Every Type of Bank Account in India, Compared Against the RBI’s Own Rules

Choosing between the types of bank accounts available in India comes down to one question repeated in different forms: how often do you need this money, and how much is the bank willing to pay you for the privilege of holding it in the meantime? A savings account sits at the accessible, low-yield end. A fixed deposit sits at the fixed-term, higher-yield end. Current accounts, recurring deposits and NRI accounts each solve a narrower problem the first two don’t. What follows is what each one actually does, what it pays, and two rule changes — one on nomination, one on how FD tax is filed — that a surprising amount of existing content online has not yet updated for.

How deposit insurance actually works, before anything else

Every account type in this guide sits on the same safety net, so it is worth establishing upfront rather than repeating per account. The Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly owned RBI subsidiary, insures ₹5 lakh per depositor, per bank, covering principal and accrued interest combined. It applies identically to savings, current, fixed deposit and recurring deposit accounts.

Savings accounts

A savings account is the default account most people open first: liquid, low-friction, meant to hold money you are not actively spending while still paying some interest. What it actually pays varies far more by type of bank than most comparisons make clear.

That gap is the single most actionable fact about a plain savings account: two accounts carrying identical DICGC insurance can pay meaningfully different rates, purely because of where the balance sits. The trade-off with a small finance bank is usually a smaller branch network and a digital-first experience rather than any difference in deposit safety — the ₹5 lakh cover is the same at every DICGC-insured bank regardless of size.

Basic Savings Bank Deposit Account (BSBDA) and Jan Dhan accounts

A Basic Savings Bank Deposit Account is a specific, RBI-mandated category every bank must offer: no minimum balance requirement, ever, with a defined set of free facilities. The Pradhan Mantri Jan Dhan Yojana (PMJDY) — India’s financial-inclusion scheme — opens accounts in this category by default, which is why “BSBDA” and “Jan Dhan account” are often used almost interchangeably, though BSBDA is the account type and PMJDY is the scheme that popularised it.

Salary accounts

A salary account is a savings account with the minimum-balance requirement waived as long as an employer keeps crediting salary into it — structurally a savings account with a conditional perk, not a separate product with its own interest rate. The condition is worth knowing precisely, because it lapses automatically: at HDFC Bank and SBI, if no salary credit lands for three consecutive months, the account is converted to a regular savings account, and the usual minimum-balance requirement and charges begin to apply from that point. Switching jobs, a career break, or a delayed first salary at a new employer can all trigger this without the account holder necessarily noticing until a shortfall fee appears.

Current accounts

A current account is built for businesses and high-transaction-volume users, not individual saving. It pays no interest — this is close to universal across Indian banks — in exchange for unlimited transactions and features a savings account is not designed to handle: high-value transfers, large numbers of daily transactions, and typically a linked overdraft facility.

Fixed Deposits (FDs)

An FD locks a lump sum for a chosen term at a fixed rate, agreed at the time of opening. Rates vary by bank, tenure and depositor category, and senior citizens are routinely offered a premium over the standard rate — commonly in the range of 0.25 to 0.50 percentage points higher, on top of whatever the base rate happens to be. For the actual arithmetic of how FD interest compounds, what breaking one early costs, and how it stacks up against a recurring deposit or borrowing against the deposit instead of breaking it, we have worked through the numbers separately in our comparison of FDs, RDs and overdrafts.

Recurring Deposits (RDs)

An RD is built for a different habit than an FD: instead of depositing a lump sum once, you commit to a fixed monthly instalment for a chosen tenure, and the bank pays a rate broadly comparable to its FD rate for the same term. It suits building toward a goal from monthly income rather than investing money you already have sitting in one place. The same DICGC insurance, TDS threshold and slab-rate taxation that apply to FD interest apply to RD interest as well — the product mechanics differ, but the tax and insurance treatment do not.

NRI accounts: NRE, NRO and FCNR

Non-resident Indians bank in India through three structurally distinct account types, and conflating them is a common and costly mistake — the tax and repatriation consequences differ sharply.

The practical rule of thumb: NRE is for parking foreign earnings you might want to bring back to India tax-free later; NRO is for managing income that originates in India, which is taxable regardless of which account it sits in; FCNR removes rupee risk entirely by never converting the money into rupees in the first place.

The nomination rule that just changed — and most content hasn't caught up

Until 1 November 2025, a bank deposit account in India could carry exactly one nominee. That is no longer true, and the change is significant enough that it is worth stating plainly rather than in passing.

It is worth being precise about what a nominee actually receives, because this is where a lot of confusion sits regardless of how many nominees are allowed: a nominee is authorised to collect the funds from the bank after the depositor’s death, but is not automatically their legal owner. Indian courts have consistently held that legal heirs’ rights under succession law — a will, or the applicable inheritance rules in its absence — still govern who ultimately owns the money; the nominee is the bank’s point of contact for releasing it, not the final word on entitlement. SEBI made a parallel, though not identical, change to demat and mutual fund nomination — up to three nominees rather than four, and only for new accounts rather than existing ones — which we covered separately in our explainer on the September 2026 demat nomination rules. The two regulators moved in the same direction, on different timelines, with different nominee caps — worth knowing if you are updating nominations across a bank account and a demat account in the same sitting.

All the types of bank accounts, compared directly

Every account in this list carries the same ₹5 lakh DICGC cover. What actually varies is the rate, the lock-in and the tax treatment — not the safety.

Final Verdict

The types of bank accounts in India are not a ranked list from worst to best — they are matched to different jobs, and most people reasonably hold several of them at once: a savings account for liquidity, an FD or RD for a lump sum or a monthly commitment with a known date, and a current account only if running a business actually requires one. NRE, NRO and FCNR exist specifically because “money in India” and “foreign income remitted to India” are taxed and repatriated on completely different terms, and treating them as interchangeable is the single costliest mistake an NRI depositor can make.

Two things should change how older advice on this subject is read. Nomination is no longer capped at one person — up to four, simultaneous or successive, since November 2025 — so any guide still describing a single-nominee limit is out of date. And FD interest above the TDS threshold is taxed the same way it always was, just under a renumbered section — 393(1), not 194A — from 1 April 2026 onward. Neither change affects how safe your money is: that number, ₹5 lakh per depositor per bank, has not moved, and it is the fact worth checking against DICGC’s own site rather than taking on faith from any comparison article, including this one.