FINANCE & BANKING 21BSO662

Module-2 Banking Products Bank Accounts – Saving Bank Accounts, Current Accounts,
Recurring deposit accounts, fixed deposit accounts, NRI accounts, pigmy accounts, and other
special accounts. – Procedures and docs involved in opening bank accounts (offline and
online).

Bank Accounts serve as the cornerstone of modern financial systems, offering individuals
and businesses a secure and convenient way to manage their money. From saving for the future
to conducting everyday transactions, bank accounts play a crucial role in facilitating economic
activities.

Types of Bank Accounts List

Banking institutions offer various types of bank accounts, each designed to fulfil specific
financial objectives. Let’s see the list of some of the most common types of bank accounts:
1. Savings Account
2. Current Account
3. Recurring Deposit Account
4. Fixed Deposit Account
5. Salary Account
6. DEMAT Account
7. NRI Account
1. Savings Account
A Savings Account is one of the most common types of bank accounts, primarily used for
saving money. It offers a safe place to deposit funds while providing easy accessibility. Savings
accounts usually earn interest on the deposited amount, helping account holders grow their
savings over time.
These accounts often have no or minimal transactional restrictions, allowing the deposit and
withdrawal of funds as required. However, some banks may require a minimum balance to be
maintained to avoid charges. Savings accounts are suitable for emergency funds, short-term
goals, or general-purpose savings
Some important features of Savings Account are:
• Interest Earnings: Accrue interest on deposited funds.
• Liquidity: Easy access to funds with minimal restrictions.
• Security: Insured by the government or relevant financial institutions up to a certain
limit.
• Low Minimum Balance: Often requires a low or no minimum balance to maintain.
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• Online Access: Provides online banking for convenient account management and
transactions.
2. Current Account
A Current Account, also known as a transactional account, is typically utilized by businesses
and individuals with frequent financial transactions. This type of account allows unlimited
transactions, including deposits, withdrawals, and transfers.
Current accounts provide features such as cheque books, debit cards, and online banking
facilities, enabling easy management of day-to-day financial activities. Unlike savings
accounts, current accounts generally do not earn interest on deposits. They are ideal for
business transactions, paying bills, and facilitating regular monetary exchanges.
Some important features of Current Account are:
• Non-interest Bearing: Typically, does not earn interest.
• High Liquidity: Unlimited transactions, suitable for frequent banking needs.
• Overdraft Facility: Offers an overdraft option for short-term borrowing.
• Business Friendly: Ideal for businesses, traders, and firms for managing daily
transactions.
• No Savings Goal: Primarily used for managing cash flow rather than saving money.
3. Recurring Deposit Account
A Recurring Deposit (RD) Account is designed for individuals who want to save a fixed
amount regularly over a specified period. RD accounts allow account holders to deposit a fixed
sum of money on a monthly basis, typically for a predetermined tenure.
These accounts often offer attractive interest rates, similar to fixed deposit accounts. At the end
of the tenure, the accumulated amount, along with the interest earned, is returned to the account
holder. RD accounts are useful for individuals who want to cultivate a disciplined savings habit
and earn interest on their regular deposits.
Some important features of Recurring Deposit Account are:
• Fixed Interest Rates: Offers guaranteed returns at a fixed interest rate throughout the
tenure.
• Flexible Tenure: Tenure options range from a few months to several years,
accommodating short and long-term savings goals.
• Regular Savings: Encourages disciplined savings through monthly deposit
requirements.
• Loan Against Deposit: Allows borrowing against the deposit amount for financial
emergencies.
• Premature Withdrawal: Offers the option for early withdrawal, often subject to a
penalty.
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4. Fixed Deposit Account

