Dealing with Deposits and Credits is the principle function of banks. Deposits mean money accepted from public. Bank's deposits are classified as two types (a) Demand deposits and (b) Time deposits.
Demand deposits:
As name says the deposit is payable on demand either fully or partly as per the demand of customer. Bank pay returns to the deposits in the form of interest. These deposits are withdrawable as per the demand of customer through a cheque or draft or written order (withdrawal
slip). Demand deposits in the bank are deposits in saving and current account.
These are major sources of funds for banks.
Savings Account deposits:
The main purpose of this account is to inculcate the habit of savings in public. Deposits in this
accounts are paid interest as per the guidelines of RBI, presently RBI has set 4% per annum is calculated on daily balances in the account and paid quarterly.
★ This deposit product of bank, savings account has a nomination facility. And customer
is allowed to withdraw funds whenever he wants through a cheque or draft or written order. Saving account also chargeable if the customer is failed to maintain Quarterly Average Balance (QAB) and if the cheques are bounced for not having balance in the account.
★ As per new guidelines of RBI zero balance account also can be opened which is known as no frill account. Recently, Prime Minister Narendra Modi has launched a scheme 'Prime Minister's Jan Dhan Yojana' with an aim of every Indian must have a bank account. The savings accounts
opened in this scheme are no frill accounts with more added advantages.
Current account:
Generally Current accounts are opened by business units to meet their financial transactions. The
deposits in this account are not entitled to any interest paid to customers. As current account is a demand deposit funds can be withdrawn at demand of customer through cheque. Even an individual also can open a current account.
Time deposits:
These are also known as term deposits and classified into two types - Fixed deposits and Recurring deposits.
Fixed deposits:
These are limited with time and fixed rate of interest (differ from bank to bank). The amount along with interest will be paid on maturity. This amount cannot be withdrawn on demand
before maturity date, if early withdrawals are to be made the account has to be closed and settled with a penalty on interest rate. These deposits can also be used as securities for loans.
Recurring deposits:
Same as fixed deposits as they are also deposited for a particular period and held till maturity. But the major difference is they are credited in equal installments on monthly bases to deposit account by the customer.
Demand deposits:
As name says the deposit is payable on demand either fully or partly as per the demand of customer. Bank pay returns to the deposits in the form of interest. These deposits are withdrawable as per the demand of customer through a cheque or draft or written order (withdrawal
slip). Demand deposits in the bank are deposits in saving and current account.
These are major sources of funds for banks.
Savings Account deposits:
The main purpose of this account is to inculcate the habit of savings in public. Deposits in this
accounts are paid interest as per the guidelines of RBI, presently RBI has set 4% per annum is calculated on daily balances in the account and paid quarterly.
★ This deposit product of bank, savings account has a nomination facility. And customer
is allowed to withdraw funds whenever he wants through a cheque or draft or written order. Saving account also chargeable if the customer is failed to maintain Quarterly Average Balance (QAB) and if the cheques are bounced for not having balance in the account.
★ As per new guidelines of RBI zero balance account also can be opened which is known as no frill account. Recently, Prime Minister Narendra Modi has launched a scheme 'Prime Minister's Jan Dhan Yojana' with an aim of every Indian must have a bank account. The savings accounts
opened in this scheme are no frill accounts with more added advantages.
Current account:
Generally Current accounts are opened by business units to meet their financial transactions. The
deposits in this account are not entitled to any interest paid to customers. As current account is a demand deposit funds can be withdrawn at demand of customer through cheque. Even an individual also can open a current account.
Time deposits:
These are also known as term deposits and classified into two types - Fixed deposits and Recurring deposits.
Fixed deposits:
These are limited with time and fixed rate of interest (differ from bank to bank). The amount along with interest will be paid on maturity. This amount cannot be withdrawn on demand
before maturity date, if early withdrawals are to be made the account has to be closed and settled with a penalty on interest rate. These deposits can also be used as securities for loans.
Recurring deposits:
Same as fixed deposits as they are also deposited for a particular period and held till maturity. But the major difference is they are credited in equal installments on monthly bases to deposit account by the customer.
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