Bank Account Types in India: Savings, Current, FD & More

Introduction: Finding the Right Financial Home

When Anjali got her first job in Pune, her father advised her to open a “savings account.” When her brother started his business, the bank insisted on a “current account.” Their mother prefers “fixed deposits” for her retirement savings, while their NRI cousin has “NRE” and “NRO” accounts.

With so many types of bank accounts available, choosing the right one can be confusing. Each account type is designed for specific purposes—understanding them helps you maximize benefits and avoid unnecessary charges.

Overview of Bank Account Types

Bank Accounts in India
│
├── Deposit Accounts (CASA + Term)
│   ├── Savings Account
│   ├── Current Account
│   ├── Fixed Deposit (FD)
│   ├── Recurring Deposit (RD)
│   └── Flexi Deposit
│
├── Specialized Accounts
│   ├── Salary Account
│   ├── Senior Citizen Account
│   ├── Women's Account
│   ├── Minor's Account
│   ├── Joint Account
│   └── Basic Savings (Jan Dhan)
│
└── NRI Accounts
    ├── NRE Account
    ├── NRO Account
    └── FCNR Account

Savings Account

What is a Savings Account?

A deposit account for individuals to save money while earning interest. It’s the most common and fundamental bank account.

Key Features

Interest Rates (2024 Approx)

Note: Interest on savings above ₹10,000/year is taxable

Types of Savings Accounts

1. Regular Savings

• Standard features
• Minimum balance required
• Basic interest

2. Zero Balance Savings

• No minimum balance
• Basic features
• May have transaction limits

3. Premium/Privilege Savings

• Higher minimum balance
• Better interest rates
• Additional benefits (lounge access, insurance)

4. Women’s Savings

• Lower minimum balance
• Special benefits
• Insurance coverage

5. Senior Citizen Savings

• Higher interest (0.25-0.5% more)
• Priority service
• Lower charges

6. Kids/Minor Savings

• For children
• Operated by guardian
• Financial literacy tools

Who Should Open?

✅ Salaried individuals ✅ Self-employed for personal savings ✅ Students ✅ Anyone wanting to save money ✅ First-time account holders

Minimum Balance Comparison

Current Account

What is a Current Account?

A transactional account designed for businesses, professionals, and institutions requiring frequent and high-volume transactions.

Key Features

Savings vs Current Account

Types of Current Accounts

1. Regular Current

• Basic business account
• Standard features

2. Premium/Business Plus

• Higher free transactions
• Better overdraft
• Relationship manager

3. Sole Proprietor

• For self-employed
• Lower minimum balance

4. Partnership/Company

• Multiple signatories
• Higher limits

5. Current Account with Overdraft

• Pre-approved credit line
• Flexible borrowing

Overdraft Facility

What is Overdraft? Ability to withdraw more than account balance (up to sanctioned limit).

How It Works:

Account Balance: ₹50,000
Overdraft Limit: ₹5,00,000
Available: ₹5,50,000

Interest: Charged only on used amount, daily basis

Who Should Open?

✅ Businesses (any size) ✅ Traders and merchants ✅ Professionals (doctors, lawyers) ✅ Companies and partnerships ✅ Institutions and trusts

Fixed Deposit (FD)

What is Fixed Deposit?

A term deposit where money is locked for a fixed tenure at a predetermined interest rate. Also called Time Deposit.

Key Features

Interest Rates (2024 Approx)

Types of Fixed Deposits

1. Regular FD

• Standard term deposit
• Cumulative or non-cumulative interest

2. Tax Saving FD

• 5-year lock-in
• Section 80C deduction (up to ₹1.5 lakh)
• No premature withdrawal

3. Senior Citizen FD

• 0.25-0.50% higher rate
• Age 60+ eligible

4. Flexi FD

• Auto-sweep from savings
• Liquidity with FD returns

5. Corporate FD

• Higher rates
• Higher risk (company deposits)

Interest Payment Options

Cumulative:

• Interest compounds and paid at maturity
• Better for long-term
• Higher total returns

Non-Cumulative:

• Interest paid periodically (monthly/quarterly/annually)
• Good for regular income needs

Example (₹10,00,000 for 3 years at 7%):

FD Taxation

Who Should Open?

✅ Risk-averse investors ✅ Retirees needing regular income ✅ Emergency fund parking ✅ Goal-based short-term savings ✅ Tax savers (5-year FD)

Recurring Deposit (RD)

What is Recurring Deposit?

A systematic savings scheme where you deposit a fixed amount monthly for a predetermined tenure, earning interest similar to FD.

