Types of Bank Accounts in India: The Short Answer
Bank deposit accounts in India fall into two groups. Demand deposits can be withdrawn any time: savings account and current account (the Basic Savings Bank Deposit Account – BSBDA is a no-frills savings account). Time (term) deposits are locked for a fixed period: fixed deposit (FD) and recurring deposit (RD). For Non-Resident Indians there are NRE, NRO and FCNR(B) accounts.
Key takeaway for bank exams: Current accounts pay no interest; savings interest is deregulated (since October 2011) and calculated on the daily balance. Under RBI's revised BSBDA rules (in force by 1 April 2026), a BSBDA gives no minimum balance, free debit card, 25 free cheque leaves a year, internet and mobile banking, and at least 4 free withdrawals a month, with UPI, NEFT, RTGS, IMPS and PoS payments not counted as withdrawals.
BSBDA rules are taken from the RBI's Amendment Directions of 4 December 2025 and the RBI (BSBDA) Directions 2025; NRI account rules from RBI/FEMA deposit regulations; checked in October 2026. All deposits in these accounts are insured by DICGC up to ₹5 lakh per depositor per bank.
Demand Deposits vs Time Deposits
| Point | Demand deposits | Time (term) deposits |
|---|---|---|
| Examples | Savings, current, BSBDA | Fixed deposit, recurring deposit |
| Withdrawal | Any time | At maturity (early withdrawal usually has a penalty) |
| Interest | Savings: yes; current: no | Higher, fixed for the term |
| CRR / SLR | Counted in Net Demand and Time Liabilities (NDTL) | Counted in NDTL |
| Cheque book | Yes | No |
Types of Bank Accounts in India (Comparison Table)
| Account | Who it suits | Interest | Minimum balance | Withdrawals |
|---|---|---|---|---|
| Savings account | Individuals saving money | Yes (bank decides; daily balance) | As per bank (zero for BSBDA) | Unlimited, bank charges may apply |
| BSBDA | Low-income and first-time users (PMJDY accounts are BSBDAs) | Yes | None | At least 4 free a month (digital payments not counted) |
| Current account | Businesses, traders | No interest | Usually high | Unlimited; overdraft possible |
| Fixed deposit (FD) | Lump-sum savers | Higher, fixed | One-time deposit | At maturity; premature with penalty |
| Recurring deposit (RD) | Monthly savers (salaried) | Similar to FD | Fixed monthly instalment | At maturity |
| NRE account | NRIs, foreign income | Yes, tax-free in India | As per bank | Fully repatriable |
| NRO account | NRIs, Indian income (rent, pension) | Yes, taxable in India | As per bank | Repatriable up to USD 1 million per financial year (after taxes) |
| FCNR(B) deposit | NRIs wanting foreign-currency deposits | Yes | As per bank | Term deposit of 1 to 5 years, kept in foreign currency |
Savings Account: Features and RBI Rules
- Meant for individuals and some non-profit bodies to save; not for business transactions.
- Interest rate deregulated by the RBI from 25 October 2011; each bank sets its own rate.
- Interest is calculated on the daily closing balance (since 1 April 2010) and credited at quarterly or shorter intervals.
- Banks can charge for not keeping the minimum balance, but must notify the customer first and cannot push the balance into negative because of such charges.
- Special forms: salary account, senior citizen account, minor's account, zero-balance (BSBDA) account.
BSBDA (Basic Savings Bank Deposit Account): 2026 Rules
The RBI reviewed BSBDA rules (draft on 1 October 2025, final Amendment Directions on 4 December 2025; banks had to comply by 31 March 2026, so the new facilities apply from 1 April 2026).
| Facility | Rule |
|---|---|
| Minimum balance | None |
| Deposits | No limit on number or value; cash at branch/ATM, electronic credits and cheques |
| ATM / debit card | Free; no annual fee at issue or renewal |
| Cheque book | At least 25 free leaves a year (new) |
| Internet and mobile banking | Free (new) |
| Passbook / statement | Free, including continuation passbook |
| Withdrawals | At least 4 free a month, including transfers and ATM withdrawals (own or other banks' ATMs) |
| Digital payments | UPI, NEFT, RTGS, IMPS, PoS are not counted as withdrawals |
| Other savings account | A BSBDA holder cannot hold another savings account in the same bank |
| Existing BSBDA holders | Get the new facilities on request |
Banks can charge for withdrawals beyond the free limit. For example, SBI announced it will charge ₹15 plus GST for each cash withdrawal beyond four a month in BSBD accounts from 1 October 2026, while digital transactions stay free.
