A complete tour of a bank's deposit-side (liability) product suite — Current Deposit accounts, Savings Bank Accounts, and Time Deposits, along with premature payment rules, Form 15G/15H, TDS on deposits, the 2-in-1 account and Recurring Deposits. With 50 exam-style MCQs with hidden answers.
📅 Updated: September 2026 • 29 min read
1 Demand Deposits: Current Accounts
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Definition
A Current Deposit Account is a demand deposit intended primarily for businesses, offering unlimited transactions but no interest on the balance.
Features
No interest, unlimited transactions, overdraft facility often available.
Documentation
KYC documents, business proof (for firms/companies), board resolution where applicable.
Operational Instructions
Cheque book, mandate holders, transfer instructions all set at account opening.
Inoperative & Closure
Accounts with no customer-induced transactions for 2 years are classified inoperative; closure requires settling any dues.
2 Savings Bank Accounts
Features
Interest-bearing, intended for individuals; some transaction restrictions may apply.
Eligibility
Individuals (singly/jointly), HUFs, trusts and specified institutions (subject to bank policy).
Deregulation of Interest
Since 2011, RBI deregulated savings account interest rates — banks now set their own rates, often tiered by balance slab.
Balance Maintenance & Restrictions
Minimum balance requirements vary by bank/account variant; non-maintenance may attract penal charges.
3 Time Deposits
Periodicity
Fixed Deposits (FDs) can be booked for tenures ranging from 7 days to 10 years.
Interest on FDs
Fixed at booking, payable monthly/quarterly/on maturity, or cumulatively compounded (cumulative FD).
Minor's Term Deposit
Can be opened in a minor's name, operated by a natural/legal guardian until majority.
Advances Against Term Deposits
Banks readily grant overdrafts/loans against FDs, typically at FD rate + a small spread.
4 Premature Payment & Overdue FD Rules
Premature Payment
Allowed subject to a penalty (typically 0.5%–1% interest reduction) as per the bank's board-approved policy.
FD Renewal
Customers may opt for auto-renewal or manual renewal at maturity on updated terms.
Overdue FD Rules
An FD not renewed/claimed at maturity typically earns savings-account-rate interest (or as per bank policy) for the overdue period.
Operational Issues
Loss of FD receipt, nomination disputes and joint-holder mandates are common operational issues banks must resolve per policy.
5 Form 15G/15H & TDS on Deposits
Form
Who Can Submit
Purpose
Form 15G
Individuals below 60 years (and HUFs) with income below the taxable limit
Declares no TDS should be deducted on interest income
Form 15H
Senior citizens (60 years and above)
Declares no TDS should be deducted on interest income
TDS by Banks: Banks deduct Tax Deducted at Source on FD interest once it crosses the prescribed threshold in a financial year, unless a valid Form 15G/15H is on file.
6 2-in-1 Account & Recurring Deposit
2-in-1 Account
Links a Savings Account with a Fixed Deposit — surplus balance auto-sweeps into FD for higher returns, with reverse-sweep on shortfall.
Recurring Deposit (RD)
Fixed monthly instalments over a chosen tenure, earning FD-like interest — encourages disciplined saving.
✓ Key Takeaways
Current Accounts are non-interest-bearing demand deposits for businesses, with unlimited transactions and overdraft facilities.
Savings Accounts are interest-bearing individual accounts; interest rates were deregulated by RBI in 2011.
Time Deposits range from 7 days to 10 years, with cumulative or periodic interest payout options.
Premature FD withdrawal attracts a penalty; overdue (unclaimed) FDs typically earn only savings-rate interest.
Form 15G (below 60 years) and Form 15H (60+) let eligible depositors avoid TDS deduction on interest income.
A 2-in-1 account auto-sweeps surplus SB balance into FD; a Recurring Deposit builds savings via fixed monthly instalments.
📝 Top 50 JAIIB-Style MCQs on Retail Liability Products
Test your understanding with these 50 practice MCQs, closely modelled on the pattern expected in the JAIIB RBWM exam. Each question has 5 options — the correct answer is hidden by default; tap "Show Answer" to reveal it along with a short explanation.
