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Scheduled banks are listed under the RBI Act. They have to meet financial norms. This makes scheduled banks more reliable. On the hand non-scheduled banks are not listed. They do not have to follow as rules.  

Have you ever thought about what makes one bank better than another bank? Why are some banks called scheduled banks and others are called scheduled banks? This is a question that a lot of people ask. They ask this question when they want to open a bank account or when they want to apply for a loan from a bank. 
 
People and businesses need to know the difference between scheduled banks and non-scheduled banks. This helps them choose the scheduled bank or the right non-scheduled bank to work with.  

Understanding the difference between these two types of banks scheduled banks and non-scheduled banks is very important. 

What are Scheduled Banks? 

A scheduled bank in India is a commercial bank that is included in the Second Schedule of the Reserve Bank of India (RBI) Act of 1934. To make it to this official schedule, banks have to meet certain RBI criteria related to: 

• Minimum paid-up capital and cash reserves 

• Limits on non-performing assets 

• Consistent profitability 

The key features that scheduled banks receive are: 

• They must maintain a paid-up capital and reserves of a specific amount  

• The RBI regulates its cash reserves, liquid assets, and overall functioning 

• They can access special refinancing facilities and loans from the RBI at set bank rates 

• They have access to local and national clearing houses for check processing and settlement 

Some major examples of scheduled banks in India include large public sector banks like the State Bank of India, major private Indian banks like ICICI and HDFC, and prominent foreign banks operating in India like HSBC and Citibank. According to the latest data, the RBI recognises over 130 scheduled commercial banks across the country. 

The scheduled bank status indicates that the bank meets key RBI regulations for stability and offers certain standardised services to customers in return, as per central banking guidelines. 

What are Non-Scheduled Banks? 

A non-scheduled bank in India refers to a financial institution that is not listed in the Second Schedule of the RBI Act, 1934. These banks do not meet all the criteria set by the RBI to be classified as scheduled commercial banks. 

Key features of non–scheduled banks: 

• Have less paid-up capital and cash reserves compared to scheduled banks 

• Not subject to strict control by the RBI 

• No access to refinancing facilities from the RBI 

• Cannot access the clearing house facilities easily 

Smaller private banks, cooperative banks, regional rural banks, and others are some of the non-scheduled banks examples in India. 

Key Differences between Scheduled and Non-Scheduled Banks 

The table below shows the differences between scheduled banks and non-scheduled banks, in India. It talks about how the Reserve Bank of India controls and regulates these banks. 

Factor	Scheduled Banks	Non-Scheduled Banks
Listing Status	Listed in the second schedule of the Reserve Bank of India Act 1934	Not listed in the second schedule of the Reserve Bank of India Act 1934
Definition	Banks that are officially registered with a paid-up capital exceeding Rs. five lakhs	No mandatory paid-up capital requirement for non-scheduled banks
Cash Reserve Ratio (CRR)	Maintains CRR with the Reserve Bank of India	Keeps CRR within its own institution
Loan Access	Authorised to borrow from the Reserve Bank of India	Can borrow from the Reserve Bank only in case of an emergency
Risk Level	Considered safer; typically not harmful to depositors	Seen as more risky and potentially harmful to depositor interests
Reporting Obligations	Must regularly submit reports to the Reserve Bank of India	Not obligated to submit reports to the Reserve Bank
Membership in Clearinghouses	Automatically eligible for clearinghouse membership	Not eligible for clearinghouse membership

Scheduled banks and non-scheduled banks are also different when it comes to getting help from the Reserve Bank of India. Scheduled banks can get this help by just following a few rules. They can lend money to sectors as they have to keep an amount of money in reserve. Scheduled banks can use facilities from the Reserve Bank of India. Scheduled banks get benefits because they follow these rules. 

List of Scheduled Banks and Non-Scheduled Banks 

Here’s a simple representation of Scheduled Banks vs Non-Scheduled Banks: 

Aspect	Scheduled Banks	Non-Scheduled Banks
Definition	Banks listed in the Second Schedule of the RBI Act, 1934	Banks not listed in the Second Schedule of the RBI Act, 1934
Regulation	Fully regulated by the Reserve Bank of India (RBI)	Less strictly regulated by RBI
Minimum Paid-up Capital	Must have a minimum paid-up capital and reserves of ₹5 lakh or more	May not meet the minimum capital requirement
CRR Requirement	Required to maintain Cash Reserve Ratio (CRR) with RBI	Not required to maintain CRR with RBI
Borrowing from RBI	Eligible for loans and financial assistance from RBI	Not eligible for RBI refinance facilities
Credibility	Considered more reliable and stable	Considered less stable compared to scheduled banks
Examples	SBI, HDFC Bank, ICICI Bank, PNB	Local area banks, small cooperative banks (not in schedule)

