In this post we are going to discuss about…

πŸ“Œ Types of Deposits

πŸ“ŒFixed deposit account

πŸ“Œ Saving deposit account

πŸ“Œ Current account

πŸ“Œ Recurring Deposit account

πŸ“Œ Annuity deposit

πŸ“ŒSuper saving account

πŸ“Œ Non-Resident (externals)

    account scheme

πŸ“Œ Flexible account

πŸ“Œ New deposit Schemes

πŸ“Œ Procedure to open a current account or saving bank account

πŸ“Œ Operations of bank accounts

Q: what is a deposit?

A deposit is a credit for the individual or organization that is  held  by the banks and can be withdrawn, transferred to another party. This is the financial amount that is placed with the commercial bank.

Bank deposits comprise money that is kept in banking institutions for safety.

The account holder has the right to withdraw the amount deposited. The deposit itself is a loan owed by the bank to the depositor.

Types of Deposits | procedure to open a current account or saving account| operation of bank accounts

Types of Deposits : 

Time deposit Account or Fixed deposit account:-  All banks in India offer fixed deposit accounts with a wide range of term savings. A fixed deposit account is also called a time deposit account. Under a fixed deposit account the amount is deposited for a period and it should not be withdrawn before the expiry of the pre – decided period.Fixed deposit account is opened for 7 days to 10 years. The interest rate paid on this account is higher than any other type of account. These are known as FD accounts.Commercial banks offer a higher rate of interest on fixed deposits to entice customers to keep their money for a longer period of time.

Current account: Open account is another name for current account. In this account, money can be deposited and withdrawn from a current account at any time during business hours without notifying the bank.Businessmen prefer to keep their money with the bank instead of keeping it in their cash box where it can be lost or stolen, as they can deposit or withdraw money from an existing account whenever they want.Current account holders can get an overdraft facility from the bank. The purpose of a current account is to offer businessmen with deposit and withdrawal facilities, relieving them of the responsibility of handling cash and the danger that comes with it.The customer has complete control over this account. Customers can withdraw funds from their accounts by cheque at any time during the bank’s business hours on any working day. There are no limitations on the amount of withdrawals that can be made. Banks usually do not pay interest on current deposit accounts.

Recurring Deposit Account: The recurring account is known as RD accounts. This special type of term deposit is suitable for those who do not have much savings at once, but are willing to save a small amount each month. Generally, RD accounts earn interest on monthly deposits at the same rate as for fixed deposits or term deposits.

Under RD account, the customer is required to deposit a specified amount of money every month. The maturity of these accounts normally ranges from 6 months to 10 years. A pass book is usually issued to the client, which contains entries for all of his or her deposits as well as the interest earned.Banks also provide the RD’s maturity value, presuming that the monthly instalments are paid on time each month. These accounts can be opened in single or joint names, with nomination facility also. Withdrawals from the RD account are not allowed. The bank may, however, allow the account to be closed before the maturity date.

Saving Deposit Account: This account is intended for those in the middle and lower income groups. This sort of account allows the customer to deposit his small savings. Any person with a certain minimum deposit can open a savings bank deposit account. The key feature of this account is that deposits can be made as many times as you like in a week.

However, withdrawals are limited to once or twice every week. To prevent the tendency of making frequent withdrawals, banks set several limits on withdrawals. Most banks allow 50 withdrawals in a six-month period. When compared to fixed deposit accounts, the rate of interest paid on saving deposits account is quite low.Interest is paid on the minimum balance to the credit of an account from the tenth to the last day of each month. Savings bank account holders receive a passbook. When a depositor wants to withdraw money, he usually has to present his passbook together with a withdrawal request.Banks are now allowing saving bank customers who maintain a minimum balance in their accounts to use the cheque function. The holder of a savings account is expected to keep a minimum amount in the account at all times. The bank will deduct a nominal amount if the balance falls below the minimum balance amount.

Cash certificate: It is one of the most often used fixed face value bank savings plans that pays a higher rate of interest. Banks may also may advance loans based on such deposits. Deposits for durations ranging from 12 months to 10 years in whole quarters are possible with a cash certificate. There is also a nominal facility.

Annuity deposit: A client deposits a lump sum payment, which is reimbursed to the customer over time in equal monthly instalments that include part of the principal amount as well as interest on the diminishing main amount. Customers can have a fixed monthly amount against their one-time deposit by using the scheme. Payment will begin on the month’s anniversary date.Annuity deposits differ from recurring deposit accounts in that recurring deposit accounts require customers to make payments in various instalments and receive the maturity amount at the maturity date, whereas annuity deposits only require a one-time deposit, and the amount, plus interest on the reducing principal, is paid to the customer in instalments over the period chosen by the customer.

Auto /Reverse sweep : Any transfer in excess of Rs 20,000/- to a short deposit account with a minimum of Rs 10,000/- for 181 days and auto transfer to the account for short deposit in case funds are required in the super-savings account in multiples of Rs 1,000/- to provide higher interest with high liquidity to the customer.

Re-investment plans : Re-investment plans are similar to Term Deposits, except instead of receiving interest on a regular basis throughout the term of the deposit, it is only paid out at maturity. Compound interest is calculated and paid on the principal after regular interest has been applied. This plan has a minimum term of 6 months and a maximum term of 10 years. This plan includes a nomination facility.

