What are different Types of Bank Accounts in India?

Following are the list of Types of bank accounts in India. Indian banks regulate under Reserve Bank of India and strictly follows RBI Guidelines. All the banks provide similar bank account types. However interest rate and other benefits may vary from bank to bank.

• Types of Bank Accounts in India
• Normal Saving Bank Account
• Basic Savings Bank Deposit Accounts
• Basic Savings Bank Deposit Accounts Small Scheme
• Current Account
• Fixed Deposit Bank Account
• Recurring Deposit Bank Account
• Foreign currency Non Resident Bank Account
• Non Resident Ordinary Rupee Bank Account
• Non Resident External Rupee Bank Account
• Demat Account
• Nostro Account
• Loro Account
• Escrow Account
• Gilt Account
• Vostro Account

Types of Bank Accounts in India

Broadly Bank Account types can be classified into following three categories.

01.	Normal Saving Bank Account
02.	Basic Savings Bank Deposit Accounts
03.	Basic Savings Bank Deposit Accounts Small Scheme
04.	Current Account
05.	Fixed Deposit Bank Account
06.	Recurring Deposit Bank Account
07.	Foreign currency Non Resident Bank Account
08.	Non Resident Ordinary Rupee Bank Account
09.	Non Resident External Rupee Bank Account
10.	Demat Account
11.	Nostro Account
12.	Loro Account
13.	Escrow Account
14.	Gilt Account
15.	Vostro Account

Let's know each bank account type available in India in detail.

01. Normal Saving Bank Account

Savings Bank are one of the type of account offered by all the banks in India. Any individual can open a savings account. There is no age limit. A minor can also open a savings bank account. There is no restriction to save money. One can save any amount at any point of time. One can save money in to this account by cash deposit, cheque deposit, or electronic fund transfer. One of the best feature about this kind of account in a bank, it adds interest to the savings. 

And the demerit part, it pays very low interest rates. There is strict guideline to maintain a minimum balance in each month. It varies bank to bank. In general, Minimum Rs 1000 INR should be maintained in Government Bank Savings Account. Some Government Banks requirement is to maintain Minimum Rs 5000 INR in the savings account. Private bank savings account should be maintained with a minimum Rs 10000 INR balance in the savings account in any day of the financial year.

02. Basic Savings Bank Deposit Account

Basic Savings Bank Deposit Accounts are also Normal Saving Bank Account types. Any one can open a basic savings bank deposit account. In 2005, RBI instructed to Bank to allow poor section people of the society to open bank accounts with zero balance. Such accounts were known as "no-frill account". (No-Frill Account: Account that can have zero balance). 

However in 2012, RBI instructed banks to convert all "No Frill" account into Basic Savings bank deposit account. "Jan Dhan Accounts" under "Prime Minister Jan Dhan Yojna" falls into this kind of savings account. Any one can open basic savings bank deposit account by providing KYC documents and following respective bank guidelines. One can have only one this kind of savings bank account in a bank.

03. Basic Savings bank Deposit Accounts Small Scheme

If a person does not possess any of the valid documents such as pan card, passport, voter id card, driving license or any Government approved document then such person is not eligible to open a savings bank account. Therefore to benefit such people banks are providing "Basic Savings Bank Deposit Accounts Small Scheme". 

Under scheme any person (Indian Resident) can open a savings account but with following conditions:

• Such bank account should not have more than one lakh savings in a year.
• Such bank account holder could not with draw more than ten thousand rupees in a month.
• Such bank account should not have more than Rs 50000 INR in any point of time.
• Such bank account is valid only for 12 months. (Can be extended if the account holder submits proof of valid identity document applications in the bank)

04. Current Account

Current bank account is not a saving bank account. Companies, firms, shops or any individual who has daily transaction (deposit and withdraw), prefer current account. There is no limit on transaction. Unlike saving account, current account do not pay interest to the account holder. Any number of deposit or cash withdrawal the respective account holder can conduct. There is no transaction fee upto certain transaction count and post there is a fee for each transaction. This transaction limit and fee differs from bank to bank. Cheques, pay orders and demand drafts can be issued from this kind of account. Internet banking is also available with this. 