Type of Bank	Description	Examples
Public Sector Banks (PSBs)	Majority stake held by the Government of India; focus on financial inclusion and large-scale lending	SBI, Punjab National Bank, Bank of Baroda
Private Sector Banks	Majority ownership held by private entities; known for innovation, customer service, and tech-driven banking	HDFC Bank, ICICI Bank, Axis Bank
Foreign Banks	Banks headquartered outside India but operating branches within India	Citibank, HSBC, Standard Chartered
Regional Rural Banks (RRBs)	Established to serve rural areas with basic banking and credit facilities; jointly owned by Govt. of India, State Govt., and sponsor bank	Prathama Bank, Baroda UP Bank
Cooperative Banks (Scheduled)	Operate on cooperative principles; serve specific communities or regions; some qualify as scheduled if they meet RBI criteria	Saraswat Cooperative Bank, Cosmos Bank
Small Finance Banks (SFBs)	Focus on financial inclusion—serving small borrowers, MSMEs, and underserved segments	Ujjivan SFB, Equitas SFB
Payments Banks	Limited banking services—accept deposits and facilitate payments, but cannot lend	Paytm Payments Bank, Airtel Payments Bank

 
Considerations Before Choosing Between Scheduled and Non-Scheduled Banks 

Listed below are some key things that you should take into consideration while choosing between the banks: 

• Regulatory Oversight 

• Scheduled banks are regulated more strictly by the RBI. 

• Non-scheduled banks have comparatively lower regulatory requirements. 

• Financial Stability 

• Scheduled banks are generally more stable due to compliance with RBI norms. 

• Non-scheduled banks may carry higher risk due to fewer safeguards. 

• Access to RBI Facilities 

• Scheduled banks can borrow from the RBI and access clearinghouse facilities. 

• Non-scheduled banks do not have access to these privileges. 

• Credibility & Trust 

• Scheduled banks enjoy higher public trust and credibility. 

• Non-scheduled banks may be perceived as less reliable. 

• Size and Scale of Operations 

• Scheduled banks usually operate on a larger scale with wider reach. 

• Non-scheduled banks are often smaller and regionally focused. 

• Services and Offerings 

• Scheduled banks offer a broader range of financial products and services. 

• Non-scheduled banks may have limited offerings. 

• Risk Factor 

• Lower risk associated with scheduled banks. 

• Higher potential risk with non-scheduled banks due to limited oversight. 

• Customer Convenience 

• Scheduled banks typically have better infrastructure (branches, ATMs, digital services). 

• Non-scheduled banks may have limited accessibility and technology support. 

Scheduled Bank vs Non-Scheduled Banks: Which Should You Choose? 

When you are trying to decide between scheduled banks and non-scheduled banks, the main difference is how reliable they are and what rules they have to follow. Scheduled banks are on a list that the Reserve Bank of India keeps and they have to do what the Reserve Bank of India says, which makes them more secure and trustworthy. That is why they are better, for most people. They can also get help from the Reserve Bank of India when they are having money problems. Non-scheduled banks are smaller and do not have many rules so they might not be as stable and might not be able to do as much for you. For people and companies, scheduled banks are the better choice because they are safer and you can count on them. 

Conclusion 

Choosing the right bank isn’t just about big names or interest rates — it’s about knowing how they operate. The difference between scheduled and non-scheduled banks reflects their financial strength and the services they can offer you. 

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FAQs on Scheduled and Non-Scheduled Banks 

Why are some banks classified as Scheduled Banks while others are not? 

In India the Reserve Bank of India checks if a bank is doing things the way. The Reserve Bank of India looks at things like if the bank has money if the bank is keeping some cash aside if the bank is making money regularly and if the bank is being honest about its finances. If the bank does all these things the Reserve Bank of India puts the bank on a list, which is part of the Reserve Bank of India Act from 1934 and the bank is called a Scheduled Bank. These Scheduled Banks get some advantages and the Reserve Bank of India keeps an eye on them. The Reserve Bank of India checks the Scheduled Banks regularly. 

Banks that do not do all these things are called Non-Scheduled Banks. The Non-Scheduled Banks do not get many advantages and the Reserve Bank of India does not watch them as closely. The Reserve Bank of India has rules, for Non-Scheduled Banks. 

Who decides whether a bank is Scheduled or Non-Scheduled? 

The Reserve Bank of India (RBI) is the one that decides this. It regularly checks how banks are performing and whether they meet the required rules, like having enough capital, keeping proper cash reserves, and following other guidelines. 

Are all nationalised banks scheduled banks? 

Yes, all nationalised banks are listed as scheduled banks since they meet RBI criteria and are included in the Second Schedule of the RBI Act. 

Do scheduled and non-scheduled banks get the same RBI benefits? 

No, scheduled banks get more privileges like access to RBI refinancing, clearinghouse facilities, and greater credibility compared to non-scheduled banks. 

Can non-scheduled banks borrow from RBI? 

Generally no, non-scheduled banks do not have routine access to RBI borrowing facilities, unlike scheduled banks. 

