EXAM PREPP · BANKING CONCEPT NOTES
Types of Bank Deposits: Savings, Current, FD and RD
Quick answer: Savings and current accounts are demand deposits; fixed and recurring deposits are term deposits. The key differences are the purpose, withdrawal arrangement, deposit pattern and interest treatment.
सरल शब्दों में: रोज़मर्रा की जरूरत के लिए पैसे रखना और तय अवधि के लिए saving करना अलग जरूरतें हैं। Bank account का type उसी जरूरत के अनुसार चुना जाता है।
Test Yourself: 10 QuestionsUseful for: SBI CBO banking knowledge, SBI PO/IBPS PO banking awareness, and relevant DBF/JAIIB banking chapters. These are concept notes, not a claim of complete syllabus coverage.
1. What is a bank deposit?
A deposit is money placed with a bank under an account or deposit arrangement. For the customer, the balance is an amount receivable from the bank. For the bank, a deposit is a liability because the bank owes that money to the depositor.
Example: You deposit ₹10,000 in a savings account. The bank holds a deposit liability of ₹10,000; your deposit does not become the bank’s share capital.
2. Compare the four common deposit types
| Type | Main purpose | Deposit / withdrawal pattern | Interest and exam clue |
|---|---|---|---|
| Savings account बचत खाता | Personal saving with access for regular needs | Money can be deposited and withdrawn under account terms | Interest-bearing demand deposit; rate and charges depend on the bank’s terms |
| Current account चालू खाता | Frequent receipts and payments, commonly for business | Transaction-oriented demand deposit; charges and conditions apply | Ordinary current accounts generally do not earn interest |
| Fixed deposit (FD) सावधि जमा | Place a lump sum for an agreed period | One principal amount placed for a specified tenure; early withdrawal depends on terms | Term deposit; interest payout or reinvestment depends on the product |
| Recurring deposit (RD) आवर्ती जमा | Build savings through regular instalments | Regular contributions over an agreed period | Term deposit; monthly instalments are common in standard RD products |
Demand versus term: Demand deposits are repayable on demand under the applicable account rules. Term deposits are arranged for an agreed period. A premature-withdrawal facility does not change an FD into a demand deposit.
3. Understand through practical examples
A salary earner needs day-to-day access
Meena receives her salary, pays bills and keeps a buffer for expenses. A savings account fits the basic need for personal saving and regular access. Savings does not mean every service is free or that all banks pay an identical rate.
A shop receives and pays money frequently
A trader makes repeated supplier payments and receives customer collections. A current account is designed around such transaction needs. An overdraft is a separate credit arrangement; merely opening a current account does not guarantee an overdraft.
A person has a lump sum today
Arjun has ₹50,000 that he wants to place for a chosen period. An FD is the usual deposit example. The maturity amount depends on the applicable rate, tenure and payout/compounding terms. This example does not assume a particular bank rate.
A person can save a small amount regularly
Ritu plans to deposit ₹2,000 each month for 12 months. This matches the basic RD pattern. The total of her contributions is ₹24,000; interest is additional and depends on the product’s calculation rules. All instalments are not invested for the same length of time.
4. Important terms in simple language
- Principal — मूलधन
- The original money deposited, before interest is added.
- Tenure — अवधि
- The agreed length of the deposit.
- Maturity — परिपक्वता
- The point when the agreed deposit period ends.
- Liquidity — जरूरत पर पैसे तक पहुँच
- How readily funds can be accessed. A product may offer access subject to conditions or penalties.
- Premature withdrawal
- Closing or withdrawing a deposit before maturity, where allowed. It may affect the applicable interest or involve a penalty.
- Reinvestment / cumulative deposit
- Interest is added back under the deposit terms instead of being paid out periodically.
5. Deposit insurance: a common exam trap
DICGC protection for eligible bank deposits is limited to ₹5 lakh per depositor per bank in the same right and capacity, including principal and interest. Eligible balances across branches and deposit types of the same bank are combined for this purpose.
Example: An individual has ₹2 lakh in savings and ₹4 lakh in FD in the same right and capacity at one insured bank. The ₹6 lakh balance does not receive a separate ₹5 lakh cover for each account; the combined insurance ceiling is ₹5 lakh. Coverage in a different bank is considered separately.
Mutual funds and NBFC deposits are not covered by DICGC bank-deposit insurance. Refer to the official DICGC rules for exclusions and claim conditions.
6. Quick revision and common mistakes
- Savings + current = demand deposits. FD + RD = term deposits.
- FD = lump sum; RD = regular instalments.
- A deposit is a liability for the bank, not its share capital.
- Current-account access does not mean unlimited free services.
- FD interest is not necessarily paid only at maturity; product payout options differ.
- Deposit insurance is not ₹5 lakh for every account or every branch.
Is an FD always locked until maturity?
No. Some deposits permit premature withdrawal under specified terms; restrictions and interest consequences depend on the product. The existence of this facility does not change its classification as a term deposit.
Can the same topic help both CBO and JAIIB/DBF?
Yes. The basic banking concepts overlap, while depth, syllabus placement and question style differ. Use the chapter with the syllabus and practice appropriate to your exam.
Check what you learned
Attempt 10 original practice questions. After submitting, review the explanation for each question and return to this chapter for revision.
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References: RBI financial-awareness material · DICGC FAQs · DICGC insurance guide. Regulatory facts checked 19 October 2026.
