This is Part 1 of Money Basics for Indians, our 12-part series on the everyday money systems every Indian should understand.
Almost every money decision you make runs through a bank account. Choosing the right type of account, and knowing how safe your money is, are the first steps in getting your finances in order.
The main types of accounts
- Savings account: For everyday saving and spending. Pays a modest interest rate, usually with a minimum balance requirement.
- Salary account: A savings account linked to your employer, usually with no minimum balance while salary keeps coming in. If salary credits stop for a few months, the bank may convert it into a regular savings account.
- Basic Savings Bank Deposit Account (BSBDA): A zero-balance account that every bank must offer, with free basic services such as deposits, withdrawals and a debit card.
- Current account: For businesses and frequent high-value transactions. Usually pays no interest.
- Fixed deposit (FD) and recurring deposit (RD): Lock money for a fixed term at a fixed rate. Read our comparison of FDs vs debt funds.
Charges to watch
- Minimum balance penalties: Check whether the rule is a monthly or quarterly average, and what happens if you fall short.
- Debit card, SMS and cheque book fees.
- Free ATM withdrawals are limited each month; extra withdrawals cost a fee.
Sweep-in accounts
Many banks let you link a savings account to an FD. Money above a set limit "sweeps" into the FD and earns more interest, and comes back automatically when you need it. This can be handy for an emergency fund.
Inactive and inoperative accounts
If you make no customer-initiated transactions in a savings account for two years, it can be classified as inoperative. Your money stays safe, but you will need to complete KYC to reactivate it. Balances left untouched for ten years are moved to the RBI's Depositor Education and Awareness Fund, and can still be claimed. See Part 12: Finding Unclaimed Money.
How much of your money is insured?
The Deposit Insurance and Credit Guarantee Corporation (DICGC), an RBI subsidiary, insures bank deposits up to ₹5 lakh per depositor, per bank, covering principal and interest together.
- It covers savings, current, fixed and recurring deposits at commercial banks, small finance banks, payments banks and most co-operative banks.
- All your accounts in the same bank, in the same capacity, are added together for the limit.
- Deposits in different banks are insured separately.
- A proposal to raise the cover to ₹7.5 lakh has been reported but was not in force as of October 2026.
If your savings are well above ₹5 lakh, spreading deposits across banks keeps more of it within the insured limit. Next, make sure your KYC and nominees are in order in Part 2: KYC, PAN, Aadhaar and Nominees.
This article is for general information and education only. It is not financial, tax or legal advice. Rules, rates and limits change often, so check official sources such as the RBI, the Income Tax Department or India Post, or speak to a qualified adviser, before acting.
Next in the series: Part 2: KYC, PAN, Aadhaar and Nominees.
