FAQ Category: Banking system & loans schemes under govt

The banking system of India comprises the Central bank (Reserve Bank of India), Commercial banks (Public sector, Private sector, and Foreign banks), Cooperative banks (Urban and Rural Co-operative Banks), and Development banks like IDBI.

The functioning of Banks and Financial Institutions in India is governed by the Department of Financial Services, Ministry of Finance.

Having a bank account will encourage savings and investments. A bank account will henceforth pave the way for further investment. Alongside this, your money will also be protected from theft. Moreover, instead of keeping hard cash with you, saving your money in a bank account will earn you a designated interest rate from the bank.

There are plenty of varied types of accounts that you can avail at a bank. Some of the examples of such bank accounts are,

• Savings account
• Current account
• Overdraft account.
• Cash credit account
• Zero balance account

A savings account is the most basic account one can open. It is a suitable option for individuals who would like to deposit their money to keep it safe with the bank. A saving account is ideal for salaried employees or for those who have a monthly income to be deposited in their accounts. A savings bank account is a basic account type that lets you deposit money safely with a bank and helps you earn interest.

Facilities such as ease of making transactions from anywhere through internet banking, debit card, cheques, ATM facilities, saving interest rates, etc. are the benefits that accompany having a savings account.

A current account is suitable for individuals who deal with multiple transactions on a daily basis, thus making it ideal for business owners such as traders and entrepreneurs who need to access their accounts frequently.

An overdraft account is a type of financial instrument that can easily be availed as an extended credit facility by the customers. This usually comes into effect when the bank balance of the customer reaches zero. This facility is chargeable and is provided to customers as an unsecured form of credit.

Cash Credit account is a type of short-term loan provided to businesses by the banks to maintain the liquidity of the cash flow in the business. It is a form of working capital loan that is usually availed by business corporations. The businesses are allowed with this credit over their current account balance for a period of time. Businesses are allowed to borrow amount above their account balance up to the permissible borrowing limit. The bank will charge interest as per its guidelines and the terms and conditions agreed between the borrower and the lender on the amounts withdrawn, not on the entire borrowing limit.