Everything You Wanted to Know about Bank Accounts

Do you know that for majority of payment/receipt transactions like college fees, electricity/telephone bills, insurance premium, salary, scholarship, dividend and any other form of income you require a bank account and a cheque book?

Well, it is true that you must have an account with local banks for almost all the financial transactions as it is mandatory to use cheques as per various acts like Income Tax Act. You must have faced this problem at some or the other occasion and if not then be prepared to face it any time.

A large population in India does not have a bank account and does not even know that besides keeping the money safely, the bank account plays a vital role in the day to day functions. Carry on reading this article to know more about bank accounts.

What are the Types of Accounts?

1. Savings Account: This is the simplest type of bank account for a common man.

Savings Bank Account

  • You will get the most essential facilities like cheque book, passbook or monthly statement.
  • Only limited number of cash deposit and withdrawal are permitted per month.
  • It is very easy to open savings accounts without any tedious paper work.
  • Savings accounts are useful for salaried persons, children, housewives, pensioners and in general for a common man.

2. Current Account: Current accounts are mostly suitable for businessmen where unlimited number of cash and cheque deposit and withdrawals are required daily, weekly or monthly.

What is the Importance of Joint Accounts?

Account opening form has a column about mode of holding.

  • Mode of holding means how you will operate the account – Single or Joint or E/S (Either/Anyone or Survivor) OR who will sign the cheques?
  • It is advisable that you should always open the account jointly with any one or two family members may be father/mother/wife/adult children and with E/S mode of holding.
  • E/S mode of holding saves you from lot of botherations in future in case of unfortunate death of first holder.

What is meant by Minimum Balance or AQB?

Most of the local banks impose something called as minimum balance or AQB (Average Quarterly Balance) in the savings account.

  • It is the minimum amount that must always remain as balance in your savings account.
  • The amount varies from Rs.1000 to 10,000 depending upon bank’s services and features.
  • Modern age bankers call the minimum balance as AQB. Click here to learn more about AQB.
  • If you do not maintain the minimum balance or AQB then the bank may charge you penalty and higher service charges.

What is the Importance of Nomination Facility?

  • Nomination is a facility that must be availed by everybody even if the account is operated as E/S.
  • In the event of unfortunate death of any single or joint holder/s it becomes very easy to claim the payment from the bank just by producing the death certificate.
  • Nomination is always in favor of only one person.
  • You can always add/change/cancel the name of nominee even after opening the accounts.
  • Nomination forms are very simple and easily available at all the local banks branches.

What Documents are Required for Opening a Bank Account?

  1. Address Proof – Any one of Ration Card, Electricity Bill, Telephone Bill, Election Card, Driving License, Passport.
  2. Identity Proof – Any one of PAN card, Driving License, Passport, Election Card, College Id Card, Company Id Card.

Modern Banks offer you savings accounts under fancy names: Easy Access, Classic, Plus, Max, Premium and many other high sounding names. Learn everything about a particular savings account before opening the account as you may land up paying huge charges under the pretext of hi-fi services which you may not at all be using.