💼 Banking Products & Services - Complete Guide

Master all banking products and services - from accounts to investments - for IBPS Banking Awareness!

🎯 Overview

Expected Questions:

• IBPS Prelims: 3-5 questions on banking products
• IBPS Mains: 8-12 questions covering all categories
• Focus: Product features, eligibility, interest rates, benefits

Coverage:

• Deposit Products (Accounts)
• Loan Products
• Payment Products (Cards)
• Investment Products
• Insurance Products
• Digital Banking Services

💰 DEPOSIT PRODUCTS (Bank Accounts)

1. Savings Account

Definition: Interest-bearing deposit account for individuals to save money with withdrawal flexibility

Features:

Interest Rate: 3-4% per annum (varies by bank) Interest Calculation: Quarterly compounding on daily balance Minimum Balance: ₹1,000-₹10,000 (varies by bank and account type) Withdrawals: Unlimited (but excessive withdrawals may incur charges) Deposit Limit: No maximum limit TDS: If interest > ₹10,000 per year (40,000 for senior citizens)

Types:

1. Regular Savings Account

   • For salaried/self-employed individuals
   • Minimum balance: ₹5,000-₹10,000

2. Zero Balance Account

   • No minimum balance required
   • Examples: Jan Dhan Account, Basic Savings Account

3. Senior Citizen Savings Account

   • For customers aged 60+
   • Higher interest rate (0.5-1% extra)
   • No TDS up to ₹50,000 interest

4. Women’s Savings Account

   • Special features for women customers
   • Lower charges, free chequebook

5. Salary Account

   • For salaried employees
   • Zero balance requirement
   • Converts to regular savings if salary not credited for 2-3 months

6. Kids/Minor Savings Account

   • For children below 18 years
   • Operated by parent/guardian

Facilities:

✅ Debit card/ATM card ✅ Cheque book ✅ Net banking, Mobile banking ✅ SMS alerts ✅ Nomination facility ✅ Auto-sweep facility (link to FD for higher returns) ✅ Overdraft facility (against FD)

IBPS Focus: ★★★★★

2. Current Account

Definition: Non-interest-bearing account for businesses/traders with unlimited transactions

Features:

Interest Rate: 0% (no interest paid) Minimum Balance: ₹10,000-₹1,00,000 (varies by bank) Withdrawals: Unlimited Deposits: Unlimited Overdraft: Available (₹1 lakh to ₹50 lakh) Cash Handling Charges: May apply for large cash transactions

Who Should Open:

✅ Business entities (companies, partnerships) ✅ Traders and merchants ✅ Professionals (doctors, lawyers, CAs) ✅ High-frequency transaction users

Facilities:

✅ Multiple cheque books ✅ Cash deposit machines ✅ Demand drafts ✅ Bulk payment facilities ✅ Net banking with high transaction limits ✅ Cash management services

Difference from Savings Account:

IBPS Focus: ★★★★

3. Fixed Deposit (FD) Account

Definition: Lump sum deposited for fixed tenure at predetermined interest rate

Features:

Interest Rate: 5-7.5% (varies by bank, tenure, amount) Tenure: 7 days to 10 years Minimum Deposit: ₹1,000 (varies by bank) Interest Payment: Quarterly, half-yearly, yearly, or on maturity Premature Withdrawal: Allowed (penalty of 0.5-1% on interest) Loan Against FD: 80-90% of FD value at (FD rate + 1-2%) TDS: Applicable if interest > ₹40,000/year (₹50,000 for senior citizens)

Types:

1. Regular FD

   • Standard fixed deposit
   • Interest rate as per tenure

2. Tax Saver FD (5-year)

   • Tax deduction under Section 80C (up to ₹1.5 lakh)
   • Lock-in period: 5 years (no premature withdrawal)
   • Interest taxable

3. Senior Citizen FD

   • 0.25-0.75% extra interest for 60+ age
   • Higher TDS limit

4. Cumulative FD

   • Interest compounded quarterly
   • Paid on maturity
   • Higher returns

5. Non-Cumulative FD

   • Interest paid out monthly/quarterly/half-yearly/yearly
   • Regular income option

Interest Calculation:

Simple Interest FD: Maturity Amount = P + (P × R × T / 100)

Compound Interest FD (Cumulative): Maturity Amount = P × (1 + R/4)^(4×T)

Where: P = Principal R = Annual interest rate (decimal) T = Time in years

Example:

