Money Market Accounts: What They Are and How They Work in India

When you hear money market accounts, a type of interest-bearing bank account that holds short-term, low-risk securities like Treasury bills and commercial paper. Also known as money market deposit accounts, they sit between a regular savings account and a fixed deposit in terms of returns and flexibility. They’re not as flashy as crypto or as locked-in as PPF, but for many Indians, they’re the smartest place to park cash you’ll need in the next 3 to 12 months.

Unlike traditional savings accounts that pay barely 3-4%, money market accounts often offer 6-8% annual returns—sometimes even more during rate hikes. But here’s the catch: they’re not the same as high-yield savings accounts, online-only accounts that boost interest by cutting branch costs. Money market accounts usually come with minimum balance requirements, limited withdrawals per month, and may require you to keep funds for a set period. They’re also different from liquid funds, mutual funds that invest in ultra-short-term debt instruments and offer daily liquidity. Liquid funds are market-linked, so their returns can dip slightly, while money market accounts are FDIC-insured (or equivalent in India) and offer stable, predictable interest.

Why does this matter in India? Because most people either leave money in a regular savings account earning next to nothing, or lock it into a 5-year FD and can’t touch it. Money market accounts fill that gap. They’re perfect for emergency funds, upcoming tuition fees, or saving for a down payment. If you’ve got ₹50,000 sitting idle, a money market account could earn you ₹3,000–₹4,000 a year more than a regular account. That’s not a small amount—it’s like getting a free bonus every year just for not touching your money.

Some banks in India now offer these accounts directly, while others bundle them with premium savings plans. You’ll need to check if your bank reports to CIBIL, because using one responsibly can actually help build your credit score. And if you’re an NRI, some institutions allow these accounts with minimal documentation—just make sure you’re not accidentally triggering tax residency rules by keeping too much cash in India.

These accounts aren’t for everyone. If you’re chasing 15% returns, you’re better off looking at mutual funds. But if you want safety, decent interest, and the ability to access your cash without penalties, money market accounts are one of the most underrated tools in Indian personal finance. Below, you’ll find real breakdowns of how they compare to FDs, what hidden fees to watch for, and which Indian banks offer the best deals right now.