🏦 Demand Deposits: Current Accounts
1 A Current Deposit Account typically:
A. Pays interest and restricts transactions
B. Pays no interest and allows unlimited transactions
C. Is exclusively for minors
D. Cannot be opened by businesses
E. Is a type of term deposit
Answer: B. Current accounts pay no interest but allow unlimited transactions.
2 Current accounts are primarily intended for:
A. Businesses
B. Only retired individuals
C. Only minors
D. Only NRIs
E. Only government departments
Answer: A. Current accounts are primarily intended for businesses.
3 A Current Account becomes "inoperative" typically after:
A. 2 years of no customer-induced transactions
B. 1 day of no transactions
C. It never becomes inoperative
D. 10 years exactly, with no exceptions
E. Immediately upon opening
Answer: A. 2 years of no customer-induced transactions typically triggers inoperative status.
4 Overdraft facility, when linked to a Current Account, allows:
A. Withdrawal beyond the credit balance up to a sanctioned limit
B. No withdrawals whatsoever
C. Only fixed deposit bookings
D. Interest-free unlimited borrowing with no limit
E. Conversion to a savings account automatically
Answer: A. Overdraft allows withdrawal beyond balance up to a sanctioned limit.
5 For a company opening a Current Account, banks typically require:
A. A board resolution authorising the account opening
B. No documentation whatsoever
C. Only a verbal request
D. Proof of a personal savings account only
E. A minor's birth certificate
Answer: A. A board resolution is typically required for companies.
💰 Savings Bank Accounts
6 Savings Bank Account interest rates in India were deregulated by RBI in:
A. 2011
B. 1969
C. 2000
D. 1991
E. Never deregulated
Answer: A. Savings account interest was deregulated in 2011.
7 After deregulation, savings account interest rates are:
A. Fixed uniformly by RBI for all banks
B. Set by each bank, often tiered by balance slab
C. Always zero
D. Identical to Current Account rates (zero)
E. Set only by the government
Answer: B. Post-deregulation, banks set their own tiered rates.
8 Non-maintenance of minimum balance in a Savings Account may result in:
A. Penal charges as per bank policy
B. Automatic account closure with no notice ever
C. No consequence whatsoever
D. Conversion to a Current Account automatically
E. A bonus interest payment
Answer: A. Non-maintenance typically attracts penal charges.
9 Savings Bank Accounts can be opened by:
A. Individuals, HUFs, trusts and specified institutions
B. Only large corporates
C. Only foreign governments
D. No one; they do not exist
E. Only banks themselves
Answer: A. Individuals, HUFs, trusts and specified institutions can open SB accounts.
10 Compared to Current Accounts, Savings Accounts typically have:
A. No interest and unlimited transactions
B. Interest earning capability, with some transaction restrictions
C. Identical features in every respect
D. No minimum balance requirement ever
E. Exclusive availability to businesses only
Answer: B. SB accounts earn interest with some transaction restrictions.
📅 Time Deposits
11 Fixed Deposits in India can typically be booked for tenures ranging from:
A. 7 days to 10 years
B. 1 hour to 1 day only
C. Exactly 1 year only, with no flexibility
D. 50 years minimum
E. No minimum or maximum exists
Answer: A. FD tenures typically range from 7 days to 10 years.
12 A "Cumulative FD" pays interest:
A. Monthly only, with no compounding
B. Compounded and paid at maturity along with principal
C. Never; it is interest-free
D. Only to minors
E. Daily in cash
Answer: B. A Cumulative FD compounds and pays interest at maturity.
13 A Term Deposit in a minor's name is typically operated by:
A. A natural/legal guardian until the minor attains majority
B. The minor alone, unsupervised, from account opening
C. No one; minors cannot hold term deposits
D. Only the bank manager
E. A random bank employee
Answer: A. A guardian operates the minor's TD until majority.