FD Amount: ₹1,00,000 Interest Rate: 7% per annum Tenure: 3 years

Cumulative FD: Maturity = 1,00,000 × (1 + 0.07/4)^(4×3) = 1,00,000 × (1.0175)^12 = 1,00,000 × 1.2314 = ₹1,23,140

Interest Earned: ₹23,140

IBPS Focus: ★★★★★

4. Recurring Deposit (RD) Account

Definition: Monthly savings scheme where fixed amount deposited every month for fixed tenure

Features:

Interest Rate: 5-7% (similar to FD rates) Tenure: 6 months to 10 years Minimum Monthly Deposit: ₹100-₹1,000 (varies by bank) Interest Calculation: Quarterly compounding Default Penalty: ₹1-5 per ₹100 (if monthly installment missed) Premature Withdrawal: Allowed (penalty applies) Loan Against RD: Available (80-90% of deposited amount)

Maturity Amount Formula:

M = P × n × (n + 1) / 2 × r / 12

Where: M = Maturity amount P = Monthly installment n = Number of months r = Annual interest rate (decimal)

Simplified: M ≈ Total Deposits + Interest

Example:

Monthly Deposit: ₹5,000 Tenure: 5 years (60 months) Interest Rate: 6.5% per annum

Total Deposits = 5,000 × 60 = ₹3,00,000

Using formula (approximate): Interest ≈ ₹53,000 Maturity Amount ≈ ₹3,53,000

Ideal For:

✅ Regular salaried individuals ✅ Building corpus for specific goal (child education, marriage) ✅ Monthly surplus savings ✅ Disciplined savings habit

IBPS Focus: ★★★★

5. NRE (Non-Resident External) Account

Definition: Foreign currency account for NRIs to park foreign earnings in India

Features:

Currency: Maintained in INR (Indian Rupees) Deposits: From foreign sources only Interest Rate: Similar to domestic savings/FD accounts Repatriation: Fully repatriable (principal + interest) Taxation: Interest income tax-free in India Joint Account: Allowed with another NRI or resident Indian

Types:

• NRE Savings Account
• NRE Fixed Deposit Account

IBPS Focus: ★★★

6. NRO (Non-Resident Ordinary) Account

Definition: Rupee account for NRIs to manage income earned in India

Features:

Currency: Indian Rupees (INR) Deposits: From Indian sources (rent, dividend, pension) Interest Rate: Similar to domestic accounts Repatriation: Limited (up to $1 million per financial year) Taxation: Interest taxable in India (TDS 30% + surcharge) Joint Account: Allowed with resident Indian

Difference: NRE vs NRO:

IBPS Focus: ★★★

🏠 LOAN PRODUCTS

1. Home Loan

Definition: Loan to purchase, construct, renovate, or expand residential property

Features:

Loan Amount: Up to 90% of property value (LTV ratio) Interest Rate: 8-10% per annum (floating/fixed) Tenure: Up to 30 years Eligibility: Salaried/self-employed, age 21-65 years EMI: Based on income (40-50% of income as EMI) Processing Fee: 0.5-1% of loan amount Prepayment: Allowed (may have charges for fixed-rate loans) Tax Benefits:

• Section 80C: Up to ₹1.5 lakh (principal repayment)
• Section 24(b): Up to ₹2 lakh (interest payment)

Types:

1. Home Purchase Loan

   • To buy ready-to-move-in or under-construction property

2. Home Construction Loan

   • To construct house on owned land
   • Disbursed in stages based on construction progress

3. Home Improvement Loan

   • To renovate or repair existing house
   • Tenure: 5-15 years

4. Home Extension Loan

   • To add rooms or floors to existing property

5. Plot Loan

   • To purchase residential land
   • LTV: 70-80% of land value

6. Balance Transfer Loan

   • Transfer existing home loan to another bank for lower interest

EMI Calculation:

EMI = [P × R × (1+R)^N] / [(1+R)^N - 1]

Where: P = Principal loan amount R = Monthly interest rate (annual rate / 12 / 100) N = Tenure in months

Example: Loan: ₹50 lakh Interest: 9% per annum (0.75% per month) Tenure: 20 years (240 months)

EMI = [50,00,000 × 0.0075 × (1.0075)^240] / [(1.0075)^240 - 1] = [37,500 × 6.009] / [5.009] = ₹44,986 per month

Total Payment = 44,986 × 240 = ₹1,07,96,640 Interest Paid = 1,07,96,640 - 50,00,000 = ₹57,96,640

