postUpdated Apr 24, 2026

Types of Bank Accounts in India – Complete Banking Awareness Notes 2026 for IBPS and SBI

Types of Bank Accounts is a high-frequency chapter in banking awareness for all competitive banking exams. This chapter covers every type of bank account in India including savings account, current account, fixed deposit, recurring deposit, BSBDA, PMJDY account, small account, bulk deposits, inactive and dormant accounts, special accounts like DEMAT, Escrow and GILT accounts, NRI accounts and the nomination facility. Key features, interest rates, withdrawal limits, TDS rules and exam-relevant differences between account types are covered in detail.

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Types of Bank Accounts in India - Introduction
1. Savings Account
2. Current Account
3. Fixed Deposit (FD)
4. Recurring Deposit (RD)
5. BSBDA - Basic Savings Bank Deposit Account
6. PMJDY Account - Pradhan Mantri Jan Dhan Yojana
7. Small Account
8. Inactive and Dormant Accounts
9. Special Account Types
10. NRI Accounts - Detailed Comparison
11. Nomination Facility
Memory Tricks - Types of Bank Accounts
One-Liners for Quick Revision - Types of Bank Accounts

Types of Bank Accounts in India - Introduction

Types of bank accounts is one of the most consistently tested chapters in the banking awareness sections of IBPS PO, IBPS Clerk, SBI PO, SBI Clerk, RBI Grade B and all government banking exams. Understanding each account type — its features, interest rates, transaction limits, tax implications and special conditions — is essential for scoring well in this section. This chapter covers every category of bank account from basic savings accounts to specialized NRI accounts.

1. Savings Account

A Savings Account is the most commonly held bank account in India. It is designed to encourage savings habits among individuals and small businesses. The key characteristics of a savings account are:

Eligibility: Any individual resident Indian aged 18 years and above. For minors between 10 and 18 years, accounts with certain restrictions are permitted. Below 10 years, a minor account must be operated by a guardian.
Interest Rate: Typically 2.5% to 8% per annum depending on the bank. Most banks offer around 3.5%. Interest is calculated on the daily closing balance since April 1, 2020.
Tax on Interest: No TDS on interest up to Rs. 10,000 per year. Interest above Rs. 10,000 is added to income and taxed as per the applicable slab.
Minimum Balance: Typically Rs. 500 without a cheque book and Rs. 1,000 with a cheque book — varies by bank.
Transaction Limits: Banks may restrict the number of free monthly transactions — typically 4 to 5 free ATM withdrawals per month at other bank ATMs.
Nature: Demand deposit — can be withdrawn at any time without prior notice.

2. Current Account

A Current Account is designed for businesses, firms, companies and other entities that have a high volume and frequency of banking transactions.

Eligibility: Businesses, firms, companies, trusts, societies — not typically for individual savings purposes.
Interest: Zero interest paid on current account deposits — this is a critical exam point.
Transactions: Unlimited deposits and withdrawals per day — no restrictions.
Overdraft Facility: Current accounts often come with an overdraft facility allowing the business to withdraw more than the account balance up to an approved limit.
Service Charges: Banks charge quarterly or monthly service fees for current account maintenance.
Minimum Balance: Typically higher than savings accounts — ranging from Rs. 5,000 to Rs. 25,000 or more depending on the bank and type of current account.
Nature: Demand deposit — withdrawable at any time.

CASA Ratio - Savings and Current Accounts Combined

The CASA Ratio measures the proportion of a bank's total deposits held in current and savings accounts. Since current accounts pay zero interest and savings accounts pay only about 3.5%, CASA deposits are the cheapest source of funds for a bank. A CASA ratio above 40% is considered healthy. Banks actively try to increase their CASA ratio to improve profitability.

3. Fixed Deposit (FD)

A Fixed Deposit (FD) — also called a Term Deposit or Time Deposit — is a financial instrument where a customer deposits a fixed amount with the bank for a predetermined period and earns a higher interest rate than a savings account.