14 Advances against Term Deposits are typically priced at:
A. FD rate plus a small spread
B. Zero interest always
C. A rate far below the FD rate always
D. Rates unrelated to the FD rate
E. Punitive rates exceeding personal loan rates
Answer: A. Loans against FD are typically priced at FD rate + spread.
15 Interest on Time Deposits can be paid:
A. Monthly, quarterly, or cumulatively at maturity
B. Only in cash, daily
C. Only at account closure with no interim option
D. Never; TDs are interest-free by definition
E. Only to third parties
Answer: A. TD interest can be paid periodically or cumulatively.
⏳ Premature Payment & Overdue FD Rules
16 Premature withdrawal of an FD typically attracts:
A. A penalty, typically a 0.5%–1% interest reduction
B. A bonus interest payment
C. No consequence whatsoever
D. Automatic account closure with no interest paid at all
E. A doubling of the original interest rate
Answer: A. Premature withdrawal typically incurs a penalty on interest.
17 An FD not renewed or claimed at maturity typically earns:
A. The original contracted FD rate indefinitely
B. Savings-account-rate interest (or as per bank policy) for the overdue period
C. No interest at all, ever
D. A punitive negative interest rate
E. Double the contracted rate
Answer: B. Overdue FDs typically earn savings-rate interest.
18 Auto-renewal of an FD means:
A. The FD automatically renews at maturity per customer instruction
B. The FD is automatically closed at maturity with no option
C. The customer loses all accrued interest
D. The bank converts it to a Current Account
E. It is illegal in India
Answer: A. Auto-renewal renews the FD per prior customer instruction.
19 Loss of an FD receipt is an example of:
A. A common operational issue requiring bank resolution per policy
B. Grounds for immediate loss of principal
C. A criminal offence by the customer
D. An issue that voids the deposit permanently
E. An issue with no resolution process
Answer: A. Receipt loss is a common operational issue resolved per bank policy.
20 The premature withdrawal penalty policy for FDs is:
A. Set arbitrarily by each branch teller
B. Board-approved and applied uniformly per bank policy
C. Illegal under Indian law
D. Never applied in practice
E. Set by the customer at will
Answer: B. The penalty policy is board-approved and applied per bank policy.
📄 Form 15G/15H & TDS on Deposits
21 Form 15G can be submitted by:
A. Individuals below 60 years (and HUFs) with income below the taxable limit
B. Only senior citizens above 60
C. Only companies
D. Only foreign nationals
E. Only minors
Answer: A. Form 15G is for those below 60 with income below the taxable limit.
22 Form 15H is specifically meant for:
A. Senior citizens (60 years and above)
B. Individuals below 18 years
C. Only NRIs
D. Only companies
E. Only trusts
Answer: A. Form 15H is for senior citizens (60+).
23 The purpose of Form 15G/15H is to:
A. Declare that no TDS should be deducted on interest income
B. Request additional TDS deduction
C. Close the deposit account
D. Apply for a new loan
E. Increase the FD interest rate
Answer: A. These forms declare that TDS should not be deducted.
24 Banks deduct TDS on FD interest:
A. Once interest crosses the prescribed threshold, unless a valid 15G/15H is on file
B. On every deposit regardless of amount, with no exceptions ever
C. Never, under any circumstances
D. Only on Current Account balances
E. Only for foreign nationals
Answer: A. TDS applies above the threshold unless 15G/15H is filed.
25 A senior citizen wanting to avoid TDS on FD interest should submit:
A. Form 15H
B. Form 15G
C. Form 16
D. No form is available to senior citizens
E. A cheque book request
Answer: A. Senior citizens use Form 15H.
💳 2-in-1 Account & Recurring Deposit
26 A "2-in-1" account links:
A. A Savings Account with a Fixed Deposit via auto-sweep
B. Two Current Accounts of different customers
C. A loan account with a locker
D. Two different banks' savings accounts
E. A demat account with a PPF account
Answer: A. A 2-in-1 account links SB and FD via auto-sweep.