IBPS Focus: ★★★★★

2. Personal Loan

Definition: Unsecured loan for any personal need without collateral

Features:

Loan Amount: ₹50,000 to ₹40 lakh (based on income) Interest Rate: 10-18% per annum Tenure: 1-5 years Eligibility: Salaried/self-employed, age 21-60 years CIBIL Score: 750+ for best rates Processing Fee: 1-3% of loan amount Prepayment: Allowed (charges may apply) Collateral: Not required

Uses:

✅ Medical emergencies ✅ Wedding expenses ✅ Travel/vacation ✅ Debt consolidation ✅ Home renovation (small amounts) ✅ Education expenses (short-term)

IBPS Focus: ★★★★

3. Education Loan

Definition: Loan to finance higher education in India or abroad

Features:

Loan Amount:

• India: Up to ₹10 lakh (no collateral)
• Abroad: Up to ₹20 lakh (no collateral)
• Above ₹20 lakh: Collateral required

Interest Rate: 8-12% per annum Tenure: 10-15 years Moratorium Period: Course duration + 6-12 months (no EMI) Eligibility: Admission confirmed in recognized institution Co-borrower: Parent/guardian required Tax Benefit: Section 80E (interest deduction, no limit)

Coverage: ✅ Tuition fees ✅ Hostel/accommodation ✅ Books and equipment ✅ Travel expenses (for abroad) ✅ Project work

Repayment Starts:

After course completion + 6-12 months grace period OR After getting a job (whichever is earlier)

IBPS Focus: ★★★★

4. Vehicle Loan (Car/Two-Wheeler)

Definition: Loan to purchase new or used vehicles

Car Loan:

Loan Amount: Up to 90% of car’s on-road price Interest Rate: 7-12% per annum Tenure: 1-7 years Eligibility: Age 21-65 years, stable income Down Payment: 10-20% of vehicle price Processing Fee: 0.5-1% of loan amount

Two-Wheeler Loan:

Loan Amount: Up to 90-95% of bike price Interest Rate: 9-15% per annum Tenure: 1-5 years Down Payment: 5-15%

IBPS Focus: ★★★

5. Gold Loan

Definition: Loan against gold ornaments/coins as collateral

Features:

Loan Amount: 60-75% of gold value (LTV ratio per RBI) Interest Rate: 7-12% per annum Tenure: 6 months to 3 years Repayment: EMI or bullet payment (pay at end) Gold Purity: 18-24 carat accepted Processing: Quick (within hours) Prepayment: Allowed (usually no charges)

Gold Valuation:

Loan = (Weight of Gold × Purity × Current Gold Price × LTV%)

Example: Gold: 100 grams, 22 carat Gold Price: ₹6,000 per gram (22 carat) LTV: 75%

Loan Amount = 100 × 6,000 × 0.75 = ₹4,50,000

IBPS Focus: ★★★★

6. Business Loan / MSME Loan

Definition: Loan for business expansion, working capital, equipment purchase

Features:

Loan Amount: ₹50,000 to ₹50 crore (based on business size) Interest Rate: 9-18% per annum Tenure: 1-15 years Eligibility: Business operational for 2-3 years Collateral: May be required for large amounts

Types:

1. Term Loan (for expansion, machinery)
2. Working Capital Loan (for day-to-day operations)
3. Cash Credit / Overdraft
4. Letter of Credit (for trade)
5. Invoice Discounting

Government Schemes:

1. MUDRA Loan:

   • Shishu: Up to ₹50,000
   • Kishore: ₹50,001 to ₹5 lakh
   • Tarun: ₹5,00,001 to ₹10 lakh

2. Stand Up India:

   • ₹10 lakh to ₹1 crore (for SC/ST/Women entrepreneurs)

3. CGTMSE (Credit Guarantee):

   • Collateral-free loans up to ₹2 crore for MSMEs

IBPS Focus: ★★★★

7. Credit Against Property (Loan Against Property - LAP)

Definition: Loan against residential/commercial property you own

Features:

Loan Amount: Up to 60-70% of property value Interest Rate: 8-12% per annum Tenure: Up to 15 years Use: Any purpose (business, education, medical) Property: Remains with you (mortgage only)

IBPS Focus: ★★★

💳 PAYMENT PRODUCTS (Cards)

1. Debit Card

Definition: Payment card linked to bank account, allowing spending from available balance

Features:

Issuance: Free with savings/current account Card Networks:

• RuPay (Indian)
• Visa
• Mastercard

Transaction Limits:

• POS: ₹1-2 lakh per day
• ATM: ₹25,000-50,000 per day
• Online: ₹50,000-2 lakh per day

Types:

1. Classic/Silver (₹5,000-10,000 limit)
2. Gold (₹25,000-50,000 limit)
3. Platinum (₹1-2 lakh limit)
4. Contactless (tap-and-pay, up to ₹5,000)

Security Features:

✅ PIN (4 or 6 digit) ✅ CVV (3-digit code on back) ✅ EMV chip ✅ OTP for online transactions ✅ Transaction alerts (SMS/email)

Charges:

Annual Fee: ₹0-500 (usually free for basic cards) ATM Withdrawal: 3-5 free per month, then ₹20 + GST per transaction Replacement: ₹100-200

IBPS Focus: ★★★★

2. Credit Card

Definition: Card allowing purchases on credit with repayment later

Features:

Credit Limit: ₹10,000 to ₹10 lakh+ (based on income, credit score) Interest Rate: 36-42% per annum (on outstanding) Grace Period: 15-50 days (interest-free if paid by due date) Minimum Payment: 5% of outstanding or ₹500 (whichever is higher)

Card Types:

1. Basic/Starter (₹10,000-50,000 limit)
2. Gold (₹50,000-2 lakh)
3. Platinum (₹2-5 lakh)
4. Super Premium/Infinite (₹5 lakh+)
5. Co-branded (airline, retail partnerships)

Charges:

Joining Fee: ₹0-10,000 (waived if spending target met) Annual Fee: ₹0-10,000 (can be waived) Late Payment: ₹500-1,000 (if minimum due not paid) Interest: 3-3.5% per month (on outstanding balance) Cash Advance Fee: 2.5% of amount + interest from day 1 Over-limit Fee: ₹500-600

Benefits:

✅ Reward points (1-4% value back) ✅ Cashback (1-5% on specific categories) ✅ Airport lounge access ✅ Fuel surcharge waiver ✅ Insurance (lost baggage, purchase protection) ✅ EMI conversion facility ✅ Dining/shopping offers

How Interest Calculated:

If ₹50,000 outstanding and not paid by due date: Interest = ₹50,000 × 3% per month = ₹1,500/month

If only minimum (₹2,500) paid: Next month outstanding = 50,000 - 2,500 + 1,500 = ₹49,000 (Debt trap if not careful!)

IBPS Focus: ★★★★★

3. Prepaid Card

Definition: Card loaded with specific amount in advance

Features:

Types:

1. Closed System (specific merchant, e.g., Starbucks card)
2. Semi-Closed (group of merchants, e.g., Sodexo meal card)
3. Open System (anywhere, like Visa Prepaid)

Load Limit: Up to ₹2 lakh per month (KYC required) Validity: 1-5 years Reload: Allowed (multiple times)

Uses:

✅ Gift cards ✅ Travel cards (forex) ✅ Meal/fuel cards (employee benefits) ✅ Wallets (Paytm, PhonePe linked cards)

IBPS Focus: ★★

📈 INVESTMENT PRODUCTS

1. Mutual Funds (via Banks)

Definition: Pooled investment scheme managed by fund managers

How Banks Facilitate:

• Bank acts as distributor
• Customers can invest via net banking
• SIP auto-debit from account

Types:

1. Equity Funds (stock market, high risk-high return)
2. Debt Funds (bonds, low risk-moderate return)
3. Hybrid Funds (mix of equity and debt)
4. ELSS (tax-saving, lock-in 3 years)

IBPS Focus: ★★★

2. Insurance (Bancassurance)

Definition: Banks selling insurance products of partner companies

Types:

1. Life Insurance

   • Term plans
   • Endowment plans
   • ULIPs

2. General Insurance

   • Health insurance
   • Travel insurance
   • Home insurance
   • Vehicle insurance

Examples:

SBI Life (SBI partnership) HDFC Life (HDFC Bank partnership) ICICI Prudential (ICICI Bank partnership)

IBPS Focus: ★★★

3. Government Schemes (via Banks)

Public Provident Fund (PPF):

Tenure: 15 years (extendable) Interest: 7.1% per annum (govt declared, quarterly compounding) Investment: ₹500 to ₹1.5 lakh per year Tax Benefit: EEE (Exempt-Exempt-Exempt)

• Investment: Deductible u/s 80C
• Interest: Tax-free
• Maturity: Tax-free

National Savings Certificate (NSC):

