Types of Bank Accounts in Pakistan

In Pakistan, banks offer a variety of account types to cater to the diverse needs of individuals and businesses. These accounts differ in features, benefits, and the interest or profit rates they offer. Below is an overview of the common types of bank accounts in Pakistan, along with their specific interest or profit rates:

Current Account

A Current Account is primarily designed for individuals and businesses that require frequent transactions, such as deposits, withdrawals, and fund transfers. These accounts typically do not offer any interest or profit on the deposited funds. The key features include:

No Interest/Profit:

Depositors do not earn interest or profit on the balance maintained.

Unlimited Transactions:

There is no limit on the number of transactions.

Overdraft Facility:

Some banks offer overdraft facilities, allowing account holders to withdraw more than their available balance.

For example, Allied Bank offers the Allied Basic Banking Account, a type of current account tailored to meet individuals' banking needs with simplified account opening procedures.

Savings Account

Savings Accounts are designed to encourage individuals to save money while earning a return on their deposits. The features of savings accounts include:

Interest/Profit Earnings:

Depositors earn interest or profit on their balances. The rates can vary between banks and account types.

Limited Transactions:

Some banks may limit the number of withdrawals to encourage saving.

For instance, Bank AL Habib offers the AL Habib Freelancer Savings Account with a profit rate of 10.50% per annum.

Basic Banking Account (BBA)

The Basic Banking Account is a simplified account designed to provide basic banking services to individuals. Features include:

No Minimum Balance Requirement:

These accounts often do not require a minimum balance.

Limited Free Transactions:

A specific number of free transactions per month, after which charges may apply.

According to the State Bank of Pakistan, existing account holders can convert to a BBA from a regular full-service banking account.

Fixed Deposit Account

Fixed or Term Deposit Accounts are investment accounts where funds are deposited for a fixed tenure at a predetermined profit or interest rate. Features include:

Higher Interest/Profit Rates:

These accounts offer higher returns compared to regular savings accounts.

Fixed Tenure:

Funds are secured for a predetermined duration, from a few months to several years.

Premature Withdrawal Penalties:

Withdrawing funds before maturity may result in penalties or reduced interest/profit.

For example, HBL offers various term deposit accounts, such as the HBL Investment Plus Deposit (IPD) and HBL Advantage Plus, which cater to different investment needs.

Foreign Currency Account

Foreign Currency Accounts allow individuals and businesses to maintain deposits in currencies like USD, EUR, or GBP. Features include:

Currency Diversification:

Helps in hedging against local currency depreciation.

Interest/Profit Earnings:

Some banks offer interest or profit on foreign currency deposits, though rates may be lower than local currency accounts.

For instance, Standard Chartered Pakistan offers Foreign Currency Accounts with various features and benefits.

Islamic Banking Accounts

Islamic Banking Accounts comply with Shariah principles, avoiding interest (Riba) and investing in Halal avenues. Types include:

Current Accounts:

Operate on the Qard (loan) principle, where the bank guarantees the funds but does not pay any profit.

Savings Accounts:

Operate on the principle of Mudarabah (profit-sharing), where depositors earn a share of the profit generated from Shariah-compliant investments.

Meezan Bank, Pakistan's premier Islamic bank, offers a variety of Riba-free accounts catering to personal banking needs.

Interest/Profit Rates Overview

Interest and profit rates in Pakistan are influenced by the State Bank of Pakistan's (SBP) monetary policy. As of March 17, 2025, the SBP's benchmark interest rate is 13%.

Individual banks set deposit rates based on this benchmark, considering factors like liquidity needs and market competition.

For example, Standard Chartered Pakistan offers a Yield Savings Account with an attractive interest rate of 10.50% per annum for balances starting from PKR 500,000.

It's important to note that interest/profit rates can vary significantly between banks and account types. Factors such as the account balance, tenure of deposit, and the bank's internal policies play a crucial role in determining the rate offered. Therefore, individuals should compare offerings from different banks to choose the account that best suits their financial needs.

Conclusion:

Pakistan's banking sector offers various account types for varying financial needs. Individuals have multiple options, from non-interest-bearing current accounts for daily transactions to profit-earning savings and fixed deposit accounts for investment purposes. Islamic banking accounts provide Shariah-compliant alternatives for those seeking Riba-free banking. Understanding these accounts' features and interest/profit rates is essential for making informed financial decisions. CometInsure is a leader in providing reliable and affordable insurance solutions, specializing in auto, travel, cargo, and commercial insurance solutions.