05. Fixed Deposit Bank Account

Fixed Deposit bank account are the account in which any one can deposit any amount with any bank for a fixed period time. This time period can vary from 7 days to 10 years. Unlike saving account or current account, depositor can not with draw money before the tenure completes. If still depositor wants to with draw the deposited amount from this kind of account, then a certain fee (penalty) will be deducted from the deposited amount. The best part about fixed deposit account, a good interest rate (4% to 7%) is added to the deposit. The interest rate varies from bank to bank.

06. Recurring Deposit Bank Account

In this type of bank account, bank receives certain amount from depositor in equal interval of time. This time interval can vary one week to quarterly. If depositor fails to deposit certain amount in one particular interval of time, then a certain fee (Penalty) is charged to the depositor. One can have multiple Recurring deposit account (Also known as RD Account) in a bank. There is good interest rates 5% to 8% and quarterly interest is calculated. The minimum time duration to have RD account is 6 months and maximum is 10 years. The demerit with this kind of bank account, depositor can not with draw the deposited amount before the tenure completes.

07. Foreign currency Non Resident Bank Account

Indian Nationals who are having earning in the overseas can open foreign currency non-resident account (FCNR). This is account is type of term-deposit. And the deposits only can be made in foreign currency. Banks which provide FCNR account allows US Dollars, Great British Pounds, European currency, Japan Currency, Canada Dollars and Australian Dollars. These deposits are exempted from tax regulations of India. FCNR account can be opened for a tenure duration of one year to 5 years. Interest rates are added on quarterly basis.

08. Non Resident Ordinary Rupee Bank Account

Non Resident Ordinary Rupee account also known as NRO can be opened by a Non Resident Indian. NRO accounts are of types savings account, fixed deposit or recurring deposit. NRI and Indian resident jointly can open NRO account. 30% TDS is imposed on the interest earned from such accounts.

09. Non Resident External Rupee Bank Account

Non Resident External Rupee Account also known as NRE account. NRE account is a good option for Indian working at the overseas. NRE account can be opened in the form of Savings account, fixed deposit or Recurring deposit. Interest earned from NRE accounts are exempted from Income tax regulations of India. This account is handled in the form of Indian Rupees and all the deposits made in foreign currency are first converted into the equivalent Indian Rupees value. 

10. Demat Account

Demat Account or dematerialised account is a type of account which holds shares and securities in the form of electronic format. This type of bank account is essential for online trading. It helps to buy and sell shares electronically. It makes share trading easy for the users. There are plenty bank that provides demat account for certain fee. This fee may vary bank to bank.

11. Nostro Account

A Nostro account is an account which a bank has in a foreign currency in some other bank in a foreign country. These accounts are maintained by Indian bank in Foreign country bank in foreign currency.

Example: State bank of India has account with Bank of America, United States.

12. Loro Account

A third party bank works as mediator in between a Indian Bank and Foreign Bank. 

Example: State bank of India has no account with xyz foreign bank but Punjab national Bank has account with XYZ foreign bank. Then State bank of India can have Loro account in Punjab National bank to do transaction with XYZ foreign bank. 

13. Escrow Account

In this type of bank account(Escrow), funds are held in trust while two or more parties complete a transaction. Third party Escrow.com secure the funds in a trust account. The funds will be released to the merchant after these parties in agreement have fulfilled the Escrow Agreement. If the merchant fails to deliver the agreed product or service then the funds are returned to the buyer. Escrow works as mediator in between a buyer and seller.

Example: A diamond merchant in India has ordered $100 US dollar valued diamonds from a diamond company XYZ Diamonds located in United States. In such scenarios Indian merchant is at risk to pay such huge amount directly to XYZ diamonds. So Escrow.com comes into play. It plays mediator in between Indian merchant and xyz diamonds. Upon agreement by both parties (seller and buyer) with respect to Escrow terms of services, escrow receives $100 US dollar from Indian merchant and instructs xyz diamonds to release the order. After successful deliver of the diamonds from xyz diamonds to Indian merchant, escrow pays the money to xyz diamonds. Upon failure, it returns back the money to the Indian Merchant.

14. Gilt Account

Non Resident Indians hold this kind of account. Gilts is short form for Gilt Edged securities.

15. Vostro Account

This kind of account is provided to foreign banks in local currency. 

Example: Bank of America has account with Punjab National Bank in Indian Currency. 

Conclusion

There are 15 types of bank accounts available in India at most of the Indian Banks. Indian Banks (Government Banks and Private Banks) operate under the strict guidelines of Reserve Bank of India.