Tenure: 5 years Interest: 7.7% per annum (compounded annually) Investment: Minimum ₹1,000, no maximum Tax Benefit: u/s 80C (investment + accrued interest)

Sukanya Samriddhi Yojana (SSY):

For: Girl child (below 10 years) Tenure: Till girl turns 21 (or marriage after 18) Interest: 8.2% per annum Investment: ₹250 to ₹1.5 lakh per year Tax Benefit: EEE status

IBPS Focus: ★★★★

🌐 DIGITAL BANKING SERVICES

1. Net Banking / Internet Banking

Services:

✅ Fund transfer (NEFT, RTGS, IMPS, UPI) ✅ Bill payments (electricity, mobile, DTH) ✅ Account statements ✅ Fixed deposit booking ✅ Loan applications ✅ Credit card payments ✅ Investment in mutual funds ✅ Tax payment (income tax, GST) ✅ Cheque book request ✅ Demat account access

Security:

• User ID + Password
• Transaction password
• OTP (One-Time Password)
• Session timeout
• HTTPS encryption

IBPS Focus: ★★★★

2. Mobile Banking

Features:

✅ All net banking features ✅ QR code scanning ✅ Cardless ATM withdrawal ✅ Fingerprint/face unlock ✅ Instant notifications ✅ Chat support

Popular Apps:

• iMobile (ICICI)
• YONO (SBI)
• Paytm
• PhonePe
• Google Pay (UPI-based)

IBPS Focus: ★★★★★

3. UPI (Unified Payments Interface)

Features:

Launch: April 11, 2016 Developer: NPCI

Transaction Limit: ₹1 lakh per transaction

VPA (Virtual Payment Address): yourname@bankname or yourname@paytm

Methods:

1. Mobile number + MPIN
2. QR code scan
3. UPI ID
4. Bank account + IFSC

Zero charges for customers 24×7 availability Instant transfer

IBPS Focus: ★★★★★

4. IMPS (Immediate Payment Service)

Features:

Launch: 2010 Real-time: 24×7 instant transfer Limit: ₹5 lakh per transaction Methods: Mobile, internet, ATM Charges: Nominal (₹2-25 depending on amount)

IBPS Focus: ★★★★

5. NEFT (National Electronic Funds Transfer)

Features:

Timing: 24×7 (since December 2019) Settlement: Hourly batches (deferred settlement) Minimum: No minimum Maximum: No maximum Charges: ₹2-25 (depending on amount, waived for many banks) IFSC Code: Required

IBPS Focus: ★★★★★

6. RTGS (Real Time Gross Settlement)

Features:

Timing: 24×7 (since December 2020) Settlement: Real-time (immediate) Minimum: Earlier ₹2 lakh, now no minimum Maximum: No maximum Charges: ₹25-50 (depending on amount) IFSC Code: Required Use: Large-value transactions

IBPS Focus: ★★★★★

🔐 LOCKER FACILITY

Definition: Secure storage facility for valuables

Features:

Sizes:

• Small: 2" × 5" × 24" (for documents, jewelry)
• Medium: 5" × 5" × 24"
• Large: 10" × 10" × 24" (for larger valuables)
• Extra Large: 10" × 11" × 24"

Annual Rent: ₹1,000 to ₹25,000 (based on size and location)

Access: Dual key system (bank + customer)

Insurance: Customer’s responsibility (bank not liable for contents)

IBPS Focus: ★★

🎯 Quick Revision - Product Comparison

📝 IBPS Exam Strategy

High Priority Products:

1. ✅ Savings Account types
2. ✅ Fixed Deposit calculation
3. ✅ Home Loan features & tax benefits
4. ✅ Credit Card vs Debit Card
5. ✅ NEFT vs RTGS vs IMPS vs UPI
6. ✅ NRE vs NRO accounts
7. ✅ Digital banking services

Medium Priority:

1. ✅ RD calculation
2. ✅ Education Loan features
3. ✅ Gold Loan LTV
4. ✅ PPF/NSC/SSY features
5. ✅ Bancassurance

Know the Basics:

1. ✅ Current Account features
2. ✅ Vehicle loans
3. ✅ Prepaid cards
4. ✅ Locker facility

🔗 Related Resources

Banking Awareness:

• Banking Terms Glossary
• RBI Functions & Policies
• Important Banking Dates

Quantitative Topics:

• Simple Interest - Loan interest calculation
• Compound Interest - FD/RD calculations

Master banking products - Essential for real banking & IBPS exams! 💼