35 Responses to Modes of Operating Bank account

  1. Pratiksha says:

    I have been a banker for so many years but was not aware of so many differnt modes of operating a bank account. Great insight.

  2. manoj says:

    nicely explained. most people do not know all these

  3. Anirban says:

    Sec 26 of NI Act provides that minor can validly draw a cheque & he bind all parties except himself .. This contradict ur point ” Minor themself would not be issued a cheque book”

  4. Anirban,
    You are right for quoting NI Act. However, for the exact reason that Minor can not bind himself by issuing a cheque, probably this is the reason why banks don’t issue chequebook to Minors. If you come across a bank which gives this facility, please update this on my blog.

  5. soniya says:

    i am an NRI..but holding resident savings account with say,private bank X..where as i also have a NRI acct with say,nationalized bank B, that was opened as part of my nri home loan..i usually spend 4 months in a year in india and i am employed abroad..i do have all my residential proof in my residence in india as well with which i was able to open my resident savings with private bank X..

    now my question is..

    1. is it mandatory for me to inform private Bank X to change it to NRI account
    2. will i lose any benefit if i do that..
    3. if i dont convert this to NRI acct, and if i get audited, will i end up in any issue..
    4. which one do u recommend..let it be as a resident savings or convert it to NRI acct..
    5..the only benefit i see and for which i didnt convert this to NRO acct is that .,if i covnert this to NRO acct..then i will lose that upto 10,000 no TDS feature ,that is usually for residents as i understand.

    i was never able to get a clear cut answer for the above even from the bank representatives for this.

    please clarify

  6. Soniya,
    To be on the right side of the law you should convert your resident account into a NRO account. You have rightly mentioned that there is major disadvantage except the 10K no TDS feature. Plus every single Rs. of interest on NRO account will attract 30% TDS. You can recover that all by filing a tax return in India.

  7. goswami says:


    i have a resident savings acct so far with icici.. i recently got a offer to work in abroad and working on getting my resident savings acct to NRO savings acct.

    like to know the following –

    1. how does the TDS works for resident savings and NRO savings acct – what way do they differ
    2. i heard there is some exemption form that we could get from tax authority office and submit it to the bank,so that they don t withhold TDS on my NRO savings acct until the 2 lakh exemption limit is reached..is this true..what form is it..i want to do this to avoid the hassle of going through tax filing inorder to get the TDS deducted

    please clarify

  8. Goswami,
    1. Resident account does not attract TDS while NRO attracts flat 30% TDS. That is the only difference.
    2. I am not aware of any such provision whereby you could submit any form to avoid TDS. I am aware of only one way – filing tax returns annually for your refund of TDS.

  9. venu says:


    kindly please clarify me on the following;

    i was an NRI and just moved recently to india..opened resident savings acct with both
    sbi and icici..i would like to understand the below.

    1, at point of time during the year, is the TDS usually deducted. will it show in my account or wll i get a TDS deduction certificate as such.
    2. will i have a TDS deduction or TDS deduction certificate only if my income (from savings and fd interest) cross 10k..otherwise there would be NO TDS..is that right
    3. my wife was a resident here so far….she also wanted to know if she can go back for the last 5 years and check if there is any TDS that has even been deducted, that she could claim based on her NRI residency status in the past..

  10. Venu,
    1. TDS is deducted every time the interest is paid. You would see only net interest being credited in your account. You can ask the bank for a TDS certificate or check Form 26AS online.
    2. TDS not deducted on Saving account. You are correct on FD interest.
    3. She can go online on Form 26AS and check the status of her TDS for past years. You can check this link for more details on Form 26AS http://insight.banyanfa.com/form-26as-how-much-tds-got-deducted/

  11. sarala says:


    when ever we dont get the required services from the banks – be it
    nationalized or private banks..what is the higher authority that we could take the matter to.
    how seriously does the bank ombudsmen take the complaints and the do banks act to these complaints very well..or is there a RTI required.
    i am going through some service deficieny with one of the bank from whom i had taken a home loan and it is with a nationalised bank..so asking..

  12. ameya says:

    i wanted to open a savings account for my mom in india.i live in US..
    but the thing is , i would like to understand whether are these savings account from banks in india backed up by any sort of insurance.in the sense, here in the country i live, if any
    fraudulent transaction occurs in our account..the banks gives us a immediate reversal for those charges and they will start the investigation after that..
    is that the same case with atm cards and accounts provided by banks in india.if there is any fradulent activity on our account..how is the amount reclaimed…which banks accounts in india are well protected and insured , that is should go for..

  13. Sarala,
    In first case you need to make a written complaint with the respective bank. If the bank rejects your complaint, it is only then you can complain at the Ombudsman. The detailed process can be downloaded from

    RTI can only provide you information. You can use it to get the procedure related information to get the idea of deficiency in service. But for complaint, Ombudsman is the best way.