A PAN card is a unique ID given by the Income Tax Department that helps track your financial activity in one place. You might have seen messages asking you to link your PAN with your bank account. This is required, as it basically connects your income, taxes and major transactions to a single record. So if you have not done it yet, it is best to complete it at the earliest to avoid any issues later.

Read on to know why it is important and how to link PAN to bank account through various methods — online, phone banking, mobile app, ATM or by visiting your bank branch.

Why Link PAN to Bank Account?

Here are some key reasons why it is important to complete the bank account and PAN card link:

• It’s the law: For certain types of accounts and big financial transactions (like large deposits or investments), the government has made it mandatory to link your PAN. If you don’t, your bank might put limits on what you can do or even charge penalties.
• It keeps your taxes in check: Linking your PAN helps the Income Tax Department track your transactions and match them with your income tax returns. It’s a smart way to stay compliant and avoid trouble later.
• It’s easier for banks to verify you: When your PAN is linked, banks can quickly verify your identity and address, without asking for extra paperwork every time you open an account or update your details.
• No more carrying around your PAN card: Once linked, you won’t need to provide a photocopy of your PAN card every time you want to invest, open a new account or do other financial stuff. Everything’s already synced.

Step-by-Step Guide to Link PAN to Bank Account

Below is a detailed step-by-step guide to help you link your PAN card with your bank account through various methods such as net banking, mobile banking app, phone banking, ATM or by visiting the bank branch. Carefully go through the instructions for the specific method you wish to use.

1. Through Internet Banking

Follow these steps to link PAN to bank account through net banking:

• Step 1: Open your bank’s Internet banking portal and log in using your credentials
• Step 2: Go to your Profile or Personal Information section
• Step3:Look for menu options like PAN Updation/Linking/Seeding/Registration. Click on the relevant option.
• Step 4: Enter your PAN card number and other details like DOB.
• Step 5: Submit the details. PAN-account linking will be completed within 2-7 working days.
  

2. Through Phone Banking

To link your PAN card with a bank account via phone banking, follow these steps:

• Step 1: Call your bank’s customer care number
• Step 2: Select relevant options to get directed to an executive
• Step 3: Request the executive to link your PAN to the account
• Step 4: Provide accurate PAN details along with verification information
• Step 5: Note down the confirmation/reference number received
  

3. Through the Mobile Banking App

To link PAN with bank account using a mobile app can be done easily by:

• Step 1: Open your bank’s mobile app and go to Profile/e-Services section
• Step 2: Choose the “Link PAN” or “Update PAN” option
• Step 3: Enter the requested information, such as PAN, account holder name, DOB, etc.
• Step 4: Submit the details after carefully verifying
• Step 5: Authorisation using OTP
• Step 6: Confirmation message on successful linking
  

4. Through ATM

Follow the steps below to link your PAN card with your bank account via ATM:

• Step 1: Visit the nearest ATM of your bank
• Step 2: Insert your ATM/debit card and enter your PIN
• Step 3: Go to the “Service Request” or “Account Services” section
• Step 4: Select the “Link/Update PAN Card” option
• Step 5: Input PAN card details accurately
• Step 6: Take note of the reference number displayed on the ATM screen
  

5. Offline at Bank Branch

To link your PAN card with the account offline, here is the process:

• Step 1: Visit the home branch where your account is maintained
• Step 2: Ask for the PAN Linking/Updation form and fill in the details
• Step 3: Submit the form with a self-attested PAN card copy
• Step 4: You may need to submit a letter to the Branch Manager requesting PAN updating

For Which Accounts PAN is Mandatory?

Linking your PAN card is mandatory for certain financial accounts as per government regulations. Typically, PAN linkage is required for:

• Savings Accounts
• Current & Cash Credit Accounts
• Fixed and Recurring Deposit Accounts
• Demat Accounts
• Credit Card Applications

Benefits of Updating Your PAN Details on Bank Account

Updating your PAN details with your bank account comes with a few practical benefits that make managing your finances easier.

• Better compliance: Linking your PAN helps you stay in line with tax rules and avoids any penalties or restrictions
• Smooth transactions: It ensures your high-value transactions go through without any delays or issues
• Faster verification: Your bank can verify your details quickly, making updates and applications easier
• Easy tax tracking: Your transactions stay linked to your PAN, which makes filing taxes simpler
• Less paperwork: You do not have to submit your PAN again and again for different banking needs

Documents Required to Link PAN with Bank Account

Linking your PAN with your bank account usually requires only a few basic documents:

• PAN card copy: A self-attested copy of your PAN card is required to verify your PAN details
• Identity proof: In some cases, you may need to show a valid ID proof such as an Aadhaar card, a passport or a driving licence
• Bank account details: Your account number and related details are needed to complete the linking request
• PAN linking form: If you are visiting a branch, you may need to fill out and submit a PAN updation or linking form provided by the bank

[Source: Link PAN with Bank Accounts – ClearTax]

Conclusion

Linking your PAN card with your bank account is a simple process that can be quickly completed through multiple channels such as net banking, mobile/phone banking, ATM or bank branch visits. This linking helps maintain seamless financial transactions and tax compliance as per Indian income tax laws.