Parameter	Details
Interest Rate	4% to 7.25% per annum; higher than savings accounts; senior citizens get additional 0.25% to 0.5%
Tenure	7 days to 10 years
Early Withdrawal	Allowed with penalty — typically 0.5% to 1% reduction in the applicable interest rate
Loan Against FD	Available up to 85% to 95% of the FD amount including accrued interest
TDS Threshold	TDS deducted if interest exceeds Rs. 50,000/year (Rs. 1,00,000 for senior citizens)
TDS Rate	10% with PAN; 20% without PAN
Avoid TDS	Submit Form 15G (non-senior citizens) or Form 15H (senior citizens) if income is below taxable limit
Bulk Deposit	FD of Rs. 3 crore and above is classified as a bulk deposit with separately negotiated interest rates

Types of Fixed Deposits

Standard FD: Interest paid at regular intervals — monthly, quarterly, half-yearly or annually. Principal returned at maturity.
Cumulative FD: Interest is accumulated and compounded until maturity. Both interest and principal are paid together at the end of the tenure. Earns higher effective yield due to compounding.
Tax-Saving FD: Tenure of exactly 5 years; eligible for tax deduction under Section 80C of the Income Tax Act up to Rs. 1.5 lakh; early withdrawal not permitted.
Flexi FD: Linked to a savings account; excess funds above a threshold are automatically converted to FD and broken back when needed.

4. Recurring Deposit (RD)

A Recurring Deposit (RD) is a savings scheme where a customer deposits a fixed amount every month for a predetermined period and earns interest on the accumulated amount.

Minimum deposit: As low as Rs. 100 per month in most banks
Tenure: 6 months to 10 years
Minimum age: 10 years
Interest rates: 3.5% to 8.5% per annum — similar to FD rates for the same tenure
TDS: Applicable on interest earned if it exceeds the threshold in a financial year
Designed for: Small savers who cannot make a lump sum deposit but can commit to regular monthly savings

5. BSBDA - Basic Savings Bank Deposit Account

The BSBDA (Basic Savings Bank Deposit Account) is a zero-minimum-balance savings account introduced by RBI in August 2012, replacing the earlier No-Frills Account scheme introduced in November 2005. BSBDA is designed to bring the unbanked population into the formal banking system.

Free ATM-cum-debit card without any charges
No limit on the number of deposits in a month
Maximum of four withdrawals per month at branches or ATMs (including ATM withdrawals of other banks)
No minimum balance requirement
KYC norms must be complied with
If KYC norms are not fully satisfied, the account is treated as a BSBDA-Small Account
A customer can hold only one BSBDA in one bank
If a customer has a BSBDA in a bank, they cannot open any other savings account in the same bank

6. PMJDY Account - Pradhan Mantri Jan Dhan Yojana

The PMJDY Account is a special type of basic savings account introduced under the Pradhan Mantri Jan Dhan Yojana, launched by Prime Minister Narendra Modi on August 28, 2014.

Feature	Details
Minimum Balance	None — zero minimum balance
Interest	Interest paid on deposits as per savings account rate
Accident Insurance	Rs. 2,00,000 (Rupees two lakh) for all account holders with RuPay card
Life Insurance	Rs. 30,000 for accounts opened between August 15, 2014 and January 31, 2015
Overdraft Facility	Rs. 10,000 after 6 months of satisfactory operation — preferably to the lady of the household
Debit Card	Free RuPay debit card issued to all account holders
Age Limit	18 to 65 years
Mobile Banking	Available including for feature phones via USSD

7. Small Account

A Small Account is opened when a customer cannot fully satisfy the KYC (Know Your Customer) documentation requirements. It is a restricted account with specific limitations to control risk.

Aggregate deposits shall not exceed Rs. 1 lakh per annum
Aggregate withdrawals and transfers in a month shall not exceed Rs. 10,000
Maximum balance at any point of time shall not exceed Rs. 50,000
Withdrawals can only be made at the base branch through withdrawal slip
Foreign remittances cannot be credited without completing full KYC
Initially valid for 12 months — extendable by another 12 months if proof of OVD (Officially Valid Document) application is provided
Can only be opened at CBS-linked branches of the bank

8. Inactive and Dormant Accounts

Status	Condition	What Happens
Inactive (Inoperative)	No customer-initiated transactions for 12 months	Bank marks account as inactive; interest still credited; customer can reactivate by making a transaction
Dormant	No customer-initiated transactions for 24 months	Account further restricted; additional verification required to reactivate
Unclaimed Deposits	Deposits unclaimed for more than 10 years	Transferred to RBI's DEAF (Depositor Education and Awareness Fund); can be claimed from RBI via bank

UDGAM Portal: RBI launched the UDGAM (Unclaimed Deposits Gateway to Access inforMation) portal to help individuals search for their unclaimed deposits across multiple banks. As of July 2025, over 8.59 lakh users had registered on UDGAM.