A Fixed Deposit (FD) Account is a popular investment instrument that allows individuals to
deposit a lump sum amount for a fixed period, known as tenure. FD accounts offer higher
interest rates than savings accounts and provide a guaranteed return on the investment.
The interest rate remains fixed for the entire tenure, ensuring a predictable growth of funds.
However, premature withdrawals from FD accounts may attract penalties or lower interest
rates. Fixed Deposit accounts are suitable for individuals with surplus funds looking for a low-
risk investment option.
Some Important features of Fixed Deposit Account are:
• Guaranteed Returns: Fixed deposit accounts offer predetermined interest rates,
ensuring guaranteed returns on your investment.
• Safety: Considered one of the safest investment options, with minimal risk of losing
the principal amount.
• Flexible Tenures: Offers a range of tenure options, allowing investors to choose the
period that best suits their financial goals.
• Interest Rate Options: Provides options for periodic interest payouts (e.g., monthly,
quarterly) or reinvestment for compound interest.
• Loan Facility: Many institutions allow you to take loans against your fixed deposit,
offering financial flexibility without breaking the deposit.
5. Salary Account
A Salary Account is a type of bank account specifically designed for employees to receive
their salaries. It is offered by banks in collaboration with employers, who deposit the
employees’ salaries directly into these accounts. Salary accounts typically come with several
benefits, such as zero or minimum balance requirements, free or discounted services, and
access to various banking facilities.
They offer a convenient way for employees to manage their salary funds and conduct financial
transactions. While salary accounts serve as a means to receive salaries, individuals may
convert them into regular savings or current accounts based on their preferences and banking
needs.
Some important features of Salary Account are:
• Zero Minimum Balance: No requirement to maintain a minimum balance.
• Higher Interest Rates: Often offers higher interest rates than regular savings accounts.
• Free and Unlimited Transactions: Unlimited ATM withdrawals and online
transactions without fees.
• Complimentary Services: Includes free cheque books, debit cards, and demand draft
issuances.
• Overdraft Facility: Access to overdraft up to a certain limit based on salary.
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6. DEMAT Account
A DEMAT (Dematerialized) Account is specifically meant for electronically holding and
trading securities. This account eliminates the need for physical share certificates by converting
them into electronic records. DEMAT accounts facilitate the easy buying and selling of stocks,
mutual funds, bonds, and other securities in the digital format. These accounts are linked to the
individual’s bank account and provide a seamless integration for transactions related to
investments in the stock market.
Some important features of DEMAT Account are:
• Electronic Storage: Safely holds shares and securities in digital format.
• Quick Transactions: Enables faster trading of shares, reducing settlement times.
• Reduced Risks: Minimizes risks related to theft, loss, or damage of physical
certificates.
• Convenience: Offers easy access to investments through online platforms.
• Consolidation: Allows the consolidation of investments under a single account for
better management.
7. NRI Account
NRI (Non-Residential Indian) Accounts are designed for individuals who reside outside their
home country but wish to maintain financial connections and conduct banking activities in their
home country. NRI accounts can be of various types, such as NRE (Non-Residential External)
Account, NRO (Non-Residential Ordinary) Account, and FCNR (Foreign Currency Non-
Resident) Account.
The NRI Accounts are further divided into three types. The three types of NRI accounts are:
• NRE Accounts: NRE accounts are denominated in Indian Rupees and allow account
holders to maintain and manage their foreign income in India. Funds in NRE accounts
are freely repatriable, meaning they can be transferred back to the account holder’s
foreign country without any restrictions. Interest earned on NRE accounts is tax-free in
India.

• NRO Account: NRO Accounts are also denominated in India Rupees and are primarily
used for managing income earned in India, such as rent, dividends, or pension. The
funds in NRO accounts have limited reparability, subject to certain conditions. Interest
earned on NRO accounts is taxable in India.

• FCNR Account: FCNR accounts allow NRLs to hold and manage foreign currency in
India. These accounts are maintained in major international currencies such as USD,
GBP, EUR, etc. The funds in FCNR accounts are fully repatriable, and the interest
earned is tax-free in India.
NRI accounts provide NRIs with the flexibility to manage their finances in India, including
investments, remittances, and transactions related to their Indian assets.
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Some important features of NRI Accounts are:

• Repatriation: Allows for easy transfer of funds abroad.
• Currency Flexibility: Maintains accounts in both Indian Rupees and foreign currency.
• Tax Benefits: Interest earned is not taxable in India.
• Investment Opportunities: Enables investment in Indian stocks, bonds, and fixed
deposits.
• Joint Holding: Permits joint account holding with another NRI or PIO (Person of
Indian Origin).
8. A pigmy deposit account
A pigmy deposit account is a savings account that allows daily deposits to help people save
money. The scheme was introduced in India in 1928 by Syndicate Bank.
Features
• Minimum deposit: Some banks allow deposits as small as 50 rupees per day
• Scheme period: Some banks offer 12, 24, or 36 month options
• No penalty: Some banks don't penalize depositors who can't pay regularly
• Interest: Some banks pay interest on pigmy deposits
• Premature withdrawals: Some banks allow premature withdrawals with penalties
• Nominations: Some banks allow depositors to nominate someone to receive the
balance after their death
Who can open a pigmy deposit account?
Businessmen, Professionals, Wage earners, Teachers, Salaried personnel, Traders, Housewives,
Small shopkeepers, Salesmen, and Hawkers.
9. Other Special Accounts
• Salary Accounts: Opened by employers for employees; often comes with zero balance
requirement.
• Senior Citizen Accounts: Offers higher interest rates and additional benefits.
• Women’s Accounts: Special savings accounts with exclusive offers for women.
• Minor Accounts: Opened for children, operated by guardians until they turn 18.
• Student Accounts: Low minimum balance requirements and educational loan benefits.
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Importance of Bank Accounts

