A Banking Advisory dated 21 July 2026, circulated in the name of IHQ of MoD (Army), AG’s Branch / ADG PS / PS-3, carries an important message for Army personnel maintaining Defence Salary or Pension Accounts.
According to the advisory, the Indian Army currently has active MoUs with 10 banks, while MoUs with five banks have been terminated. Personnel have been advised to maintain their Defence Salary/Pension Account with a bank that has an active Indian Army MoU so that applicable negotiated banking and insurance benefits remain available.
The biggest concern is not routine banking service. It is the possible impact on Personal Accident Insurance (PAI) and compensation benefits linked to an Army-bank MoU.
Important verification note: The document appears consistent with known Indian Army banking-advisory practices, but the exact 21 July 2026 circular is not currently available on a publicly indexed official Army/PIB webpage. Personnel should confirm the latest position through their unit/formation or authorised Army channel before changing an account.
Which 5 banks are named in the advisory?
The document states that Indian Army MoUs have been terminated with the following banks:
| Bank named in advisory | MoU position stated in document |
|---|---|
| IndusInd Bank | Terminated |
| IDBI Bank | Terminated |
| Bandhan Bank | Terminated |
| Kotak Mahindra Bank | Terminated |
| Union Bank of India | Terminated |
The document attributes the decision to grievances from individuals and unsatisfactory response/performance.
This does not mean these banks have been banned from ordinary banking.
The issue is specifically their Indian Army MoU status for Defence Salary/Pension Accounts and the benefits attached to that arrangement.
Why does an active Army-bank MoU matter?
A Defence Salary Package is more than a normal savings account.
Banks entering into arrangements with the Armed Forces can provide negotiated benefits to eligible personnel, subject to account classification and applicable conditions.
For example, SBI’s current Defence Salary Package page lists benefits including Personal Accident Insurance for eligible Army personnel and separate benefits for pensioner veterans, while also making clear that benefits depend on the account being correctly classified under the relevant salary/pension package.
The 21 July advisory therefore warns personnel not to assume that merely having salary credited into a bank account automatically preserves every Army-negotiated benefit.
The most important warning: PAI and compensation
The strongest paragraph in the advisory concerns an unfortunate event such as:
- death; or
- disability.
According to the document, personnel keeping their Defence Salary Account in a non-MoU bank may not be entitled to compensation claims / Personal Accident Insurance cover arising from the Army-bank MoU.
That is why this advisory matters to families as much as it matters to the account holder.
A bank account may appear to be working normally for salary credit, ATM transactions and online banking, but the real difference can emerge when a MoU-linked insurance claim is required.
What has the Army advised personnel to do?
The document asks personnel holding Defence Salary/Pension Accounts with the affected banks to consider shifting those accounts to another bank of their choice having an active MoU with the Indian Army.
The practical process should be:
Step 1: Check your current account
Confirm the bank where your Defence Salary or Pension Account is maintained.
Step 2: Confirm current Army MoU status
Do not rely only on the name of a product such as “Defence Account” or “Uniformed Forces Account”.
Confirm whether the bank has a current valid MoU with the Indian Army.
Step 3: Check account classification
Even with an MoU bank, the account should be correctly classified under the applicable Defence Salary/Pension package.
Bank-specific benefits can depend on such classification and other terms. SBI, for example, expressly states that its salary-package benefits depend on the account being classified under the relevant Salary Package/Variant.
Step 4: Compare benefits before shifting
Do not choose a bank only because it has an MoU.
Compare the applicable:
- PAI cover;
- disability benefits;
- pensioner benefits;
- banking concessions; and
- eligibility conditions.
Step 5: Complete the change through authorised procedure
Serving personnel should follow unit/record-office/pay-channel instructions wherever applicable rather than moving salary arrangements informally.
Does this mean these five banks are banned for Army personnel?
No.
The advisory should not be interpreted as a blanket prohibition on using these banks.
It does not say Army personnel cannot hold:
- normal savings accounts;
- fixed deposits;
- credit cards;
- loans; or
- other personal banking products
with these institutions.
The specific issue is:
Defence Salary/Pension Account + Indian Army MoU-linked benefits
A bank may independently offer a defence-oriented product, but that is not automatically the same as benefits negotiated under a current Indian Army MoU.
Where is the list of 10 active MoU banks?
The photographed advisory states that a comparative matrix of banks having valid Indian Army MoUs and their benefits is attached as an appendix.
That appendix is not included in the page available with this report.
For that reason, it would be unsafe to reproduce an assumed list of all 10 banks or benefit amounts from this document alone.
There is public evidence that the Army continues to maintain Defence Salary arrangements with banks. For example, an Indian Army communication in February 2026 announced a three-year MoU with IDFC FIRST Bank till February 2029. SBI also currently maintains an Army Defence Salary Package page listing insurance and banking benefits.
But personnel should use the latest Army comparative matrix/unit instructions as the final reference.
Why this advisory is important for Army families?
The biggest mistake would be to treat this as a routine bank-switching circular.
For an individual soldier, the immediate difference between two banks may look small.
For the family, the difference can become significant if a death or disability claim arises and a particular benefit depends on the account being covered under an active Army-bank MoU.
That is why the advisory asks for the information to be disseminated down to unit level, including through roll calls and Sainik Sammelans.
The aim is clearly to ensure that personnel know their banking position before an unfortunate event occurs, not after a claim is rejected.
Quick facts
| Question | Answer |
|---|---|
| Advisory date | 21 July 2026 |
| Active Army MoUs stated in document | 10 banks |
| Banks stated to have terminated MoUs | 5 |
| Main accounts concerned | Defence Salary / Pension Accounts |
| Key risk highlighted | MoU-linked compensation / PAI eligibility |
| Should everyone immediately close accounts with the five banks? | No |
| What should personnel verify? | Current Army MoU status and account benefits |
| Is the active 10-bank appendix visible in this document? | No |
Final takeaway
The message of the Indian Army Banking Advisory dated 21 July 2026 is straightforward:
Do not assume that every Defence Salary Account gives the same Army-negotiated benefits.
The document states that Army MoUs with IndusInd Bank, IDBI Bank, Bandhan Bank, Kotak Mahindra Bank and Union Bank of India have been terminated and advises affected personnel to maintain their Defence Salary/Pension Account with a bank having a current active Indian Army MoU.
The most important reason is the possible impact on compensation and Personal Accident Insurance benefits in cases of death or disability.
Before taking action, however, personnel should confirm the latest bank-MoU position through their unit, formation or authorised Army instructions, especially because the comparative appendix listing the current active banks is not available with the photographed page.
Sources:-
Indian Army Banking Advisory No. 1/2026 — Ref. B/27087/Banking Advisory/AG/PS-3(P), dated 21 July 2026.
Document image provided with this report; exact circular not located on a publicly indexed official Army webpage.
State Bank of India — Defence Salary Package — official bank information on Army DSP and applicable insurance/package conditions.
Indian Army / IDFC FIRST Bank — 2026 MoU announcement confirming a three-year Army banking arrangement till February 2029.
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