A pigmy deposit is a savings account collected in person: an agent visits your home or shop on a fixed route, takes a small amount of cash, records it, and the balance earns interest until it is paid out at maturity.
The model dates to 8 October 1928, when Syndicate Bank began sending agents door to door in Udupi, Karnataka, collecting amounts as small as two annas from fisherwomen and small traders. Syndicate Bank merged into Canara Bank in 2020, and the scheme continues there as the Nitya Nidhi Deposit. The name spread far beyond one bank: urban co-operative banks, district central co-operative banks, patpedhis, Souharda co-operatives and Nidhi companies all run versions of it today, sometimes under the name "pigmy" and sometimes as a plain daily deposit scheme.
What makes a pigmy deposit different from an ordinary savings product is who does the work of saving. You do not transfer money or visit a branch; a pigmy agent comes to you, and that service is why the interest rate on this product is usually lower than what the same institution pays on a recurring deposit it does not have to collect.
It is easy to confuse a pigmy deposit with a recurring deposit because both build savings through small, regular contributions. The difference is mechanical: a recurring deposit is paid, by standing instruction from a bank account you already hold; a pigmy deposit is collected, in cash, from people who may not otherwise use a bank account at all. Whether your money is insured also depends entirely on the kind of institution that holds it, a bank or a society, which is worth checking before you rely on the passbook alone.