  14. taxlearner says:


    i had taken a car loan at sbi – at the rate of 10.45% per annum

    now, as of july 1st- i had a outstanding balance of 7.5 lacs
    now, on july 10th,i made a payment of 1lakh and then on july 15th, i made a
    payment of 50k..
    and so currently outstanding balance is 6lakhs.

    so now, when the interest is calculated on july 31, how much it would be and how is it calculated.

    will this be a simple or compound interest.

    i was never able to get the interest matched with my calculation ( not sure what i am missing) but at the same time i dont question the integrity of the calculation of my banking system..which is with a nationalized bank…

  15. Ameya,
    I can very well appreciate the features you are after. Unfortunately, the only protection on saving account is an insurance of upto Rs. 1lac in case the bank goes bust. There is no sort of insurance on fraudulent transactions / charges. However, if the account holder informs the bank of a fraud, any subsequent transactions are bank’s responsibility.

    In the current scheme of things, there are not many such cushions as are available in US.

  16. Hi,
    Interest depends upon if SBI uses daily or monthly reducing balance method. I believe SBI is one of the few banks following Daily method. in that case, while the interest is applied to your loan account on a monthly basis, the interest is calculated on principal outstanding after every day. Any prepayment done before the EMI date goes towards reducing the principal amount. You can always ask the bank for the exact interest calculation method.

  17. vela says:


    what exactly classifies someone as an NRI-

    in my case

    i work in US..and employed by an employer based out of US..
    but my job requires i spend 6-7 months at times in a year in india,at times, to take care of an offshore branch here.

    so, am i really a NRI now..or how it works.

    till date i have both NRI and resident bank accounts.and all my home loans were NRI loans.

    please clarify

  18. For banking purposes, the definition of a NRI is mentioned under FEMA. As per FEMA “person resident outside India” means a person who is not resident in India. The definition of a “person resident in India” means-
    (i) a person residing in India for more than one hundred and eighty-two days during the course of the preceding financial year but does not include-
    (A) a person who has gone out of India or who stays outside India, in either case-
    (a) for or on taking up employment outside India, or
    (b) for carrying on outside India a business or vocation outside India, or
    (c) for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

    (B) a person who has come to or stays in India, in either case, otherwise than-
    (a) for or on taking up employment in India, or
    (b) for carrying on in India a business or vocation in India, or
    (c) for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period;

    Looking into your case, you should be a Person resident outside India as you gone outside India for employment. However to avoid Income Tax complications, please ensure that you are not in the country for more than 182 days in one year.

  19. payal says:


    i have a icici gold debit card that says there is a personal coverage of upto 5lakhs.
    i got this card because i am a high network customer with them.
    i would like to understand how does the above coverage differs from a mediclaim policy
    does that mean with the above coverage..it is not required for me to buy any separate mediclaim policy

  20. Hi Payal,
    Apologies but there is no term such as ‘Personal coverage’. Could you provide the exact type of insurance provided by the Credit Card. They should be able to provide you policy documents if such a policy is provided in the card.

  21. Razibul Hassan says:

    Great Article. That explains the different modes of Bank account operation pretty clearly.

  22. ravi says:

    Hello, I have maintained saving bank account in SBI last 6 year but was not aware of so many differnt modes of operating a bank account. thanks for sharing such a use full information Thanks Ravi

  23. Rishidev Arya says:

    Thank You very much. It’s a knowledgeable informative article

  24. can we make a minor a survivor in former or survivor joint account?

  25. Sumit Upadhyay says:

    Dear Sir

    need your clarification on below mentioned issue :
    i am having a joint individual current account in IDBI bank ,in which mode of operation is jointly .
    Can bank issue bank statement with single sign or can bank mark freeze on bank account on single sign ?

    Plz clarify …..

  26. Sumit,
    I am not sure if I can fully answer your query. Generally the bank statements mention the joint account holder’s name. Joint mode of operation may be of several types. The most common one is Any or Survivor where any one of the holder and operate the account. I am not sure if I understand your freeze concept. Please can you further clarify ?

  27. padmanaban says:

    Sir, A.B and C are opening SB account. After the death A the account may be operated by B or C.Please clarify the A/c is E or S or surviors .

  28. Hi Padmanaban,
    What you are mentioning looks more like Former or Survivors.

  29. lalitha nair says:

    if a person put fixed deposit an a private bank and keeping a nominee .and asking the private bank to put monthly income in to government bank account presently he is holding putting monthly interest in this government bank.deposit duration is 3 years.if that person dies can any one operate this account..if so what is the rule .

  30. Lalitha – sorry your query was not clear.

  31. manish pathak says:

    What will be operation mode of joint account where all the individuals are illiterate?

  32. Ramesh says:

    Sir, I opened one E or S account in Andhra Bank, Redhills, Chennai. My mother and myself operated the account individually. My mother expired on 14.2.2012. Since then, the bankers are not allowed me to operate the account and it is freezed by bankers. Now they are asking death certificate of my mother which I have not received urfortunately. It is clear that it not joint and account. What can I do. Please help.

  33. Hi Ramesh,
    The bank would definitely need death certificate to get the account name corrected and moved later into your individual name, but they should not freeze it as it is a E or S account. You must file a complaint to get this account re-instated.

  34. Manish,
    A person does not need to be literate to be able to open a bank account. All modes of operations are available for people who are not literate. They need to be helped by some one to understand their requirements and get the best mode of bank operation for the need.

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