Here are some of the key points why Bank accounts are important:
• Security: A bank account provides a safe place to keep your money, protecting it from
theft or loss.
• Convenience: With a bank account, managing finances becomes easier, allowing for
direct deposits, withdrawals, and online transactions.
• Record Keeping: A bank account helps track expenses, income, and financial progress
with detailed statements.
• Access to Credit: Having a bank account often makes it easier to obtain loans and
credit cards, as it establishes financial credibility.
• Financial Services: A bank account gives access to a range of financial services,
including savings options, investment tools, and more, facilitating overall financial
growth and stability.
In summary, bank accounts are indispensable tools for managing finances efficiently and
securely. The different types of accounts available cater to various financial objectives,
allowing individuals and businesses to choose the most suitable option.
Whether it’s saving for the future, conducting day-to-day transactions, or planning for
retirement, there is a bank account to meet every need. Understanding the features and benefits
of each type of account can empower individuals to make informed financial decisions and
maximize the advantages offered by banking institutions.
To open a bank account, both offline and online, you'll need to provide proof of identity and
address. Offline, this involves visiting a branch and submitting documents, while online, you'll
typically upload scanned copies and complete an online form.

Procedures and docs involved in opening bank accounts (offline and online)
Process for Opening a Bank Account (Offline Mode)
Opening a bank account offline requires visiting the bank branch and completing the necessary
formalities. Below is a step-by-step guide to the process:
Step 1: Choose the Type of Bank Account
Before visiting the bank, decide the type of account you want to open:
• Savings Account – For individuals to save money with interest.
• Current Account – For businesses with frequent transactions.
• Fixed Deposit (FD) Account – For saving a lump sum amount with higher interest.
• Recurring Deposit (RD) Account – For regular monthly savings.
• NRI Account – For non-resident Indians.
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Step 2: Visit the Bank Branch

Go to the nearest branch of the chosen bank and request an Account Opening Form from the
bank representative.
Step 3: Fill Out the Account Opening Form
Complete the application form with the required details, such as:
Name, Date of Birth, and Contact Information
Type of Account to be Opened
Nominee Details (if applicable)
Step 4: Submit Required Documents
Attach self-attested copies of the required KYC documents, which may include:
• Identity Proof (Aadhaar, PAN, Passport, Voter ID, Driving License)
• Address Proof (Aadhaar, Passport, Utility Bill, Bank Statement)
• Recent Passport-size Photographs
• Initial Deposit (if applicable)
For certain accounts (e.g., minors, NRIs, businesses), additional documents may be required.
Step 5: Verification by Bank Officials
The bank official will:
✔ Verify the submitted documents.
✔ Cross-check your identity as per the Know Your Customer (KYC) norms.
✔ Take your signature specimen.
Some banks may also require an in-person verification or an introducer’s signature (existing
account holder reference).
Step 6: Deposit the Minimum Initial Amount (If Required)
For certain accounts (like Savings Accounts), banks may require an initial deposit to activate
the account. Deposit the required amount at the bank counter.
Step 7: Receive Account Details & Banking Kit
Once the account is approved, the bank will provide:
Passbook (for Savings Accounts)
Cheque book (if applicable)
Debit/ATM Card (for online and ATM transactions)
Net Banking & Mobile Banking Credentials (if requested)
Step 8: Activate the Account
To start using the account:
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• Set up ATM PIN (at an ATM or bank branch).

• Register for Net Banking/Mobile Banking (optional but recommended).
• Link the account with UPI for easy transactions.

Online Bank Account Opening:

• Visit the Bank's Website: Go to the bank's official website and navigate to the online
account opening section.
• Choose Account Type: Select the type of account you want to open (e.g., savings
account).
• Fill Out the Online Form: Complete the online application form with your personal
details.
• Upload Scanned Documents: Scan and upload copies of your Aadhaar card, PAN
card, and other required documents.
• eKYC Verification: The bank will conduct an eKYC (Know Your Customer) process,
which may involve a video call to verify your identity.
• OTP Verification: You'll likely need to provide an OTP (One-Time Password) sent to
your mobile number linked to your Aadhaar for verification.
• Account Activation: Once the verification is complete, your account will be opened
and activated.