27 In a 2-in-1 account, surplus balance above the threshold is:
A. Auto-swept into the linked FD for higher returns
B. Automatically transferred to another customer
C. Forfeited by the bank
D. Converted into a loan
E. Left idle with no action
Answer: A. Surplus balance auto-sweeps into the FD.
28 If the Savings Account in a 2-in-1 arrangement falls short of the required balance:
A. A reverse-sweep pulls funds back from the FD
B. The account is permanently frozen
C. The FD is forfeited entirely
D. No action is taken, ever
E. The customer is charged a criminal penalty
Answer: A. A reverse-sweep covers shortfalls from the linked FD.
29 A Recurring Deposit (RD) requires the depositor to:
A. Deposit fixed monthly instalments over a chosen tenure
B. Deposit a single lump sum with no further instalments
C. Withdraw funds daily
D. Maintain zero balance throughout
E. Open a new account every month
Answer: A. RDs require fixed monthly instalments over a chosen tenure.
30 A Recurring Deposit is primarily designed to:
A. Encourage disciplined, regular saving
B. Discourage saving altogether
C. Replace the need for a savings account
D. Provide unlimited daily transactions
E. Serve only corporate customers
Answer: A. RDs encourage disciplined, regular saving.
🔁 Comprehensive Review
31 A business needing unlimited daily transactions with no interest concern would open a:
A. Current Account
B. Fixed Deposit
C. Recurring Deposit
D. Savings Account exclusively
E. None of these products
Answer: A. A Current Account suits unlimited transaction needs.
32 A senior citizen depositor with total income below the taxable limit should file:
A. Form 15H to avoid TDS
B. No form at all, and simply accept TDS deduction
C. Form 15G only, never Form 15H
D. A loan application instead
E. A cheque book request
Answer: A. As a senior citizen, Form 15H is the correct form.
33 A customer who breaks an FD before maturity to meet an emergency should expect:
A. A reduced interest rate as a premature withdrawal penalty
B. A bonus interest rate for early withdrawal
C. Complete forfeiture of the principal
D. No interest calculation of any kind
E. Automatic loan approval instead
Answer: A. Premature withdrawal incurs a reduced interest rate.
34 Parents saving small fixed amounts monthly for a child's future education would most suitably use a:
A. Recurring Deposit
B. Current Account
C. Overdraft facility
D. Demand loan
E. None of these
Answer: A. An RD suits disciplined monthly saving for a goal.
35 A customer wanting automatic optimisation between liquidity and returns on idle SB balances would choose:
A. A 2-in-1 (sweep-in) account
B. A plain Current Account
C. A demand loan account
D. No banking product; this is not possible
E. A locker facility
Answer: A. A 2-in-1 sweep account optimises liquidity and returns automatically.
36 An FD left unclaimed for two years past maturity would typically earn interest at:
A. The savings account rate (or as per bank policy) for the overdue period
B. The original, higher contracted FD rate throughout
C. Zero interest permanently
D. A penal rate higher than the original FD rate
E. An amount decided solely by the customer
Answer: A. Overdue FDs earn savings-rate interest per bank policy.
37 A young professional with fluctuating monthly cash needs and no desire for a fixed monthly commitment would prefer:
A. A Savings Account over a Recurring Deposit
B. A Recurring Deposit exclusively
C. A Current Account exclusively
D. No banking product at all
E. A locker facility
Answer: A. A Savings Account offers flexibility without a fixed commitment.
38 A trust wishing to earn interest on idle funds while retaining some liquidity would most likely open a:
A. Savings Bank Account (subject to bank policy on trust eligibility)
B. Only a Current Account, since trusts cannot hold SB accounts anywhere
C. No account at all, since trusts cannot bank
D. Only a locker
E. Only an overdraft account
Answer: A. Trusts can open SB accounts subject to bank policy.
39 A depositor needing emergency liquidity but holding funds only in an FD could most efficiently:
A. Take an advance/loan against the FD rather than breaking it
B. Always break the FD, incurring maximum penalty
C. Forfeit the FD entirely with no recourse
D. Wait until natural maturity regardless of urgency
E. Convert the FD into a Current Account
Answer: A. A loan against FD avoids breaking the deposit.
