrafts and facilitate easy fund transfers, incorporating Internet banking features. This proves beneficial during sudden cash shortages or emergencies.

Axis Bank’s Current Accounts come with customised solutions for different business needs, ensuring seamless financial transactions.

Also Read: Complete guide to opening a Current Account

Salary Account

A Salary Account is a type of Savings Account specifically designed for employees to receive their monthly salary. Typically, employers open this account on behalf of their employees, offering them seamless access to their earnings.

Salary Accounts often come with added benefits like zero balance requirements, exclusive offers on loans and additional perks such as cashback and discounts on purchases.

These accounts usually include features like free Debit Cards, internet banking and 24/7 customer support. Upon leaving a job, the Salary Account can easily be converted into a regular Savings Account.

Axis Bank's Suvidha Salary Account offers benefits like no minimum balance, free ATM withdrawals and preferential loan rates, making it ideal for salaried employees.

Recurring Deposit Account

A Recurring Deposit (RD) Account allows you to deposit a fixed amount every month for a predetermined period. You earn interest at a rate similar to that of Fixed Deposits.

This type of account is suitable for individuals who want to save a part of their income regularly. It offers the flexibility of choosing the deposit term and is an excellent tool for goal-based savings like funding education or buying a vehicle.

You also have flexibility to determine the amount and duration of deposits with RDs, making them an ideal option for beginners in investing or those inclined toward a safer path. Noteworthy for their low-risk and disciplined investment approach, RDs are straightforward to set up, and you can even automate your investments.

Axis Bank offers flexible tenures and competitive interest rates on its Recurring Deposit Accounts, making it an attractive option for disciplined saving.

Fixed Deposit Account

Investors deposit money in Fixed Deposit (FD) Accounts for a set period at a predetermined interest rate. These accounts offer higher interest rates compared to Savings Accounts, making them a popular choice for short-term and long-term savings.

Fixed Deposits generally come in two variations - Cumulative and Non-Cumulative FDs. Within a Cumulative FD, the earned interest compounds and gets added to the principal amount. The entirety, comprising both principal and accumulated interest, is disbursed at the end of the term. In contrast, a Non-Cumulative FD pays out the earned interest at regular intervals, as per your choice. You can opt for receiving interest on a monthly or quarterly basis.

They provide the safety of capital and guaranteed returns. Premature withdrawal of the deposit is possible, though it may attract a penalty.

Axis Bank’s Fixed Deposits provide attractive interest rates, loans against FD facilities, and auto-renewal options, making them a secure and beneficial saving tool.

Also Read: What is Fixed Deposit (FD) ? Advantages of a Fixed Deposit Account

 

NRI Account

NRI Accounts are specially designed for Non-Resident Indians to manage their income earned outside India. There are two main types:

• Non-Resident External (NRE) Account
• Non-Resident Ordinary (NRO) Account

Non-resident Indians use NRE accounts to deposit foreign earnings in India with full repatriability, while they utilise NRO accounts to manage income earned within India. These accounts offer various benefits like high interest rates and repatriation benefits. They are usually held in Indian Rupees.

NRE accounts cater well to individuals seeking to transfer or retain their foreign earnings within an Indian bank account. You can deposit your foreign earnings in this account and earn completely tax free interest. Conversely, an NRO account offers access to earnings within India, making it an optimal choice for managing income derived from rent, interest, salary, and similar sources.

Deposits into an NRE account can be entirely repatriated, allowing you to transfer the money to a foreign bank account. Conversely, with an NRO account, post payment of applicable taxes, you can only repatriate up to USD 1 million in a financial year.

Axis Bank’s NRI Accounts offer features like convenient fund transfers, competitive exchange rates, and dedicated customer service. This ensures that global Indians stay connected with their financial needs in India.

DEMAT Account

DEMAT Accounts hold shares and securities electronically. This account is necessary if you want to invest in the stock market. It facilitates easy trading, holding, monitoring and transfer of securities.

DEMAT Accounts ensure a seamless process for trading and investments. They offer enhanced security against theft, damage or forgery.

You can enjoy a seamless banking, Demat, and stock investing experience with integrated 3-in-1 savings, DEMAT, and trading account with Axis Direct.

Conclusion

The diverse range of bank accounts caters to various financial needs and goals. Each type serves a unique purpose, from the convenience of a Savings Account to the investment-focused Fixed Deposit Account.

Axis Bank ensures that you have access to the right tools and services, whether you are saving, investing, or managing business transactions. With a commitment to customer satisfaction and financial excellence, choosing Axis Bank for your banking needs means choosing a path towards efficient financial management.

Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.