Current Account: Features
- For businesses, firms, companies and traders with many daily transactions.
- No interest is paid on current account balances.
- No limit on deposits and withdrawals; banks may offer an overdraft facility.
- RBI rules restrict borrowers with large bank credit from opening current accounts in many banks; collections must route through the main lending bank (to prevent diversion of funds).
Fixed Deposit (FD) and Recurring Deposit (RD)
| Point | Fixed deposit | Recurring deposit |
|---|---|---|
| Deposit | One lump sum | Fixed amount every month |
| Tenure | Usually 7 days to 10 years (bank-specific) | Usually 6 months to 10 years (bank-specific) |
| Interest | Fixed at the start; simple or compounded quarterly | Compounded (usually quarterly) |
| Early withdrawal | Allowed with a penalty (except tax-saver FD) | Allowed with a penalty |
| Tax-saver FD | 5-year lock-in, deduction under the old tax regime (Section 80C) | Not available |
| Loan facility | Loan / overdraft against FD | Loan against RD |
NRI Accounts: NRE vs NRO vs FCNR(B)
| Point | NRE | NRO | FCNR(B) |
|---|---|---|---|
| Currency | Indian rupees | Indian rupees | Foreign currency |
| Source of money | Income earned abroad | Income earned in India | Income earned abroad |
| Repatriation | Fully repatriable | Up to USD 1 million per financial year | Fully repatriable |
| Tax on interest in India | Exempt | Taxable | Exempt (for NRIs) |
| Account type | Savings, current, term | Savings, current, term | Term deposit only (1–5 years) |
| Exchange-rate risk | Borne by the depositor | Borne by the depositor | None for the depositor (kept in foreign currency) |
Other Account Rules Asked in Exams
- Inoperative account: a savings or current account with no customer-induced transaction for over 2 years.
- Unclaimed deposits: balances not operated for 10 years are moved to the RBI's Depositor Education and Awareness (DEA) Fund (set up in 2014); the customer can still claim them from the bank with interest where due.
- Joint account modes: "Either or Survivor", "Former or Survivor", "Anyone or Survivor(s)", "Jointly".
- Nomination is available for all deposit accounts.
- KYC is needed to open any account: see KYC norms in banking.
Worked Examples on Bank Accounts
Example 1 (BSBDA withdrawals). In a month, a BSBDA holder makes 3 ATM cash withdrawals, 1 branch cash withdrawal, 12 UPI payments and 2 NEFT transfers. Counted withdrawals = 3 + 1 = 4; the UPI and NEFT payments are not counted. So all are within the free limit of 4. A fifth ATM withdrawal could be charged by the bank.
Example 2 (FD interest, compounded quarterly). ₹1,00,000 is kept in an FD for 2 years at 7% a year, compounded quarterly. Maturity = 1,00,000 × (1 + 0.07/4)^8 = 1,00,000 × 1.0175^8 ≈ ₹1,14,888. Interest earned ≈ ₹14,888. (With simple interest it would be ₹14,000.)
Example 3 (NRO repatriation). An NRI has ₹12 crore in an NRO account from selling a flat. If USD 1 = ₹88, the annual limit of USD 1 million ≈ 88 × 10,00,000 = ₹8.8 crore a financial year (after taxes). The rest can be sent in the next financial year.