Documents Required for Opening a Bank Account (Offline Mode)

To open a bank account offline, customers must provide certain documents as per the Know
Your Customer (KYC) norms. The required documents vary based on the type of account and
the applicant's category (individual, minor, NRI, business, etc.). Below is a general list of
required documents:

1. Identity Proof (Any One)

• Aadhaar Card
• PAN Card (Mandatory for financial transactions)
• Passport
• Voter ID
• Driving License
• Government/Employer-issued ID Card (for salary accounts)
2. Address Proof (Any One)
• Aadhaar Card
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• Passport
• Voter ID
• Utility Bill (Electricity/Water/Gas/Telephone bill, not older than 2 months)
• Bank Passbook/Statement with address details
• Rental Agreement
• Ration Card
3. Passport-size Photographs
• Generally, two recent passport-size photographs are required.
4. Signature Proof
• A specimen signature must be provided on the account opening form.
5. Additional Documents (if applicable)
For Minors (Below 18 years)
• Birth certificate of the minor
• Parent/guardian’s ID and address proof
• Parent/guardian’s signature
For Non-Resident Indians (NRIs)
• Valid passport and visa
• Overseas address proof
• NRI status proof (work permit, residence permit, OCI/PIO card)
For Senior Citizens
• Age proof (if applying for a senior citizen account with benefits)
For Business or Corporate Accounts
• Sole Proprietorship: GST registration certificate, business registration proof
• Partnership Firm: Partnership deed, PAN of the firm, KYC of all partners
• Private/Public Limited Company: Certificate of Incorporation, Memorandum and
Articles of Association, PAN of the company, Board resolution authorizing the account
opening

Documents Required for Opening a Bank Account (Online Mode)

• With advancements in digital banking, many banks offer the option to open accounts
online through their websites or mobile apps. The Know Your Customer (KYC)
process is completed digitally via Aadhaar-based authentication or video verification.
Below are the required documents for online account opening:
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Identity Proof (Any One - Digital Copy)

• Aadhaar Card (Mandatory for e-KYC)
• PAN Card (Mandatory for financial transactions)
• Passport
• Voter ID
• Driving License

2. Address Proof (Any One - Digital Copy)

• Aadhaar Card (Most commonly used for e-KYC)
• Passport
• Voter ID
• Utility Bill (Electricity/Water/Gas/Telephone bill, not older than 2 months)
• Bank Statement with Address

3. Passport-size Photograph
• A scanned copy or digital upload of a recent passport-size photograph.

4. Signature Proof
• Scanned image of signature or digital signature upload (as required by the bank).
5. Additional Documents (if applicable)
For Minors (Below 18 years)
• Birth certificate of the minor
• Parent/guardian’s KYC documents
• Parent/guardian’s signature proof
For Non-Resident Indians (NRIs)
• Valid Passport and Visa
• Overseas Address Proof (Utility bill, bank statement, etc.)
• NRI status proof (Work permit, residence permit, OCI/PIO card)
For Senior Citizens
• Age proof (if applying for a senior citizen account with special benefits)
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For Business or Corporate Accounts

• GST Registration Certificate
• Business Registration Proof
• PAN of the Firm/Company
• Memorandum and Articles of Association (for companies)
• Board Resolution authorizing account opening (for corporate accounts)

6. Verification Process (Online Mode)

1. Visit the bank’s website or mobile app.
2. Fill out the account opening form with personal details.
3. Upload scanned copies of the required documents.
4. Complete e-KYC verification through:
o Aadhaar OTP authentication, OR
o Video KYC (Live video call with a bank representative to verify identity).
5. Once verified, the account is activated, and the customer receives account details via
email/SMS.
6. Debit card, cheque book, and other documents (if applicable) are sent via courier.
Key Benefits of Online Account Opening

Convenient & Time-Saving – No branch visits required.

Paperless Process – No physical documents needed in most cases.
Instant Activation – Some banks provide instant account numbers upon Aadhaar-based
verification.
Secure & Hassle-Free – Digital verification ensures security.

Key benefits of having a bank account

Safe Storage of Money
• Reduces the risk of theft or loss compared to keeping cash at home.
• Deposits in banks are usually insured (e.g., by Deposit Insurance in India up to ₹5
lakhs).
Earning Interest
• Savings accounts offer interest on deposits.
• Fixed deposits and recurring deposits can offer higher returns.
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Access to Banking Services

• Loans (personal, home, vehicle, education).
• Credit cards.
• Overdraft facility.
• Investment and insurance products.
Promotes Financial Inclusion and Empowerment
• Helps individuals and businesses become part of the formal financial system.
• Enables access to government schemes and subsidies (e.g., Jan Dhan Yojana in India).

Convenient Payments and Transfers

• Enables easy bill payments, online shopping, fund transfers, and receiving salaries or
subsidies.

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