Different Types of Deposit and Accounts in India

Explore the wide range of deposits available for Indian investors with our comprehensive guide.
Different Types of Deposit and Accounts in India
5 mins
24 August 2023

Types of Deposits and Accounts in India

Various fixed income products have numerous investment options to generate stable returns. Among them, most investors prefer deposits to include in their investment portfolios. Safe deposits help investors to grow their funds over time. To identify the most appropriate investment option based on your financial goals and requirements, you must know different types of deposits and the difference between Bank Deposits and NBFC Deposits.

What are the types of deposits?

Find the different types of deposits below:

1. Savings Account

An interest-bearing deposit account kept at a bank is a savings account. Despite these accounts' relatively low-interest rates, their security and dependability make them a fantastic choice for keeping cash on hand for urgent needs.

Savings accounts are a fantastic choice for short-term or emergency funding because they provide interest while keeping your money accessible. It often has no maximum withdrawal limit, and the interest is regarded as taxable income.

Features of savings account:

  • A savings bank account is a secure location to save extra money.
  • Savings Account interest rates can range from 3.5% to 7% annually.
  • Simple access to online and mobile banking.
  • Most banks also offer various insurance options, including coverage for personal accidents and death, to customers with savings accounts.
  • Your debit card can be used at ATMs across India.

2. Current Account

A current account is a deposit account kept by people who regularly do a disproportionately high volume of banking activities. It is developed by the bank at the applicant's request and made accessible often or instantly.
Current accounts offer a wide range of tailored alternatives to help with financial transactions related to liquid deposits. Additionally, current accounts enable the bank's cheque feature to pay creditors. In contrast to savings accounts, current accounts typically don't pay interest and have higher minimum balance requirements. The most significant benefit of a current bank account is that its holders can readily use an overdraft facility up to an agreed limit.

Features of current account

  • The primary goal of the current account is to promote efficient commercial transactions, and it needs a larger minimum balance than a savings account.
  • Transactions permitted by a current account go beyond those permitted by a savings account.
  • It simplifies frequent transactions like money transfers, cheque deposits, and cash withdrawals.
  • There is no cap on the number of transactions that can be made daily.

3. Fixed Deposits (FDs)

A fixed deposit is a type of account wherein a depositor needs to invest a lump sum amount for a fixed period at a fixed rate of return. The depositor receives secured returns at a fixed interest rate throughout the FD tenor.

The interest earned on FDs is taxable. The interest amount is clubbed to the total income of the depositor and taxed at the applicable income tax slab.

  1. FDs are latent to market volatility, so you earn profitable returns.
  2. Interest rates on FD are higher than a savings account.
  3. It is a flexible investment in terms of investment amount and tenor. Tenor and investment amount differs from institution to institution.
  4. The FD tenor ranges from seven days to ten years, depending on the choice of the FD issuer.
  5. The FD issuer imposes a penalty on premature withdrawal.

After completing the FD tenor, the FD issuer pays back the principal to the depositor. The interest rate and payout frequency depend on the type of fixed deposit an investor chooses.

Cumulative FDs vs. non-cumulative FDs

A depositor can choose cumulative or non-cumulative FDs, depending on the investment and liquidity requirements.

1. Cumulative FDs

These FDs accumulate interest and offer a single outgo of interest at the maturity date. It reinvests and compounds the interest amount till the maturity date. Such types of FDs are preferred by investors looking for wealth accumulation safely.

2. Non-cumulative FDs

These FDs provide regular interest payouts at a regular interval chosen by the depositor. Depending on the financial requirements, an investor can select the interval - monthly, quarterly, half-yearly, or yearly to receive interest payouts. Such FDs are preferred by individuals looking for regular cash flow to meet their expenses, like senior citizens.

You can make a cheque deposit to invest offline, or you can open an online deposit account.

3. Recurring Deposits (RDs)

Recurring Deposits (RDs) are a regular savings tool. They allow an individual to save money for the long term with regular and fixed monthly payments. Depositors can choose the minimum monthly payment according to their convenience. RDs are selected by an individual looking to build a rainy-day fund. It provides higher interest rates than a savings bank account.

  1. RD investing helps depositors to develop a savings habit and instills a sense of financial discipline over time.
  2. An investor can start an RD account with a minimal amount.
  3. The rate of returns on this savings deposit is fixed.
  4. If the interest exceeds Rs. 40,000 (Rs. 50,000 in case of senior citizens), RDs attract TDS (Tax Deducted at Source) on the interest earned.

Investors can consider Bajaj Finance SDP (Systematic Deposit Plan). It is a quick savings tool to save and grow your money in a disciplined manner at fixed interest rates. Unlike RD, you can choose the date of the monthly deposit at your discretion. With every bite-sized monthly deposit of Rs. 5,000, the investor gets a new fixed deposit account every month that matures on your selected maturity date.

Bank Deposits vs. NBFC Deposits vs. Post Office Deposits

Fixed deposits are offered by banks, NBFCs (Non-banking Financial institutions) and post offices. NBFC fixed deposits are also known as a company FD/ corporate FD.

