Banking Operations and Types of Accounts
Core account types
This domain tests account opening, operation, and the rules that separate deposit accounts. Savings accounts suit individuals and allow limited withdrawals; current accounts suit businesses and normally pay no interest. Fixed deposits lock funds for a term and pay higher interest; recurring deposits accept fixed monthly instalments. Basic Savings Bank Deposit accounts are no-frills accounts with minimum documentation. Banks must follow KYC norms, obtain a nomination, and record the mode of operation for joint accounts. A minor can operate an account subject to age and bank rules, usually with a guardian.
Operational rules
Account opening requires proof of identity and address, photograph, and PAN or Form 60/61 where applicable. Cheque books, passbooks, ATM cards, and internet banking are delivered against proper authority. Banks may prescribe minimum balances for certain accounts, but basic accounts have relaxed conditions. Joint accounts require a clear mandate: either-or-survivor or former-or-survivor. Stop-payment instructions, standing instructions, and account closure follow documented procedures.
Worked example
A retail shopkeeper wants an account for daily receipts and payments to suppliers. Reasoning: a current account is suitable because it supports frequent transactions and does not normally pay interest; a savings account is designed for individuals and has withdrawal restrictions. The bank will still complete KYC and may require business proof. The answer should not say current accounts earn interest.
Traps
Do not claim current accounts earn interest. Do not say a minor can never have an account. Do not ignore nomination and joint-account mandates. Do not mix fixed deposits with recurring deposits.