Types of Bank Accounts- Savings, Current, FD, NRE, NRO, Demat, FCNR

When they ask this question, the answer they are expecting is about Savings Account and Current account. If they ask further types of accounts, you can classify further and talk about Fixed Deposit, Demat Account, NRE account, NRO Account etc.

Saving Account and Current Account:  

Savings Account enables the customers to park their excess amount and earn small interest (3.5-4%) on their savings. This is generally preferred by common people/ individuals. Customer can withdraw their money anytime they want. There would be some restriction on number of transactions and the amount can be withdrawn during specific period. Users will be generally issued with cheque book and ATM card. User also may have to keep minimum balance to keep the account active. However some banks are providing zero balance account for Salary Account.

Current accounts are by and large used by business people. You can do any number of transactions from current account. Typically no interest will be paid for the money parked in current account. It also provides overdraft facility. Overdraft means even if you do not have sufficient fund in your account, transaction will go through. You’ll have to pay the money with interest at a later time.

	Savings account	Current account
Interest	Interest will be paid monthly balance. 3.5-4% interest rate.	Generally no interest paid
Overdraft	Generally Not allowed, though some banks offer OD facility for Savings Account	Allowed
Minimum balance	Minimum Balance Required (Again some banks give exemption)	Not required
Preferred By	Individual	Business Class
Restriction On Transaction/ Withdrawal amount	May have some restriction	No Restriction
Cheque Book Charge	No	Yes
Folio Charge	No	Yes

In Fixed Term Deposit, money is deposited for a definite period. It can be 6 months, one year or even 15 years. Customer will not be able to withdraw the amount before the tenure. . In case the amount needs to be withdrawn due to some emergency, bank deducts some percentage from interest. It gives the customer higher rate of interest compare to Savings Account. Rate of interest depends on the term, amount and bank. FD is single time payment, so for each new fixed deposit, new account needs to be created.

Demat Account is a short form of dematerialized account used in India. As per SEBI guideline an individual needs to have Demat Account to trade in stocks listed. Demat Account are issued by Brokerage Firms. You can buy shares in electronic format though online; no paper certificate will be issued. Electronic form of trading reduces the brokerage fee and stamp duty charges as no paper certificates issued.

A NRE (Non-resident External Accounts) is maintained in rupee unlike FCNR account maintained in foreign currencies. Funds in NRI account can be converted to any currency. When the person returns to India, account can be converted to regular account. This account can be opened as current, savings, and recurring or term deposit account. Investment and interest are non-taxable. This account can be opened only by a non-resident Indian.

NRO Account is normal bank account opened by an individual who’s planning to go abroad and convert the account later as NRI. This has similar features as NRE account, but money converted other currencies are reported to RBI by filling appropriate form. This account is not exempted from Tax.

FCNR is Foreign Currency Non-Resident Account. A non-resident Indian national or an Indian Origin can open this account for fixed deposit. Dollar, Pounds, Euro etc are permissible.

Recurring Deposit Account is opened by individual who wants to save on regular basis by investing a fixed amount for a specific term. For instance you pay Rs.1000 every month for 5 years scheme. At the end of 5^th year you’ll get the total amount with interest.

Term deposit account is nothing but fixed deposit.