Differentiation

Basis Bank Fixed Deposits NBFC Fixed Deposits Post Office Term Deposits
Issuer Banks NBFCs Post Offices
Interest Rate Lower (up to 5.5%) Higher (can go as high as 8.60% p.a.) Lower (up to 6.7%)
Insurance Insured by RBI Uninsured No concept of insurance
Maturity Period 7 days to 10 years 12 - 60 months 1 - 5 years
Taxable Interest Amount If it exceeds Rs. 40,000 (Rs. 50,000 for senior citizens) in a financial year. If it exceeds Rs. 5,000 in a financial year If it exceeds Rs. 40,000 (Rs. 50,000 for senior citizens) in a financial year.
TDS waiver Available Available Available


What allures investors to prefer NBFC FDs is higher interest rate than bank FDs. A slightly high-interest rate can impact returns with a compound effect significantly. On the other hand, bank FDs come with insurance, but with a maximum cap of Rs. 1 lakh only. Thus, you can save more and earn more with your fixed deposits safely.

Benefits of Bajaj Finance Fixed Deposits

  1. Guaranteed returns at a fixed rate of interest
  2. Higher returns than bank FDs and post office FDs
  3. Periodic interest payouts on non-cumulative fixed deposits
  4. Flexible FD tenure from 12 - 60 months
  5. The facility of premature withdrawal
  6. Avail of an easy loan against FDs to meet urgent financial needs
  7. Calculate your returns beforehand using the Bajaj Finance FD calculator

Annual rate of interest valid for deposits up to Rs. 5 crore (w.e.f May 10, 2023)

FD rates for customers below 60 years

Revised interest rates for deposits starting at Rs. 15,000 up to Rs. 5 crore (w.e.f May 10, 2023)

*Special interest rates are offered on tenure of 15, 18, 22, 30, 33 and 44 months.

Tenure in months Cumulative (interest + principal amount payment at maturity) Non-cumulative (interest payout at a defined frequency, principal paid at maturity)
At Maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half Yearly (p.a.) Annual (p.a.)
14-Dec 7.40% 7.16% 7.20% 7.27% 7.40%
15* 7.45% 7.21% 7.25% 7.32% 7.45%
>15-17 7.50% 7.25% 7.30% 7.36% 7.50%
18* 7.40% 7.16% 7.20% 7.27% 7.40%
19-21 7.50% 7.25% 7.30% 7.36% 7.50%
22* 7.50% 7.25% 7.30% 7.36% 7.50%
23 7.50% 7.25% 7.30% 7.36% 7.50%
24 7.55% 7.30% 7.35% 7.41% 7.55%
25-29 7.35% 7.11% 7.16% 7.22% 7.35%
30* 7.45% 7.21% 7.25% 7.32% 7.45%
31-32 7.35% 7.11% 7.16% 7.22% 7.35%
33* 7.75% 7.49% 7.53% 7.61% 7.75%
34-35 7.35% 7.11% 7.16% 7.22% 7.35%
36-43 8.05% 7.77% 7.82% 7.89% 8.05%
44* 8.35% 8.05% 8.10% 8.18% 8.35%
45-60 8.05% 7.77% 7.82% 7.89% 8.05%


FD rates for senior citizens (customers above 60 years (Inclusive of additional rate benefit of up to 0.25% p.a.)

Revised interest rates for deposits starting at Rs. 15,000 up to Rs. 5 crore (w.e.f May 10, 2023)

*Special interest rates are offered on tenure of 15, 18, 22, 30, 33 and 44 months

Tenure in months Cumulative (interest + principal amount payment at maturity) Non-cumulative (interest payout at a defined frequency, principal paid at maturity)
At Maturity (p.a.) Monthly (p.a.) Quarterly (p.a.) Half Yearly (p.a.) Annual (p.a.)
14-Dec 7.65% 7.39% 7.44% 7.51% 7.65%
15* 7.70% 7.44% 7.49% 7.56% 7.70%
>15-17 7.75% 7.49% 7.53% 7.61% 7.75%
18* 7.65% 7.39% 7.44% 7.51% 7.65%
19-21 7.75% 7.49% 7.53% 7.61% 7.75%
22* 7.75% 7.49% 7.53% 7.61% 7.75%
23 7.75% 7.49% 7.53% 7.61% 7.75%
24 7.80% 7.53% 7.58% 7.65% 7.80%
25-29 7.60% 7.35% 7.39% 7.46% 7.60%
30* 7.70% 7.44% 7.49% 7.56% 7.70%
31-32 7.60% 7.35% 7.39% 7.46% 7.60%
33* 8.00% 7.72% 7.77% 7.85% 8.00%
34-35 7.60% 7.35% 7.39% 7.46% 7.60%
36-43 8.30% 8.00% 8.05% 8.13% 8.30%
44* 8.60% 8.28% 8.34% 8.42% 8.60%
45-60 8.30% 8.00% 8.05% 8.13% 8.30%


Calculate your expected investment returns with the help of our investment calculators

Investment Calculator

SIP Calculator

FD calculator

SDP calculator

Gratuity Calculator

Frequently Asked Questions

What is the maximum deposit amount?

The maximum deposit amount varies depending on the bank and type of account. For Bajaj Finance FDs, the maximum deposit amount is Rs. 5 crore.

What is the difference between mutual funds and bank deposits?

The primary difference between mutual funds and bank deposits is that mutual funds invest in stocks, bonds, and other securities and offer returns based on market performance, while bank deposits offer a fixed interest rate for a fixed term.

Why do your savings bank deposits actually result in a loss?

Savings bank deposits may result in a loss because the interest earned on them is often lower than the rate of inflation, which means that the purchasing power of your money decreases over time.

How do bank deposits help the nation’s economy?

Bank deposits help the nation’s economy by providing a safe place for people to store their money, which banks can then lend out to businesses and manufacturers to facilitate commerce and create employment opportunities. Banks also play an important role in capital formation, trade facilitation, and investment promotion.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.