PAN also acts as an important document while applying for a quick loan. With Fibe, you can get up to ₹10 lakhs with flexible repayment options. Fibe makes sure you get the funds you need without any hassle. Visit the website or download the Fibe App today to explore more!

FAQs on Linking PAN Card with Bank Account 

Is it possible to link my PAN to my bank account online?

Yes, most banks provide the facility to link your PAN to your bank account easily through net banking. Simply log in to your account, go to the profile/personal details section and look for the ‘Link PAN’ option. Submit your PAN details along with verification information to complete the linking online.

How to check PAN card link with bank account?

You can check your bank account statement or net banking profile or request your bank to provide an account linkage status letter/SMS confirmation. If the linkage is successfully completed and seeded with your customer ID, it will have an updated PAN linking status.

What happens if I do not link my PAN Card to my bank account?

As per income tax guidelines, not linking your PAN with certain financial accounts can lead to restrictions in transactions, including cash deposits and withdrawals beyond a limit. You may also be liable for penalties for non-compliance if PAN is mandatory for your account type.

I have two bank accounts in a bank. Do I have to link both with my PAN Card?

Yes, your PAN card should be linked to all your operative bank accounts, including multiple savings accounts, current accounts, cash credit accounts, etc. This linking helps banks verify your KYC details seamlessly across all your accounts and allows smooth transactions.

Can I link my PAN card with a bank account offline?

Yes, you can link your PAN offline through phone banking or by visiting your bank branch. You may need to fill out a KYC form and provide your PAN details for verification.

How long does it take to link a PAN with a bank account?

The time depends on the method you choose. Online methods can be instant or take up to 24 hours, phone banking may take up to 2 days. Branch requests usually take 1 to 3 working days.

Need a safe place to store your valuables? A bank locker facility is the perfect solution. It offers a secure, protected space within the bank designed to store everything from important documents to precious jewellery. While most nationalised and private banks provide this service, the features and charges may vary. 

Read on to understand how you can rent a safe deposit locker, access it and what you need to know about the charges involved.

Understanding Bank Locker Facility

A bank locker facility is more than just a storage solution – it’s a high-security service provided by financial institutions to keep your valuable items safe. These lockers are located within the secure premises of the bank, giving you peace of mind knowing that your possessions are protected from theft, natural calamities or even accidents at home.

You can use a bank locker to store a wide range of items, such as:

• Important documents: Property papers, legal documents and certificates
• Jewels: Family heirlooms, gold, and other precious items
• Valuable collectables: Artwork, antiques or other precious items you want to keep safe

Eligibility Criteria for Getting a Bank Locker

Banks usually have specific eligibility criteria for renting a safe deposit locker:

• You must have a functioning savings/current account with the bank for a minimum period, often 6 months to 1 year.
• Some banks require you to maintain an average monthly balance in your accounts.
• If you do not have an existing account, you may need to open a fixed deposit account to establish a financial relationship for locker eligibility.
• A loan or other banking relationship may improve the priority of locker allocation.

Those eligible to open a safe deposit locker at banks typically include individual citizens, companies and organisations: 

• Individual applicants can apply for a personal locker independently or jointly with another account holder, such as a spouse or family member. 
• Incorporated entities like limited companies and firms can also utilise locker facilities for secure storage needs. 
• Additionally, banks permit non-resident Indian citizens to rent lockers if they already have an existing locker relationship from previous periods of residency. 

The required documentation and process may vary between different banks. Still, the locker system broadly aims to be accessible for both personal and business storage purposes, only needing association through relevant accounts.

Locker Booking Process

Once you’ve met the basic requirements to rent a safe deposit locker, your next step is to check if there are any lockers available at your preferred bank.

• Choose from different locker sizes – small, medium, or large – based on your storage needs.
• Pay a refundable security deposit and advance rent after selecting the locker.
• Sign an agreement outlining the terms and conditions of locker usage.
• The bank records your signature for verification whenever you access the locker.
  

Accessing and Operating the Locker

When you’re ready to access your safe deposit locker, just head over to the bank during its operating hours and hand over the locker key. After a quick verification, a bank officer will accompany you to the locker area to ensure everything stays secure. This two-key system ensures that only you (and the bank) can access your locker. 

Locker Related Charges

Here’s a quick and easy breakdown of the bank locker charges you may need to pay when renting a safe deposit locker from a financial institution:

• Refundable security deposit: Paid upfront when you book the locker.
• Annual rent: Varies depending on the size of the locker – larger lockers have a higher bank locker price.
• Locker breaking charges: In case you lose the key, the bank may charge you to break open the locker.
• Late payment fee: A penalty is applied if you don’t pay your locker rent on time.
• Extra access charges: Most banks allow a limited number of visits. Additional visits may cost extra.

