Defence Salary/Pension Account Alert 2026: Army MoUs Terminated With 5 Banks
A significant banking advisory issued by IHQ of MoD (Army), AG’s Branch, ADG PS / PS-3 has important implications for serving personnel and defence pensioners maintaining Defence Salary or Pension Accounts.
According to Banking Advisory No. 1/2026 dated 21 July 2026, the Indian Army currently has active MoUs with 10 banks. However, the Army has terminated its MoUs with five banks following grievances and concerns regarding their performance and response.
The five banks named in the advisory are:
- IndusInd Bank
- IDBI Bank
- Bandhan Bank
- Kotak Mahindra Bank
- Union Bank of India
The advisory specifically asks personnel holding Defence Salary/Pension Accounts with these banks to consider shifting their accounts to another bank having an active MoU with the Indian Army.
Why Is This Banking Advisory Important?
The issue is not simply about changing banks.
Defence Salary Package (DSP) and Defence Pension Account (DPA) arrangements can provide benefits negotiated between the Indian Army/Ministry of Defence and participating banks. These may include banking concessions and, importantly, insurance or compensation-related benefits subject to the applicable terms and eligibility conditions.
The Army advisory contains a particularly important warning concerning death or disability.
It states that in the event of an unfortunate incident, personnel maintaining their Defence Salary Accounts with non-MoU banks may not be entitled to compensation claims or Personal Accident Insurance (PAI) cover linked to the Army-bank arrangement.
Therefore, serving personnel and pensioners should not ignore the advisory merely because their salary or pension continues to be credited normally.
5 Banks Whose Army MoUs Have Been Terminated
| Bank | Status mentioned in Army advisory |
| IndusInd Bank | Army MoU terminated |
| IDBI Bank | Army MoU terminated |
| Bandhan Bank | Army MoU terminated |
| Kotak Mahindra Bank | Army MoU terminated |
| Union Bank of India | Army MoU terminated |
The advisory attributes the termination to grievances and unsatisfactory response/performance.
It is important to understand that this does not mean these banks are banned for Army personnel or pensioners. Customers can continue to have ordinary savings accounts, deposits, loans or other banking relationships with these banks. The concern raised by the Army is specifically about the Defence Salary/Pension Account and benefits associated with an active Army-bank MoU.
What About Defence Pensioners?
This update is also important for Ex-Servicemen and defence pensioners.
The advisory refers to personnel holding Defence Salary/Pension Accounts and advises those having accounts with the affected banks to shift to another bank having an active MoU with the Indian Army.
Pensioners should therefore check whether their existing account is actually classified as a Defence Pension Account (DPA) or an applicable DSP-PEN/defence pension variant, and what benefits are currently attached to it.
A normal savings account receiving pension should not automatically be assumed to carry every benefit available under an Army-bank MoU.
PAI Cover Is the Most Important Concern
The most significant part of the advisory relates to Personal Accident Insurance (PAI) and compensation.
For a serving soldier or pensioner, the difference between an ordinary bank account and an account covered under an applicable defence banking arrangement may become particularly important when a family has to make an insurance or compensation claim after an unfortunate event.
The advisory specifically cautions that persons maintaining Defence Salary Accounts with banks that no longer have an active MoU may not be entitled to the relevant compensation/PAI benefits.
Therefore, account holders should verify their status before an unfortunate situation arises.
Should You Immediately Close Your Bank Account?
No.
The advisory does not say that personnel must close all accounts with the five banks.
The issue is whether your Defence Salary/Pension Account continues to enjoy the benefits available under a current Indian Army MoU.
Before transferring your account, you should:
- Check your existing account type.
- Confirm whether it is classified as DSP/DPA or another defence banking variant.
- Verify the current Army MoU status of your bank.
- Check the applicable PAI and other insurance benefits.
- Compare the benefits offered by banks having active Army MoUs.
- Follow the authorised procedure applicable to serving personnel/pensioners.
Which Banks Have Active MoUs With the Indian Army?
The photographed advisory states that the Indian Army has 10 banks with valid MoUs and that a comparative matrix showing the banks and benefits is attached as an appendix.
However, the appendix containing the complete list of the 10 active banks is not visible in the document provided. Therefore, it would be unsafe to publish an assumed list of those banks without verifying the latest authorised Army comparative matrix.
Recent public information also shows continuing Army-bank arrangements—for example, IDFC FIRST Bank announced a three-year MoU with the Indian Army in February 2026.
Important: DSP Account and DPA Account Are Not Necessarily the Same
Serving personnel generally use Defence Salary Package (DSP) arrangements, while retired personnel/pensioners may have a Defence Pension Account (DPA) or an applicable pension variant.
Therefore, after retirement, veterans should not simply assume that an old salary account continues to provide exactly the same benefits.
A veteran should check with the bank whether the account has been properly converted/classified for pension and whether the applicable defence banking benefits remain available.
What Should Defence Personnel and Pensioners Do Now?
If your account is with IndusInd Bank, IDBI Bank, Bandhan Bank, Kotak Mahindra Bank or Union Bank of India, the Army advisory provides a clear reason to review your banking arrangement.
Recommended action:
1. Check your passbook/account statement
Find out whether your account is classified as a Defence Salary/Pension Account.
2. Contact your bank
Ask the branch to confirm the exact account category and the benefits currently applicable to it.
3. Verify Army MoU status
Confirm whether your bank currently has a valid MoU with the Indian Army.
4. Check PAI/insurance coverage
Ask specifically whether your Defence Salary/Pension Account provides Army MoU-linked Personal Accident Insurance and under what conditions.
5. Compare an active-MoU bank
If your existing bank is one of the five mentioned in the advisory, consider shifting the Defence Salary/Pension Account to a bank having a current valid Army MoU.
6. Do not rely on social-media lists
The complete comparative matrix of the 10 active banks should be verified through the latest authorised Army communication/unit/formation before making a final decision.
Final Takeaway
The Indian Army Banking Advisory No. 1/2026 dated 21 July 2026 is an important alert for serving personnel and defence pensioners.
The advisory states that the Army’s MoUs with IndusInd Bank, IDBI Bank, Bandhan Bank, Kotak Mahindra Bank and Union Bank of India have been terminated.
Personnel holding Defence Salary/Pension Accounts with these banks have been advised to shift to another bank having an active Army MoU.
The most important issue is not ordinary banking operations. It is the possible loss of Army MoU-linked benefits, particularly compensation and Personal Accident Insurance (PAI) cover, depending on the applicable terms.
Therefore, if your Defence Salary or Pension Account is with any of these five banks, check your DSP/DPA status and insurance benefits now. Do not wait until a claim becomes necessary.
Important Disclaimer: This article is based primarily on the Banking Advisory document dated 21 July 2026 provided for review. The complete comparative matrix of the 10 active Army MoU banks is not included in the supplied page. Account holders should verify the latest MoU status and applicable benefits through their unit/formation, authorised Army channel or concerned bank before transferring an account. The termination of an Army MoU should not be interpreted as a general ban on the concerned bank. Public reporting also notes that the exact advisory has not been located on a publicly indexed official Army/PIB webpage.