💼 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! 💼