Typically, the bank locker price ranges between ₹1,500 to ₹12,000 or more annually. The cost depends on:

• The bank (public sector banks generally offer lower bank locker charges than private ones)
• The size of the locker
• How often do you access your safe deposit locker
• Any additional services provided

Banks may also charge GST and fees for locker-breaking or late payments. Comparing options across banks helps you find the best locker that fits your needs and budget.

Conclusion

At the end of the day, having a safe deposit locker is about more than just storing valuables — it’s about peace of mind. Whether it’s your family heirlooms, important documents, or other prized possessions, knowing they’re stored safely in a high-security environment brings a sense of comfort that’s hard to put a price on.

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FAQs

Who is eligible to apply for a bank locker?

Both individuals and entities, like companies and trusts, can apply for a bank locker. Individuals can open personal lockers singly or jointly. Banks typically require applicants to have an existing savings account, fixed deposit, loan or other affiliation with the bank for a defined period.

Can I access my bank locker anytime?

No, locker access is provided only during banking hours on working days. Locker holders must also provide key verification to access lockers.

What happens to my locker if I don’t use it for a long time?

If you don’t use your locker for a very long time, the bank may take action, even if you are still paying the rent. First, the bank will try to contact you several times. If they don’t get a response, they have the right to open the locker. The items inside will be checked, listed, and either given to the person you’ve nominated or handled as per the rules. So, if a locker stays unused for too long, the bank can cancel it and take further steps.

What happens if I fail to pay my locker rent on time?

If you don’t pay your locker rent on time, the bank will charge a late fee. If the rent stays unpaid for a long time, the bank will try to contact you multiple times. If there’s still no response, the bank can break open the locker. The items inside may be sold through an auction to recover the unpaid rent and other charges. In such cases, the bank can also cancel your locker agreement.

Online transactions are now the new norm. This is particularly so for younger generations who are technologically savvy. Nevertheless, paper-based transactions such as cash deposits remain a common banking practice. Cash deposit slips must be completed when you make a physical cash deposit into an account. It is for this reason that you should know what a banking deposit slip is. 

Read on to learn what bank deposit slip is, how it functions and how to complete one accurately.

What is a Bank Deposit Slip?

A bank deposit slip is essentially a paper-based form. This form is provided by banks when you need to deposit money into your account. The form has blank spaces to fill in details like your name, account number, amount to be deposited, date and denomination breakdown. All you have to do is fill out the form correctly and hand it to the bank employee along with the cash. They will then verify the information and credit the required amount to your account. Filling deposit slip basically acts as a formal record of your deposit.

What is a Deposit Ticket?

A deposit ticket is another term for a deposit slip. Both refer to the form you fill out when depositing cash or cheques into a bank account. The term ‘deposit ticket’ is not commonly used by all banks. However, it is an important part of the cash deposit process.

The format for these slips may vary slightly with each bank. However, most of the key fields remain the same. 

Here’s an example of deposit slip:

Date: 11/04/2025
Depositor’s Name: Rohan Mehta
Account Number: 123456789012
Type of Deposit: Cash
Amount: ₹10,000
Denomination Breakdown:

• ₹500 × 10 = ₹5,000
• ₹200 × 10 = ₹2,000
• ₹100 × 30 = ₹3,000

Signature: Rohan Mehta

These deposit slips also have a section for the bank to stamp once the transaction is completed. Banks also keep pre-filled sample deposit slips at all branches for reference. 

Why Is a Deposit Slip Important?

A deposit slip serves 3 purposes:

• It records the details of your cash deposit
• It helps the bank verify the amount and process your transaction
• It gives you a stamped copy as proof of deposit

You might use a deposit slip for different reasons. It could be to add money to your savings account, pay off a loan or top up a fixed deposit. Filling it correctly makes sure your money reaches the right place.

How to Fill Bank Deposit Slip?

Let’s walk through how to fill bank deposit slip in a few simple steps:

1. Pick up the deposit slip from your bank branch counter
2. Write your name clearly in the space provided
3. Enter the account number where you want the money deposited
4. Write the date of the deposit
5. Mention the deposit amount in both words and numbers
6. Add denomination details (like how many notes of ₹500, ₹100, etc). If you’re filling deposit slip for a cheque deposit, mention the cheque number and bank name
7. Sign the slip at the bottom
8. Tear off the customer copy and give the rest, along with the cash, to the bank staff

Please make a note: Do carry your PAN details if you’re depositing over ₹50,000 in cash. 

Benefits of Deposit Slips

For banks, they’re a way to track all cash and cheque deposits made during the day. This helps keep records accurate and reduces manual errors. 

For customers, a deposit slip is like a receipt. It shows the bank received your money and added it to the right account. If there ever is a mistake, you can use the slip to raise a query. Because it contains information such as denominations and not simply the amount, it provides much more clarity.

