Types of Bank Accounts in India: Savings, Current, and NRI

Savings Account

The default account for individuals. Earns a modest interest rate on the balance, comes with a debit card, cheque book, and UPI access. Designed for everyday personal use - most people's primary account should be this one.

Current Account

Designed for businesses, not individuals - built for high transaction volumes and doesn't pay interest on the balance (or pays a negligible rate). If you're running a business or freelancing at meaningful volume, a current account keeps personal and business money cleanly separated, which also makes tax filing and audits easier.

NRE and NRO Accounts (for NRIs)

For Indians living abroad, two distinct account types exist, and mixing them up has real tax consequences:

• NRE (Non-Resident External): for foreign income you want to bring into India. Both the principal and interest are typically fully repatriable (can be freely moved back abroad), and interest earned is generally tax-exempt in India.
• NRO (Non-Resident Ordinary): for income earned within India (rent from an Indian property, dividends, pension) while you're a non-resident. Interest is taxable in India, and repatriation of funds is more restricted.

(This article is written for a retail Indian-resident audience; NRI account rules specifically have their own detailed tax treatment worth researching separately if this applies to you.)

A quick sanity check

If you're an Indian resident with a single salary account, none of the NRI distinctions apply to you - a standard savings account, and possibly a separate account for any side business, covers most situations.