9. Special Account Types

Account Type	Description	Key Purpose
DEMAT Account	Dematerialized account that holds shares, bonds and mutual funds in electronic form	Trading and holding securities without physical share certificates; BSDA (Basic Service Demat Account) limit raised to Rs. 10 lakh in September 2024
Escrow Account	Account held by a neutral third party during a transaction between two parties	Funds held safely until all conditions of a transaction are met — used in real estate, mergers and acquisitions
GILT Account	Account maintained by investors with Primary Dealers for holding government securities and treasury bills in Demat form	Enables retail investors to hold government securities electronically through RBI Retail Direct platform
Nostro Account	Account that a domestic bank holds in a foreign bank in the foreign currency	Facilitates international trade and foreign exchange settlements; for example HDFC Bank's USD account with Citibank New York
Vostro Account	The mirror of a Nostro account — account that a foreign bank holds with a domestic bank in the domestic currency	Same relationship viewed from the other bank's perspective; used in correspondent banking

10. NRI Accounts - Detailed Comparison

Non-Resident Indians (NRIs) — Indian citizens residing outside India — can maintain three types of bank accounts in India:

Feature	NRE Account	NRO Account	FCNR(B) Account
Full Form	Non-Resident External Rupee Account	Non-Resident Ordinary Rupee Account	Foreign Currency Non-Resident (Bank) Account
Currency	Indian Rupees	Indian Rupees	Foreign currency (USD, EUR, GBP, JPY, CAD, AUD)
Source of Funds	Only income earned abroad	Income earned in India — rent, dividends, pension	Only funds remitted from outside India
Joint with Resident Indian	No — only with another NRI	Yes — can be joint with resident Indian	No — only with another NRI
Tax in India	No income tax on interest	Interest is taxable in India; TDS deducted	No income tax on interest
Repatriation	Fully repatriable — principal and interest	Repatriation limited to USD 1 million per year	Fully repatriable — principal and interest
Account Types Available	Savings, Current, FD, RD	Savings, Current, FD, RD	Fixed Deposit only
Minimum FD Tenure	1 year	No specific minimum	1 year; maximum 5 years

11. Nomination Facility

The Nomination Facility in banking is governed by the Banking Companies (Nomination) Rules, 1985. It allows an account holder to nominate a person who will receive the account balance in case of the account holder's death, without requiring a succession certificate or probate from a court.

Available for savings accounts, fixed deposits and recurring deposit accounts
For current accounts, nomination is available only in limited cases
Highly advisable for every bank account holder to register a nominee
A nominee is a trustee for the legal heirs — the money can be claimed by legal heirs even after being paid to the nominee
Maximum of one nominee per account (or per deposit)
Nomination can be changed or cancelled at any time by the account holder

Memory Tricks - Types of Bank Accounts

Savings vs Current - Simple Rule

Trick: "Save = Interest. Current = No interest." Savings accounts pay interest because you are saving. Current accounts pay no interest because the bank is doing the business owner a favour by managing their constant flow of transactions.

Remember PMJDY Key Numbers

Trick: "PMJDY = 2 lakh accident cover, 10 thousand overdraft, August 28, 2014." The three numbers — Rs. 2 lakh, Rs. 10,000, August 28 (day 28 of month 8) — form a pattern to remember.

Remember NRE vs NRO

Trick: "NRE = Earned abroad, Exempt from tax, Entirely repatriable. NRO = Ordinary Indian income, taxed in india." NRE = all E's (Earned abroad, Exempt, Entire repatriation). NRO = Ordinary, taxable, restricted repatriation.

Remember FCNR

Trick: "FCNR = Foreign Currency, NRI, only Fixed deposits, Rupee exchange not needed." FCNR is the only NRI account held in foreign currency rather than rupees. Only available as fixed deposits. Minimum tenure 1 year, maximum 5 years.

