Welcome to letsstudytogether.co .How Many Types of Bank Accounts – Types of Bank Accounts.As we all know that RBI Grade B Officer exam is the biggest target for of a aspirant life.So If you are preparing for RBI Grade B Exam then yo should know How many types of Bank Accounts? In this post we discussed different Types of Bank Accounts.So Let’s begin the topic:-
Types of Bank Accounts
1.Savings Bank Account
Savings Bank accounts as the name implies, are intended for savings for future. The very purpose of this type of account is to promote savings habit of the general public. As such, there is no restriction on the number and amount of deposits that can be made. The credit balance outstanding in this account will earn interest as per the current directives of the Bank.When needed, the amount can be withdrawn, subject to certain conditions.
For whom to open Savings Bank Accounts :-
Savings Bank Accounts may be opened in the names of:
(i) Individual – Single Accounts
(ii) Two or more individuals – Joint Accounts
(iii) Illiterate persons
(iv) Blind persons
(v) Minors
(vi) Associations, Clubs, Societies.
(vii) Trusts
(viii) Institutions/Agencies specially permitted by the RBI.
2.Current Account
Current Accounts are active accounts opened by such section of the public like Traders,Businessmen,Corporate Bodies, etc. who like to operate their accounts continuously due to many receipts and payments of money in connection with their business. In these accounts, there is no restriction on the number of withdrawals and deposits.
For whom to open Current Accounts
Current Accounts may be opened in the names of following:-
(i) Accounts in the name of a single person.
(ii) Joint Accounts of two or more individuals.
(iii) Sole-Proprietory Concern.
(iv) Partnership Firms.
(v) Joint Hindu Family or Hindu Undivided Family.
(vi) Associations, Clubs, Societies.
(vii) Trusts/Other Trust Accounts like Provident Fund A/cs.
(viii) Private and Public Limited Companies and other undertakings registered under Companies Act, 1956.
(ix) Executors and Administrators.
(x) Other Banks.
(xi) State Financial Corporations.
(xii) Government/Quasi Government Departments /Boards/Bodies etc.
No interest is paid in current accounts. However banks may charge a reasonable amount from the customer / clients if the balance falls below the stipulated amount.
3.Fixed Deposits / Term Deposits
- The term fixed deposit will include both deposits made for a fixed period and deposits made subject to notice of withdrawal.
- Fixed deposits are term deposits repayable after an agreed period fixed at the time of
deposit. - On the other hand, call deposits (accounts) can be treated as demand or term liabilities
subject to terms of repayment and notice of withdrawal agreed at the time of accepting
these deposits.
Who can open Fixed Deposit Accounts
Fixed Deposits can be opened in the name of:
• Individuals,
• Joint names of two or more individuals,
• Clubs, Association, Societies, Trusts, etc.
• Limited Companies,
• Minor under the guardianship of the natural guardians or guardians appointed by the
Court of Law,
• Partnership or Proprietory concerns.
Other Features:-
- Money is deposited in the account and period is decided by the customer.
- Premature withdrawal is allowed in such accounts. In case of premature withdrawal customer is paid rate of interest charged is the one that is applicable for the period the deposit remained in the bank. The interest is calculated for the duration it remained with
the bank. - The customer / client has to pay some reasonable penalty fixed by each bank for premature withdrawal.
- Fixed deposits are not transferable instruments.
- Fixed deposits / term deposits attract higher rate of interest than other deposit schemes.
- Normally longer the period of deposit higher the interest rate. In some banks it is called time liability deposit accounts. However this principle does not always hold good due to the banks deposit needs and market conditions.
4.DEMAT Accounts
DEMAT means Dematerialized Account. This account is opened to buy and sell shares in the market. It is opened like any other bank account with the difference that in such accounts only shares are transacted and not money as is the case with other bank accounts.
Indian Depository Receipit:
An IDR is a receipt, declaring ownership of shares of a foreign company. These receipts can be listed in India and traded in rupees. Just like overseas investors in the US-listed American Depository Receipts (ADRs) of Infosys and Wipro get receipts against ownership of shares held by an Indian custodian, an IDR is proof of ownership of foreign company’s shares. The IDRs are denominated in Indian currency and are issued by a domestic depository and the underlying equity shares are secured with a custodian. An Indian investor pays in Indian rupees for the IDR whereas a shareholder in the issuer’s home country pays in home currency.
5.Public Provident Fund Accounts (PPF)
Public Provident Fund (PPF) is the scheme floated under the PPF Act 1968 by central government. It is a safe and government backed investment scheme which provides besides higher interest rate a tax benefit under section 80C of IT Act.
Features of the PPF Scheme:-
• The period for which money could be invested in PPF is 15 years.
• Minimum investment is Rs.500 and Maximum investment is Rs.1,00,000 per year.
• Amount invested more than Rs.1,00,000 will not be eligible for interest and for tax benefit under Sec 80C.
• One is eligible to open only one PPF account in one’s name. But if found that second account is opened it will be deactivated. You will receive only principal of what you paid.
• PPF can’t be opened in joint names. However, PPF accounts can be opened in the names of spouse or children.
• PPF account can be opened in your minor child name also.
• You can’t invest more than 12 installments in a year. It means if you planned for contribution of Rs.1,000 per month, then maximum contribution you can make is 12,000
in a year.
• This account cannot be attached for your debt or liability. So this is totally safest form of investment.
• PPF account can be opened at all nationalized banks, post offices or other banks so permitted.
• If you forget to contribute the minimum amount in any year then the account will be deactivated. To activate you need to pay Rs.50 as penalty for each inactive year and also you need to pay Rs.500 for each inactive year’s contribution. Such provision can be modified from time to time by appropriate authority.
• NRIs cannot open PPF account. But they can continue their existing account till its maturity only. Scheme does not provide any extension of period.
• In case death of account holder then the balance amount will be paid to his nominee or legal heir even before 15 years. Nominees or legal heirs are not eligible to continue the deceased account.
• PPF can be transferred from one place to another place. But can’t be transferred from one name to another.
• A person having an Employee’s Provident Fund Account can open a Public Provident Fund Account since both are different.
• Once your account completes 15 years then following options are available to subscriber:
(a) You can withdraw your whole amount.
(b) You can extend for a 5 years block as many times as you wish.
6.Senior Citizen’s Account
As per the Government guidelines, people above the age of 60 years are treated as senior citizen.
• Senior Citizen accounts are normal savings accounts with the difference that an interest benefit of between 0.25% and 0.50% per annum or as decided by respective banks from time to time is given to the beneficiary account holder.
• This scheme became effective from April 19, 2001.
• In such accounts where a senior citizen opens a joint account, the first name in the account should be that of senior citizen only then the benefit of the scheme goes to senior citizen.
• The accounts under senior citizen scheme are applicable to those senior citizens who are residents of India.
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