Key Features

How RD Works

Example: ₹10,000/month for 5 years at 7%

Total Deposited: ₹6,00,000 Interest Earned: ₹1,14,000 Maturity Amount: ₹7,14,000

RD vs FD

Who Should Open?

✅ Salaried individuals (monthly savings) ✅ Those without lumpsum ✅ Disciplined saving habit builders ✅ Short-term goals (vacation, gadget)

Salary Account

What is a Salary Account?

A savings account opened through employer tie-up where salary is credited directly. Offers special benefits.

Key Features

Benefits

During Employment:

• Zero balance requirement
• Free unlimited transactions
• Pre-approved loans/cards
• Insurance coverage
• Better credit score building

Special Offers:

• Personal loan at lower rates
• Credit card with higher limits
• Overdraft facility
• Better FD rates sometimes

Salary Account vs Regular Savings

NRI Accounts

Types of NRI Accounts

1. NRE Account (Non-Resident External) 2. NRO Account (Non-Resident Ordinary) 3. FCNR Account (Foreign Currency Non-Resident)

NRE vs NRO vs FCNR

NRE Account

Best For:

• Remitting foreign earnings to India
• Tax-free interest
• Full repatriation

Features:

• Rupee denominated
• Convert foreign currency to INR
• Interest: 6-7% (savings), higher on FD
• Principal and interest fully repatriable

NRO Account

Best For:

• Managing Indian income
• Rent, dividends, pension from India
• Family expenses in India

Features:

• Rupee denominated
• Credit local income
• Interest taxable in India
• Limited repatriation ($1 million/year)

FCNR Account

Best For:

• Avoiding currency risk
• Foreign currency savings in India

Features:

• Fixed deposit only
• USD, GBP, EUR, etc.
• Minimum 1-year tenure
• Fully repatriable
• Tax-free in India

Which NRI Account to Choose?

Basic Savings Bank Deposit Account (BSBDA)

Jan Dhan Account

Pradhan Mantri Jan Dhan Yojana (PMJDY):

Benefits:

• Financial inclusion
• DBT (Direct Benefit Transfer) receipt
• Free basic services
• Insurance coverage

Who Should Open?

✅ No existing bank account ✅ Low-income individuals ✅ Want government benefits directly ✅ First-time bankers

Joint Accounts

Types of Joint Holding

1. Either or Survivor

• Any holder can operate
• Survivor gets funds on death
• Most flexible

2. Anyone or Survivor

• For 3+ holders
• Any one can operate

3. Former or Survivor

• First named person operates
• Others operate on death

4. Jointly

• All holders must sign together
• Least flexible, most controlled

Joint Account Benefits

✅ Shared family finances ✅ Business partnerships ✅ Succession planning ✅ Convenient for couples ✅ Easy access for emergencies

Minor’s Account

Features

Types

1. Guardian-Operated

• For younger children
• Parent/guardian manages

2. Self-Operated (10+)

• Minor can operate independently
• Limited features
• Amounts capped

Choosing the Right Account

Decision Guide

Factors to Consider

For Savings Account:

• Minimum balance requirement
• Interest rate
• Digital banking quality
• Branch/ATM network
• Service charges

For Current Account:

• Transaction limits
• Overdraft availability
• Cash handling charges
• Relationship support

For Fixed Deposit:

• Interest rate
• Bank safety rating
• Premature withdrawal penalty
• Auto-renewal options

Key Takeaways

1. Savings Account: For personal savings with interest
2. Current Account: For businesses with high transactions
3. Fixed Deposit: For lumpsum parking with guaranteed returns
4. Recurring Deposit: For systematic monthly savings
5. NRE/NRO/FCNR: Specific purposes for NRIs
6. Jan Dhan: Zero balance basic banking for all
7. Choose based on need: Interest rate isn’t the only factor

Disclaimer

This article is for educational purposes only. Interest rates and features vary by bank and change frequently. Verify current terms with your bank before opening accounts. This is not financial advice.

Frequently Asked Questions

Q: Can I have multiple savings accounts? A: Yes, no legal limit. But manage minimum balances carefully.

Q: Is interest on savings account taxable? A: Yes, if total interest exceeds ₹10,000/year. Section 80TTA deduction available.

Q: Can I convert savings to current account? A: No direct conversion. Close savings and open current (or maintain both).

Q: Which account gives highest interest? A: Small Finance Banks offer up to 7% on savings. FDs offer higher fixed returns.

Q: Is KYC required for all accounts? A: Yes, KYC is mandatory. Simplified KYC for basic accounts.

Your bank account is your financial home base—choose the right type for your needs, and it becomes a powerful tool for building wealth and managing money efficiently.