Banking Notes / Banking Awareness / Chapter 4
Chapter 4 of 17

Bank Accounts, Deposits & Customer Services

Savings, current, and term deposit account types, along with the customer service frameworks (KYC, nomination, cheque handling) tested in bank exams.

📖 ~9 min read 🏛️ Banking Awareness

Introduction

Bank accounts are broadly classified as demand deposits (withdrawable anytime) and term deposits (fixed duration). Understanding each type's features, along with core customer service norms like KYC, is a regular Banking Awareness testing area.

Types of Bank Accounts

Account TypeKey Feature
Savings AccountFor individuals; limited withdrawals, earns interest, encourages saving
Current AccountFor businesses; unlimited transactions, usually no interest, overdraft facility available
Fixed Deposit (FD)Lump sum deposited for a fixed tenure at a fixed interest rate; premature withdrawal usually incurs a penalty
Recurring Deposit (RD)Fixed monthly instalments over a fixed tenure, earning FD-like interest
PMJDY (Jan Dhan) AccountZero-balance savings account under financial inclusion scheme, with RuPay card and accident insurance

KYC (Know Your Customer)

KYC is the mandatory process banks use to verify a customer's identity and address before opening an account, using documents like Aadhaar, PAN, passport, or voter ID. It's designed to prevent money laundering and financial fraud, and is periodically re-verified for existing accounts.

Deposit Insurance

Bank deposits in India are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC), a wholly-owned subsidiary of RBI, up to ₹5 lakh per depositor per bank (covering both principal and interest).

Q. If a depositor has ₹7 lakh in a single bank (in one account) and the bank fails, how much will DICGC insurance cover?
DICGC covers deposits up to ₹5 lakh per depositor per bank. Even though the depositor had ₹7 lakh, only ₹5 lakh would be covered by deposit insurance.
⚠️ Key Insight: The ₹5 lakh DICGC limit applies per depositor per bank, not per account — having multiple accounts in the same bank does not increase the insured amount, but having accounts in different banks does give separate ₹5 lakh coverage at each bank.
✅ Practice Focus: Savings vs current account distinctions · KYC document requirements · DICGC deposit insurance limit and its per-bank (not per-account) application.

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