Types of Bank Accounts Quick Revision Table
| Asked as | Answer |
|---|---|
| Account with no interest | Current account |
| Savings rate deregulated | 25 October 2011 |
| Savings interest basis | Daily closing balance |
| BSBDA minimum balance | Nil |
| BSBDA free withdrawals | At least 4 a month (digital payments excluded) |
| BSBDA free cheque leaves | 25 a year |
| New BSBDA rules effective | By 1 April 2026 |
| PMJDY accounts are | BSBDAs |
| FCNR(B) tenure | 1 to 5 years |
| NRE interest tax | Exempt in India |
| NRO repatriation limit | USD 1 million per financial year |
| Inoperative account | No customer transaction for 2 years |
| Unclaimed after 10 years goes to | DEA Fund (RBI) |
| Deposit insurance | DICGC, ₹5 lakh per depositor per bank |
Types of Bank Accounts Questions with Answers (Practice Set)
Q1. Which type of bank account does NOT pay interest? (a) Savings account (b) Current account (c) Recurring deposit (d) Fixed deposit Answer: (b).
Q2. Under RBI's revised BSBDA rules, which of these is NOT counted towards the 4 free withdrawals? (a) ATM cash withdrawal (b) Branch cash withdrawal (c) UPI payment (d) Withdrawal at another bank's ATM Answer: (c). Digital payments (UPI, NEFT, RTGS, IMPS, PoS) are excluded.
Q3. How many free cheque leaves a year must a BSBDA get under the 2025 RBI directions? (a) 10 (b) 20 (c) 25 (d) 50 Answer: (c). At least 25 a year.
Q4. FCNR(B) deposits can be opened for a tenure of: (a) 7 days to 1 year (b) 1 to 3 years (c) 1 to 5 years (d) 5 to 10 years Answer: (c).
Q5. Interest earned on an NRE account is: (a) taxable in India (b) tax-free in India (c) taxed at 30% (d) taxed only above ₹10,000 Answer: (b).
Q6. The RBI deregulated the savings bank interest rate in: (a) 2004 (b) 2010 (c) 2011 (d) 2016 Answer: (c). From 25 October 2011.
Q7. An account with no customer-induced transaction for more than two years is called: (a) Dormant FD (b) Inoperative account (c) Frozen account (d) Closed account Answer: (b).
Q8. Unclaimed deposits not operated for 10 years are transferred to: (a) DICGC (b) Consolidated Fund of India (c) DEA Fund of the RBI (d) NABARD Answer: (c).
Q9. Accounts opened under PMJDY are a type of: (a) Current account (b) BSBDA (c) NRO account (d) Recurring deposit Answer: (b).
Q10. ₹1,00,000 at 7% a year compounded quarterly for 2 years gives interest of about: (a) ₹14,000 (b) ₹14,490 (c) ₹14,888 (d) ₹15,250 Answer: (c). 1,00,000 × 1.0175^8 − 1,00,000 ≈ ₹14,888.
Types of Bank Accounts FAQs
What are the main types of bank accounts in India?
Savings account (including BSBDA), current account, fixed deposit and recurring deposit for residents, and NRE, NRO and FCNR(B) accounts for NRIs.
What is a BSBDA account?
A Basic Savings Bank Deposit Account: a zero-balance savings account with free debit card, cheque book (25 leaves a year), internet and mobile banking, and at least four free withdrawals a month, with digital payments not counted.
Which bank account is best for business?
A current account, because it allows unlimited transactions and overdrafts, though it pays no interest.
What is the difference between NRE and NRO accounts?
NRE holds money earned abroad, is fully repatriable and its interest is tax-free in India. NRO holds money earned in India, is taxable, and can be repatriated up to USD 1 million a financial year.
Can I have a BSBDA and a normal savings account in the same bank?
No. A BSBDA holder cannot keep another savings account in the same bank, though accounts in other banks are allowed.
Are bank deposits insured in India?
Yes. DICGC insures deposits up to ₹5 lakh per depositor per bank, covering savings, current, FD and RD balances together.
Practice Next
- Mock tests: IBPS and SBI Clerk Banking Awareness Mock Test 01, SBI Clerk General Awareness Mock Test 01, IBPS Clerk Mains General Awareness Mock Test 01 and Banking Acts and Financial Institutions Quiz 01.
- Related notes: financial inclusion schemes in India, types of cheques in banking, KYC norms in banking, functions of RBI and simple and compound interest tricks for bank exams.
- Exam details: SBI Clerk 2026 notification.
- Browse all study notes.