The Bottom Line

Completing a banking deposit slip is an everyday process and is important in ensuring that your money goes into the bank safely. It helps the bank process your transaction without delays and gives you a written record. Whether you’re depositing money into your own account or someone else’s, taking a minute to double-check the details can save you trouble later.

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FAQs on Deposit Slips

1. Should I list each currency note separately or just the total amount?

It’s better to list each denomination separately. It enables the bank to instantly verify the cash. It even avoids problems in case of any discrepancy later.

2. Can I fill out a deposit slip for someone else?

Yes, absolutely. You can easily complete a deposit slip for someone else. You simply need to make sure that you fill out the correct account number and other details.

Cheques and demand drafts (DDs) are traditional banking instruments used to make payments in India. Although both can transfer money without using cash, they work differently. A cheque is issued by an account holder and depends on the availability of funds in that account, while a demand draft is issued by a bank after receiving the amount in advance. 

Understanding the difference between cheque and demand draft can help you choose the right option based on payment certainty, cost, convenience and the recipient’s requirements. Read on for a clear DD vs cheque comparison. 

What Is a Cheque? 

A cheque is a written instruction from an account holder directing their bank to pay a specified amount to a person or organisation. Under Section 6 of the Negotiable Instruments Act, 1881, a cheque is a bill of exchange drawn on a specified banker and payable on demand. In other words, a cheque is a negotiable instrument governed by the Negotiable Instruments Act, 1881. 

The bank processes the cheque when it is properly completed and presented within its validity period, subject to sufficient funds and other applicable checks. People commonly use cheques for business payments, fees, transfers and other formal transactions. 

Types of Cheques 

Different cheque types serve different purposes: 

1. Bearer cheque: A cheque payable to the person who presents it, subject to the bank’s verification and payment procedures. 

2. Order cheque: A cheque payable to the person or entity named on it, or as validly endorsed in accordance with applicable rules. 

3. Crossed cheque: A cheque marked with two parallel lines. It is generally deposited into a bank account rather than paid as cash over the counter. 

4. Post-dated cheque: A cheque bearing a future date. It should be presented on or after that date. 

5. Stale cheque: A cheque presented after its permitted validity period. RBI directions require banks not to make payment of cheques presented more than three months from the date of the instrument. 

6. Self cheque: A cheque on which the account holder writes “Self” as the payee to withdraw money from their own account, subject to the bank’s rules and verification. 

The right type of cheque depends on how you want the payment to be made and the level of control or restriction you need. 

What Is a Demand Draft? 

A demand draft (DD) is a bank-issued payment instrument for which the purchaser provides the money to the bank in advance. The bank then issues the draft in favour of a specified payee. Because the amount is collected upfront, a DD provides greater payment certainty than a personal cheque, which may be returned if sufficient funds are not available in the drawer’s account. 

Unlike writing a cheque, which requires a cheque-enabled bank account, buying a demand draft does not always require you to hold an account with the issuing bank. Banks may issue certain demand drafts against cash to non-customers, subject to KYC requirements, transaction limits and the bank’s applicable policies. 

Demand drafts are often used when an institution asks for a bank-backed paper payment, such as certain admission fees, government payments, application fees or formal deposits. 

Types of Demand Drafts 

In Indian banking, a demand draft is payable on demand. Therefore, the common “sight draft vs time draft” classification can be misleading when applied specifically to demand drafts. A time draft is a separate type of bill payable at a future time rather than a standard demand draft. 

In practice, demand drafts may differ based on the bank that issues them, the branch or location where they are payable, how the purchaser funds the draft, and how the bank delivers it. Always follow the issuing bank’s current process and the recipient’s payment instructions. 

Cheque vs Demand Draft 

Here is a quick comparison of demand draft vs cheque: 

Feature	Cheque	Demand Draft
Issued by	The account holder (drawer)	The bank
Funding	Paid from the drawer’s bank account when the cheque is presented	Amount is collected by the bank in advance before issuing the DD
Account requirement	The drawer needs an eligible bank account with cheque facility	A bank account with the issuing bank may not always be required; cash purchase may be allowed subject to KYC and bank rules
Payment certainty	May be returned for insufficient funds or other reasons	Greater payment certainty because funds are prepaid, subject to validity and verification
Cancellation / stop payment	The drawer may request stop payment before the cheque is paid, subject to bank procedures and legal obligations	The purchaser can generally request cancellation before payment, subject to the issuing bank’s process, return of the original DD where applicable, documentation and charges
Issuance fee	Cheque leaves may be free within account limits or charged depending on the account/bank	Banks generally charge an issuance fee depending on their schedule of charges
Validity period	Generally valid for three months from the date on the cheque	Generally valid for three months from the date of the draft
Presentation	Presented or deposited through the banking system according to the cheque type	Presented/deposited by the named payee through the banking system
Security / payment risk	Can face return risk, alteration, loss or misuse if not handled properly	Reduces insufficient-funds risk because the amount is prepaid, but it must still be protected from loss, alteration and fraud
Typical use	Routine personal or business payments where cheques are accepted	Formal payments where the recipient wants a bank-issued prepaid instrument

The key cheque and DD difference is who backs the payment. A cheque is an instruction from the account holder to the bank, whereas a demand draft is issued by the bank after it receives the funds upfront. 

