Traditionally in India, we have four major types of bank deposits namely Current Account, Savings Accounts, Recurring Deposits and Fixed Deposits.
However these days, some banks have also introduced many new products, which combine the features of two or more types of deposit accounts like 2-in-1 deposits, Power Saving Deposits, Smart Deposits, etc.
Let’s understand the various bank deposits in brief.
1. Savings account
It offers high liquidity and is very popular among the masses. They provide a lot of flexibility for deposits and withdrawal of funds from the account and also have cheque facility. The interest provided by Public sector bank is only 4%, however some of the private banks like Yes Bank and Kotak Bank offers interest between 6-7%.
2. Recurring deposit
It is a special type of term deposit where you do not need to deposit a lump sum savings rather a person has to deposit a fixed sum of money every month (which can be as low as Rs 100 per month). These accounts have maturities ranging from 6 months to 120 months. You can also give a standing order to the bank to withdraw a fixed sum of money from your saving account on every fixed date and the same is credited to RD account. However the bank may charge some penalty for delay in paying the instalments.
3. Current Account
It is a demand deposit and is meant for businessmen to conduct their business transactions smoothly.These are the most liquid deposits and there are no restrictions on the number and the amount of transactions in a day. Moreover, banks do not pay any interest on these accounts.
It is an instrument offered by banks which gives a higher interest than a regular savings account and offers a wide range of tenures ranging from 7 days to 10 years. The rate of interest varies from bank to bank between 6-10%. You may or may not have a separate bank account to open a fixed deposit with the bank. You may be charged some penalty in case of early closure of FD account. However, with the focus of government to have a bank account for everyone under the scheme of Pradhan Mantri Jan DhanYojana, you can open up a bank account for free if you do not have one and enjoy various facilities offered by banks.
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