40 For JAIIB purposes, understanding retail liability products is essential because they:
A. Form the core funding base that retail banking depends on
B. Have no bearing on a bank's balance sheet
C. Are irrelevant to a bank's cost of funds
D. Apply only to corporate banking
E. Are purely a marketing concept
Answer: A. Liability products are the core funding base for retail banking.
41 A customer under 60 with total annual income below the basic exemption limit should file:
A. Form 15G
B. Form 15H
C. No form; TDS cannot ever be avoided
D. Form 16
E. A loan application
Answer: A. Below 60, the correct form is 15G.
42 A joint FD holder wishing to add a nominee should do so:
A. As per the bank's nomination process at or after account opening
B. Only via a court order, in every case
C. It is never permitted for joint accounts
D. Only after the account holder's demise
E. Only via a newspaper notice
Answer: A. Nomination follows the bank's standard nomination process.
43 A bank offering higher SB interest on balances above ₹1 lakh compared to lower balances illustrates:
A. Tiered, deregulated interest rate-setting
B. A regulatory violation
C. An illegal banking practice
D. A fixed, RBI-mandated uniform rate
E. A Current Account feature
Answer: A. This illustrates tiered, deregulated SB interest rate-setting.
44 The key operational difference between a Current Account and Savings Account, from a bank's cost perspective, is:
A. Current Accounts are interest-free, making them cheaper funding for the bank
B. Savings Accounts always cost the bank more than term deposits
C. Both products have identical costs to the bank
D. Current Accounts always cost more than term deposits
E. There is no cost difference between any deposit products
Answer: A. Current Accounts are interest-free, making them the cheapest funding source.
45 A bank designing an RD product for salaried employees would typically align the instalment date with:
A. The customer's typical salary credit date
B. A random date with no consideration of cash flow
C. The bank's own audit schedule
D. National holidays exclusively
E. The FD maturity calendar of other customers
Answer: A. Aligning with salary credit dates improves RD instalment discipline.
46 If a customer disputes a TDS deduction on their FD interest despite having filed Form 15G on time, the appropriate resolution channel is:
A. Raising the issue with the bank's branch/customer service for correction and reconciliation
B. Ignoring the deduction permanently
C. Closing all accounts with the bank
D. Filing a police complaint
E. Waiting indefinitely with no communication
Answer: A. Bank branch/customer service is the appropriate resolution channel.
47 Which retail liability product is best suited to a business needing to write large numbers of cheques daily?
A. Current Account
B. Recurring Deposit
C. Fixed Deposit
D. Minor's Term Deposit
E. None of these
Answer: A. A Current Account suits high-volume cheque issuance.
48 A bank's overall liability mix (Current + Savings + Term Deposits) is often referred to using the acronym:
A. CASA + Term Deposits
B. NPA
C. ROA
D. DSCR
E. KYC
Answer: A. CASA (Current + Savings) plus Term Deposits describes the liability mix.
49 The primary regulatory concern behind Form 15G/15H is to:
A. Prevent unnecessary TDS deduction from those below the taxable threshold
B. Increase tax collection from all depositors regardless of income
C. Eliminate interest income taxation entirely for everyone
D. Apply only to corporate deposits
E. Replace the need for a PAN card
Answer: A. These forms prevent unnecessary TDS for those below the taxable threshold.
50 The single most important reason JAIIB candidates must master retail liability products is that:
A. These products form the everyday, high-frequency retail transactions bankers handle
B. These products are rarely encountered in actual banking practice
C. They apply exclusively to wholesale banking
D. They have been phased out of modern banking
E. They are irrelevant to customer service quality
Answer: A. These are everyday, high-frequency retail banking transactions.
Disclaimer: This article is prepared for educational and exam-preparation purposes only, as of September 2026. Candidates should cross-check the latest official IIBF syllabus and current notifications before the exam.