When Should You Use a Cheque or a Demand Draft? 

You can consider a cheque when: 

• The recipient accepts cheques for the payment. 

• You want to pay directly from your bank account rather than prepay the bank for a draft. 

• You may need the ability to request stop payment before the cheque is paid, subject to the circumstances and bank procedures. 

• You regularly use cheques for business or formal payments. 

You can consider a demand draft when: 

• The recipient specifically asks for a DD. 

• You need a prepaid, bank-issued paper instrument. 

• You want to avoid the risk of a payment failing solely because of insufficient funds in the purchaser’s account at the time of presentation. 

• You are making a formal payment such as certain application, admission or institutional fees. 

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How to Obtain a Demand Draft 

The exact process varies by bank, but you can generally obtain a demand draft through the following steps: 

1. Step 1: Check the payee details. Confirm the exact name of the person or institution in whose favour the DD should be issued, along with the payable location if required. 

2. Step 2: Visit the bank or use an available digital channel. Depending on the bank, you may request a DD at a branch or through internet/mobile banking if the facility is available. 

3. Step 3: Fill in the DD request details. Enter the payee name, amount, payable location and other information requested by the bank. Check the spelling carefully because errors can make the draft difficult to use. 

4. Step 4: Fund the demand draft. Pay the DD amount and applicable bank charges. The bank may debit your account or, where permitted, accept cash subject to KYC, limits and its internal rules. 

5. Step 5: Collect or receive the DD. Check the payee name, amount, date and other details immediately after the bank issues the draft. 

6. Step 6: Deliver it securely. Submit or send the DD to the intended payee and keep the receipt or transaction reference until the payment is completed. 

If you need to cancel a DD before it is paid, contact the issuing bank. Banks may ask for the original draft and purchase proof and may charge a cancellation fee. Lost drafts can require additional documentation or indemnity procedures. 

FAQs on Cheque vs Demand Draft 

1.Can you use both cheques and demand drafts for payments? 

Yes. You can use either instrument when the recipient accepts it. Cheques are commonly used for payments drawn on your own account, while demand drafts are useful when the recipient wants a prepaid instrument issued by a bank. 

2.Which instrument offers more security, a cheque or a demand draft? 

A demand draft generally offers greater payment certainty because the bank collects the amount before issuing it. A cheque can be returned for insufficient funds or other reasons. However, neither instrument is completely risk-free: both should be protected against loss, alteration, forgery and unauthorised use. 

3.Do cheques and demand drafts need clearing time? 

Both instruments need to be presented and processed through the banking system. The actual time can vary based on the bank, clearing arrangements, location and type of instrument. A DD is prepaid, but that does not guarantee that every DD will be credited faster than every cheque. 

4.Can you get a demand draft without having a cheque? 

Yes. You do not need a chequebook simply to purchase a demand draft. Depending on the bank and transaction amount, you may fund it by account debit or by cash where permitted, subject to KYC requirements and bank rules. 

5.Demand Draft vs Cheque: Which Is Better? 

Neither is better in every situation. A cheque may suit routine payments when the recipient accepts it and you want the payment to come directly from your bank account. A demand draft may be more suitable when the recipient requires a prepaid bank-issued instrument or greater payment certainty. Choose based on the recipient’s requirements, charges, convenience and the nature of the payment. 

6.Can You Cancel a Demand Draft After It Is Issued? 

Yes, a demand draft can generally be cancelled before it is paid, subject to the issuing bank’s procedures. The bank may require the original DD, purchase receipt or other proof and may levy cancellation charges. If the draft is lost, the bank may require additional documentation or an indemnity before processing cancellation, refund or a duplicate. Once the DD has already been paid, it cannot be cancelled as an unpaid instrument. 

7.What Is the Validity Period of a Cheque and a Demand Draft? 

In India, banks should not make payment of cheques, demand drafts, pay orders or banker’s cheques presented more than three months from the date of the instrument. RBI made this three-month validity rule effective from 1 April 2012. If an instrument becomes stale, contact the issuer or bank to understand the available revalidation or reissue process.

You can close your bank account, be it savings or current in a very few simple steps. Closing a bank account isn’t something we do often. However, knowing how to go about it can help when you’re planning to. Whether you’re switching banks, moving cities or just don’t need the account anymore, the process is simple when you follow the right steps.

What are the Reasons for Closing a Bank Account? 

There could be many reasons why you would want to close bank account:

• You are juggling multiple accounts and want to streamline things.
• You’re relocating or moving abroad.
• Your current bank has significantly hiked charges like the minimum balance requirement.
• You’re shifting to a digital-only banking experience.
• Your bank is undergoing a merger and could change favourable policies.

