Q1. What account types do banks in India offer?
Ans. Banks in India offer 4 types of deposit accounts—current account, savings account, recurring deposits and fixed deposits. Many banks have come up with hybrid accounts, i.e, accounts that combine features of two or more of the above mentioned traditional accounts.
Q2. What is Savings account?
Ans. A savings account is an account where individuals stash money with the bank, assured that they can withdraw their hard earned money as and when they require. There’s no maturity period and as per a recent RBI regulation, no minimum balance requirement (no-frills accounts).
Q3. What are the benefits of a Savings account?
Ans. The benefits of a savings account are varied. For starters, such accounts offer cheque facilities, flexible withdrawal options and a minimum rate of interest of 4% on deposits. Some private banks such as Yes Bank and Kotak Bank offer as much as 6-7% rate of interest on deposits.
Q4. What is the tax on Savings account?
Ans. Of course, the interest earned on savings deposits is taxed. However, since FY 2012-13, no tax needs to be paid on interest earned up to INR 10,000/- per year.
Q5. Who can/should use a savings account?
Ans. Salaried persons, senior citizens, pensioners, homemakers and even students can use savings accounts to save money and make payments via cheques. A savings account is essentially a virtual safe that holds and adds to your money.
Q6. What is Current Account?
Ans. Current accounts are meant to facilitate business transactions and cannot be used for savings/investments. Therefore, such accounts belong to companies, trusts, associations, proprietorships, etc. A current account can also be opened in the name of an individual who is a sole proprietor.
Q7. What are the benefits of a Current account?
Ans. Unlike savings accounts, current accounts are non-interest bearing accounts; although there are banks that have a special current account rate of interest, presumably to attract and then keep customers. There are no limits on the number of transactions that can be carried out in a day. However, some banks do charge a fee if the amount of money transacted exceeds the account’s defined limit. Also, current accounts offer what is known as the overdraft facility, which allows a customer to withdraw more money than what is available in his or her current account. The bank essentially loans this extra money and the amount loaned is, of course, subject to a ceiling.