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How well do you know your bank accounts???

How many account types do you know. Before going through please let us know down in the comments.

Almost everyone has a bank account. An attempt is made to explain various types of bank accounts.

Types of accounts:

Operating accounts:

Savings Bank account and a current account:

Savings bank account is the most operated account by individuals. This account has certain limitations though. There are restrictions on the number of transactions. The very name indicates that this account is a saving of the individual and cash is withdrawn for dire necessities.

Current account is operated by business concerns and professionals. There is no restriction on the number of transactions. While banks offer interest on savings accounts, current accounts do not generate any interest. Periodically banks collect certain amount by way of ledger charges meaning that the amount is recovered for allowing multiple operations in the account.

There will be a charge for issue of a fresh cheque book of current account but not in case of Savings bank account. Heavy transactions in savings bank account, either deposit or a withdrawal are reported to the Income tax department

Recently the Government required banks to charge a tax on cash withdrawals exceeding 20 lakhs in case of non tax payers and Rs.100 lakhs in case of tax payers.

A debit card is issued for a savings bank account but not for normal current accounts. However, if a person has both savings and current accounts under the same customer identification number, (Cust id.) the debit card can be operated for both savings account and the current account.

The above two accounts are operated with the money belonging to the account holder. There are two other accounts where the banks provide withdrawing facilities being

Overdraft and cash credit:

Banks offer a facility to draw money against a security offered to them, which could be Fixed deposits, Gold, etc, subject to a limit. Such a facility is called overdraft. This account can be operated like a current account. Interest is payable on the amount utilized. These accounts are called as secured overdrafts.

Depending upon the credibility of a person, banks often allow unsecured overdrafts also. Credit cards are the most common example of this.

For the persons carrying on business, a facility is provided called as cash credit. This facility is again subject to a limit and is provided against a security of stocks and receivables.

Banks also provide an account where no operations are allowed, being Fixed deposit. In this type of account, no operations will be allowed. Banks insist that the amount for fixed deposit shall be transferred from savings and current account. Proceeds of fixed deposit account maturity will be transferred only to this account.

Partial operations:

Certain types of accounts have only one side operations.

Recurring deposit accounts where a pre determined amount is deposited every month for pre determined duration in to the account, normally by transfer from a designated account, be it savings account or current account. Banks offer interest on these deposits.

Loan accounts:

Banks offer loans to customers, which can be long term such as a housing loan, medium term such as a car loan, loans for the purchase of machinery, furniture, etc. And lastly short term loans such as loans against Gold jewelry which has to be cleared within one year. Gold loans are generally renewed at the end of one year either by paying off the interest or there being a fresh limit due to price increase. There have to be periodical repayments in to the loan account, may be monthly or quarterly etc. If paid monthly they are called as Equated Monthly instalments. (EMI) this amount includes principal as well as interest. This is calculated at the time of disbursal of loan to make the account fully paid by the pre determined duration.

Banks also provide loans to farmers known as crop loans which are for a crop time depending upon the nature of crop and duration of crop, which has to be cleared immediately harvesting the crop.

They also provide loans for agricultural purposes such as mechanical harvesting equipment, tractors, sheds for animals, stores etc.

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