Irrespective of the reason, the procedure to close bank account remains the same. Closing it the right way will help avoid future hassles like hidden charges or bounced transactions.

How to Close the Bank Account Online?

You can log in to your internet or mobile banking and head to the service requests section. Fill out the closure form and upload the required documents. Some banks may still ask you to physically submit unused chequebooks, your debit card and a duly signed closure form for verification.

Here’s a step-by-step breakdown of the full closure process:

• Step 1: Clear all dues and charges: Make sure there are no penalties, EMIs or fees pending.
• Step 2: Transfer your balance: Move your money to your new bank account before initiating the closure.
• Step 3: Download or save past statements: Keep a digital or printed record for future reference.
• Step 4: Update linked services: Change your bank details for salary credit, EMIs, SIPs, subscriptions and utility bills.
• Step 5: Submit a closure request: Visit the branch or check if your bank offers online closure through its website or mobile app.
• Step 6: Provide the required documents: You might need to fill out an account closure form and submit a letter of closing bank account along with ID proof.
• Step 7: Safely discard debit cards and old cheques: Shred unused cheque leaves and cut up your debit card to avoid any risk of misuse.

If your bank requires a letter of closing bank account, you can write one yourself. Include your name, account number and reason for closing the account. Also include a request to transfer the balance, if any, along with your contact details. You can hand it over at the branch or upload it online as per your bank’s process.

[Source: How to close a bank account – Experian]

How to Close a Savings Account?

Closing a savings account is pretty straightforward. Here’s how to go about it:

• Step 1: Clear any pending charges or minimum balance dues
• Step 2: Delink all auto-debits, SIPs, subscriptions and bill payments linked to this account
• Step 3: Visit your nearest bank branch with your passbook, debit card and unused cheque leaves
• Step 4: Fill out the account closure form available at the branch
• Step 5: Submit the form along with your ID proof and a written closure request
• Step 6: Hand over your debit card and any unused cheque leaves
• Step 7: Collect the acknowledgement receipt – you’ll get a closure confirmation via SMS or email once done

Most banks also allow savings account closure through their mobile app or net banking portal under the service requests section. 

How to Close a Current Account?

The process for closing a current account is similar to a savings account but may involve a few additional steps, especially if the account is linked to business operations.

• Step 1: Clear all outstanding dues, overdraft limits and pending transactions. Also, make sure no cheques are pending clearance – issued or received.
• Step 2: Cancel all standing instructions, payment mandates and services linked to the account.
• Step 3: Transfer the remaining balance to your new account
• Step 4: Visit your bank branch with your account documents, ID proof and any unused cheque leaves
• Step 5: Fill out the current account closure form and submit a written request
• Step 6: Return your debit card and cheque book to the bank
• Step 7: Collect the acknowledgement – closure confirmation will follow via SMS or email

If it’s a business current account, your bank may also ask for a few additional documents like your GST certificate or partnership deed. It varies by bank, so a quick call to your branch beforehand can save you an extra trip.

[Source: How to close a bank account – Income Tax.Gov]

What Documents are Required to Close a Bank Account?

You can keep these documents handy for a smooth closure process:

• Filled account closure form
• A written request or letter of closing bank account
• Valid ID proof (Aadhaar, PAN, etc.)
• Any unused cheque leaves and your debit card

Some banks may also ask for a cancelled cheque from your new bank account to transfer the remaining balance. Once you submit your request and documents, most banks take:

• Immediate to a few hours: Specially private banks like HDFC and Punjab National Bank may close your account on the same day, often within a few hours.
• Up to 7 business days: Banks like the State Bank of India (SBI) may take longer, especially for older accounts or specific account types

You’ll receive a confirmation via SMS or email once the account is successfully closed.

How to Deactivate a Bank Account?

If you’re not using the account but don’t want to go through the closure process, you can simply stop all activity. After a period of inactivity, the bank will mark it as dormant. But do note, dormant accounts can still attract maintenance charges. So, it’s better to officially close it if you don’t plan to use it again.

Also, some banks may charge a closure fee if the account is closed too soon after opening. This period can range from the first 14 days up to 1  year, depending on the bank. Before 14 days or after 1 year, most accounts can be closed without any charge. So, it’s best to check your bank’s policy beforehand.
Closing a bank account is easy if you plan ahead. Just make sure your balance is transferred, dues are cleared and all services are updated with your new account. 

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FAQs on How to Close a Bank Account

Can I close my bank account without visiting a branch?

Yes, few banks do offer an entirely online procedure to close bank account. However, for most banks, a final verification may require a visit.

Are there any closure fees associated with terminating my bank account?

Most banks don’t levy charges if the account is older than 12 months. Even if you close it within the first 14 days, it’s usually free. But if you close it anytime between 14 days and 1 year, most banks may apply a fee.

What is the typical processing time for closing a bank account?

The processing time to close bank account may vary from one bank to another. However, it usually takes a few working days, depending on your balance and paperwork.