One-Liners for Quick Revision - Types of Bank Accounts

Savings account interest is calculated on the daily closing balance since April 1, 2020.
Current accounts pay zero interest on deposits.
Fixed deposit tenure: 7 days to 10 years.
Bulk deposit: FD of Rs. 3 crore and above.
TDS on FD interest if it exceeds Rs. 50,000/year (Rs. 1 lakh for senior citizens).
Form 15G (non-seniors) and 15H (seniors) avoid TDS on FD interest.
BSBDA introduced in August 2012 replacing No-Frills Account (November 2005).
BSBDA withdrawal limit: 4 withdrawals per month.
PMJDY launched: August 28, 2014 by PM Narendra Modi.
PMJDY accident insurance: Rs. 2 lakh; overdraft: Rs. 10,000.
Small account: maximum balance Rs. 50,000; maximum deposits Rs. 1 lakh/year.
Dormant account: no transactions for 24 months.
Unclaimed deposits transferred to DEAF (Depositor Education Awareness Fund) after 10 years.
NRE account: funds earned abroad, fully repatriable, no tax in India.
NRO account: Indian income, partially repatriable (USD 1 million/year), taxable in India.
FCNR(B) account: foreign currency FD only; minimum tenure 1 year, maximum 5 years.
Nomination facility governed by Banking Companies (Nomination) Rules, 1985.

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Frequently Asked Questions

What is the difference between a savings account and a current account?

A savings account is designed for individual customers who want to save money and earn interest. It pays interest of approximately 3.5% per annum, has limited daily transaction limits and maintains a minimum balance requirement. A current account is designed for businesses, firms and companies with frequent and large transaction volumes. It pays zero interest on deposits and allows unlimited transactions per day. Banks charge service fees on current accounts. Both are demand deposits — money can be withdrawn at any time.

What is the CASA Ratio?

CASA Ratio stands for Current Account and Savings Account Ratio. It is calculated as the sum of savings and current account deposits divided by total deposits, multiplied by 100. A CASA ratio above 40% is considered healthy. Higher CASA ratio means lower cost of funds for the bank since savings accounts pay only about 3.5% interest and current accounts pay zero interest, making them much cheaper than fixed deposits.

What is a Fixed Deposit (FD) and what is the penalty for early withdrawal?

A Fixed Deposit or FD is a type of deposit where a customer deposits a fixed amount for a fixed period and earns a higher interest rate than a savings account. The tenure ranges from 7 days to 10 years. Interest rates range from 4% to 7.25%. If the customer withdraws before the agreed tenure, most banks charge an early withdrawal penalty of 0.5% to 1% reduction in the applicable interest rate. A loan can be availed against FD up to 85% to 95% of the deposit amount.

What is a BSBDA account?

BSBDA stands for Basic Savings Bank Deposit Account. It is a zero-minimum-balance savings account introduced by RBI in August 2012, replacing the earlier No-Frills Account scheme introduced in November 2005. Features of BSBDA include a free ATM-cum-debit card, unlimited deposits, a maximum of four withdrawals per month at branches or ATMs and compliance with simplified KYC norms. A customer can hold only one BSBDA in one bank.

What is the difference between inactive and dormant accounts?

An account is classified as inactive or inoperative when there are no customer-initiated transactions for 12 months. An account becomes dormant when there are no customer-initiated transactions for 24 months. Unclaimed deposits left unattended for more than 10 years are transferred to the Depositor Education and Awareness Fund (DEAF) maintained by the RBI. Customers can search for their unclaimed deposits on the RBI's UDGAM portal.

What is the TDS rule on Fixed Deposit interest?

TDS (Tax Deducted at Source) is applicable on FD interest income if it exceeds Rs. 50,000 per year for regular customers and Rs. 1,00,000 per year for senior citizens. The TDS rate is 10% for those who have submitted their PAN card and 20% for those who have not submitted PAN. Customers can submit Form 15G (for non-senior citizens) or Form 15H (for senior citizens) to avoid TDS if their total income is below the taxable limit.

What are NRE, NRO and FCNR(B) accounts?

These are the three types of bank accounts for Non-Resident Indians (NRIs). NRE (Non-Resident External Rupee Account) is maintained in Indian rupees with funds earned abroad, fully repatriable, and no income tax is deducted in India. NRO (Non-Resident Ordinary Rupee Account) is for income earned in India — like rent or dividends — and is subject to income tax. FCNR(B) (Foreign Currency Non-Resident Bank Account) is available only as a fixed deposit in approved foreign currencies, fully repatriable and not subject to Indian income tax.

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