Different Types of Bank Accounts in India & their Features!

By BYJU'S Exam Prep

Updated on: September 25th, 2023

Financial account maintained by a bank or other financial institution in which the financial transactions between the bank and a customer are recorded is Bank Account. In this article, we have come up with everything you need to know about Bank Account and its features.

Bank account has various purposes ranging from safety, convenience, savings to business. To facilitate different purpose, frequency of transaction, and location of the account-holder, banks offer various types of bank accounts to choose from. 

In India, Bank Accounts are mainly categorized broadly into Demand Deposits, Time Deposits, and Non-resident accounts. Types of bank accounts categorization in India depends on various parameters such as accessibility to the account, liquidity, and the amount of interest that can be earned on the deposited funds in the account. Let’s dig inside to know about the different types of bank accounts in India with their distinct features.

Different Types of Bank Accounts in India

The three broad categorization of bank accounts in India are as follow:

  1. Demand Deposits
    • Saving Account
    • Current Account
  2. Term Deposits
    • Fixed Deposit
    • Recurring Deposit
  3. Non-Resident Deposits
    • Foreign currency Non-Resident
    • Non-Resident External Rupee Account
    • Non-Resident Ordinary Rupee Account

1. Demand Deposit

Demand Deposit are types of bank deposits that can be withdrawn on-demand at any time. They are usually easier to access but offer a lower interest rate as they are used for day to day business and expenses. 

There are two types of Demand Deposits bank accounts

Savings Account: Savings Account is the most common and basic type of bank account in India. It allows you to deposit money and withdraw funds at your convenience. The interest earned on the savings account is generally low. Number of transactions you can make each month from saving accounts is capped. Banks offer a variety of savings accounts based on the type of depositor, features of the product, age or purpose of holding the account, and so on. 

There are zero-balance savings accounts and also advanced ones with features like auto sweep, debit cards, bill payments and cross-product benefits. 


Further classification of Savings accounts

Types of Saving Account

Features and Details

Basic Savings Bank Deposit Accounts (BSBDA)

Note: Jan Dhan accounts under PMJDY comes under this category.

  • There is no requirement of minimum balance.
  • There is an upper limit to the monetary balance.
  • Especially available for the economically weaker sections.
  • only one BSBDA account in one bank is permitted.
  • No limitations on age and income criteria of the customer.

Basic Saving Bank Deposit Accounts Small scheme

  • They have provisions of relaxed KYC and self-attested required documents.
  • The upper limit on credit is one lakh rupees in a year
  • The upper monetary limit on deposit is Rs.50000/-
  • One can open the account for only 12 months if further extension is required the applicant must submit the required documents.

Normal Saving Bank Account

  • Minimum balance provisions vary from bank to bank.
  • Mostly help be salaried individuals, students, etc.

Note: Know Your Customer (KYC) norms are applicable to all the accounts now.

What is No Frills Account?

Under these accounts, there was a provision of ‘nil’ or very low minimum balance. These were in operation especially for the poor economic section of the society. After the BSBDA, all the no-frill accounts are transferred to BSBDA.

Current Account

Current accounts are the types of bank accounts that are designed to facilitate frequent transactions for business owners, trader and entrepreneurs. It is also known as a financial account. Such bank accounts allow the individual to carry out an unlimited number of transactions regularly. These accounts hold more liquid deposits with no limit on the number of transactions per day. 

Other features of the current account are :

  • Overdraft facility at an agreed limit.
  • Flexible and high liquidity options.
  • Higher minimum balance as compared to saving account
  • KYC guidelines are to be followed

2. Term Deposit

A term deposit is a type of deposit account held at a financial institution where money is locked up for some set period of time as an investment. They are generally short-term deposits with maturities ranging from one month to a few years. Interest Rate on term deposits are higher than that of demand deposit accounts

Different Types of Bank Accounts in India & their Features!

There are two types of bank accounts under Term Deposit accounts.

Types of Term Deposit Account

Features and Details

Fixed Deposit

  • In this type of deposits, banks accept deposits varying from 7 days to a maximum of 10 years.
  • The interest rate varies from bank to bank.
  • At the end of the agreed term, you receive the deposited amount with interest.
  • You cannot withdraw money from an FD before it matures. However, some banks offer a premature withdrawal facility

Recurring Deposit

  • In this type of accounts, banks accept a fixed amount from a customer in fixed installments at a regular interval of time.
  • The deposit period varies from 5 months to 10 years.
  • Customer need to invest a fixed sum of money in it regularly (every month or once a quarter) to earn interest.
  • Unlike FDs, where you need to make a lump sum deposit, the sum you need to invest here is smaller and more frequent.
  • You cannot change the tenure of the RD and the amount to be invested each month or quarter. 

3. Non-Resident Deposits

Non-Resident Deposits are primarily for the Indians or Indian-origin people living overseas. It is used by them to deposit their savings in Indian Banks while staying outside the country. There are different types of bank accounts for Indians or Indian-origin people living overseas. These accounts are also known as overseas accounts. Let us quickly see the various types of NRIs bank accounts:

Currently, there are three types of Non-Resident Deposit types of bank accounts in India

Types of Non-Resident Deposit Account

Features and Details

Foreign currency Non-Resident (Banks): FCNR (B)

  • Such accounts only accept and are maintained in foreign currency
  • The currencies that are accepted are US dollar, Euro, Pound Sterling, Japanese Yen, Australian Dollar and Canadian Dollar.
  • Only the term deposit is accepted.
  • Such account deposits are non-taxable in India.
  • Such accounts are considered as fully repatriable, both the principal amount and the interest earned.

Non-Resident External Rupee Account (NRE)

  • The currency acceptable under these accounts is only Indian Rupees.
  • Term deposits and Demand deposits are both accepted.
  • Non-taxable in India
  • These accounts are considered as fully repatriable, both the principal amount and the interest earned.

Non-Resident Ordinary Rupee Account (NRO)

  • NRO Account services all the individuals who reside outside of India.
  • Any Indian resident who migrated abroad can move their account to this category.
  • Term deposits and saving deposits are allowed.
  • These accounts are taxable in India.
  • In these accounts, the principal amount is non-repatriable.
  • Interest amount can be repatriable.

Other Types of Bank Accounts in India


Types of Bank Accounts

Features and Details

DEMAT Account

  • DEMAT stands for Dematerialised Accounts.
  • Primarily used for shares transaction in electronic format.

Nostro Account

  • These accounts are held in foreign Banks by Indian Banks.
  • They are held in foreign currency.

Example- PNB holds an account in Bank of America in US dollars.

Loro Account

Such accounts are used for two banks making a transaction where a third bank holds an account.

For Example: If Punjab National bank wants to do some transactions with Bank of America in dollars in the USA, but they don’t have an account with Bank of America. on the other hand, State Bank of India has an account with Bank of America in the USA in dollars.

State bank of India makes the transaction in the bank of America in the USA on behalf of Punjab National bank. In such a case, for SBI this account is known as Nostro Account and for Punjab National Bank it is known as Loro Account.

Vostro Account

Vostro Account is maintained and held in India in Indian Rupees by the foreign banks.

Example: Bank of America has an account in the State Bank of India in Indian Rupees.

Escrow Account

It is used for a transaction between two parties where a temporary pass through an account is held by third parties

GILT Account

  • These are used to hold Government securities and Treasury bills in the Demat form.
  • These are maintained and held by investors with the primary dealers.

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