Flexible Account : Flexible accounts combine the features and advantages of both savings and fixed deposit accounts. In such accounts, a fixed deposit account for the maturity periods available is opened, as well as a savings account. The sum in a fixed deposit account is treated as  units Rs 1000 each.In the event that a customer’s savings account balance is insufficient, the required amount will be moved out of a fixed deposit account in units of Rs 1000 each, with interest due as per RBI regulations. The remaining amount in fixed deposit continues to earn at the contracted rates.

New Deposit savings scheme: Banks have introduced a variety of new savings schemes to allow customers to deposit money in the bank based on their own needs and requirements. To serve the general public, banks have opened extension counters at schools and colleges.

Insurance Linked Deposits: In collaboration with the Life Insurance Corporation of India and other insurance firms, banks also launched a few initiatives to promote saving habits among the public . This account can be opened by anyone between the ages of 18 and 49. The premium will be paid at a rate of 1.25 percent of the deposit by commercial banks.The customer has the right to receive the entire amount.In the event of the account holder’s death, the legal heirs are entitled to the following advantages if the deposits have been made for a continuous period of two years.

(Β‘) If the dead account user was over 41 years old, only half of the sum specified in the previous scenario would be paid, up to a maximum of Rs 5,000.

(‘‘) If the deceased person’s age exceeds 47 years, no insurance benefit will be paid.

(‘‘‘)If the deceased account holder was under the age of 21, an amount equal to double the average of minimum monthly balances used to calculate the premium in the account during the half-yearly period preceding the death would be paid, up to a maximum of Rs10,000.

People’s savings plan : A consumer is required to deposit Rs 500 per month in a people’s saving plan for a term of one year. After depositing for three months, the consumer can withdraw 1/10 of the total once a month. A fixed rate of interest is offered by the bank.

Minor’s Savings : Young children aged 12 and up are permitted to open and operate this account in their own name under the Minor’s Savings Plan. The major goal of the Minor’s Savings Scheme is to teach children about banking and saving.

Farmer’s Deposit Scheme: Farmers in India can only deposit in the bank once their crops have been harvested. Farmers that participate in this programme must deposit a substantial sum of money once or twice a year in order to receive a consistent return throughout the year.

Monthly Income Plans : This plan is designed specifically for pensioners. They will be required to deposit a lump sum amount in the bank for a predetermined number of years under this arrangement. They are given a fixed rate of interest on a monthly basis, and their deposit is repayable when it matures.

Non- Resident (External) Account Scheme ( NRE)

(1) Savings, current, recurring, or fixed deposit accounts (with a minimum maturity of one year) are all options for non-resident (external) accounts. Such accounts can only be opened by the NRI (as defined by regulation 2(Β‘V) himself and not by the holder of the power of attorney .

(2) On a ‘former or survivor’ basis, NRIs may be allowed to open NRE accounts with their resident near relatives (as defined in section 6 of the Companies Act,1956). During the lifetime of the NRI/Persons of Indian Origin (PIO) account holder, the resident close relative shall be eligible to operate the account as a power of attorney holder in line with the extent instructions.

(3) The balances in the NRE account can be repatriable at any time. The account will be maintained in Indian rupees.

(4)NRE account balances and accrued income are excluded from income tax and wealth tax, respectively.

(V) Savings: banks are free to set their own interest rates.

(6)Term deposits:Interest rates on term deposits with a maturity of one year or more are set by banks at their discretion. Banks cannot give higher interest rates on NRE deposits than they do on similar domestic rupee deposits.

(7)Local disbursements, transfers to other NRE accounts of persons qualified to open such accounts, remittances outside India, investments in Indian company shares/ securities/commercial paper, and so on are all permissible debits.

(8) Loans can be granted without limit to the depositor or third parties against the security of funds kept in an NRE account, subject to the usual margin requirements.

(9) Such accounts can be handled by residents with power of attorney for the sole purpose of withdrawing local payments or remittances through conventional banking channels to the account holder himself.

Procedure  to open a current account or a savings account.
1. Application form : A person who wants to open a current account or a savings bank account must submit an application to the relevant bank on the prescribed form. Printed application forms are available for free of cost at the bank.The application form comprises information such as the applicant’s name, occupation, full address, and specimen signatures, among other things. For creating a savings or current account, banks offer different types of application forms.

2. Introduction: The bank may also request references and introductions from people who can be consulted about an applicant’s integrity, honesty, financial standing, and responsibility. The bank requires that such a person or business enterprise being introduced to the bank by an existing customer or a well-known businessman.
Though anyone can apply for an account in his or her own name, the bank reserves the right to do so after verifying the customer’s identity.
3. Specimen signature: When the bank is pleased with the introductory references, the account will be opened. For the purposes of the bank’s records, the applicant is required to sign two or three specimen signatures on a prescribed form, usually a card.The bank preserves these spicemen signature cards and files them alphabetically for easy access to verify the signature whenever the need arises. The signatures on the customer’s cheque are compared to the specimen signature. If the two signatures are not identical, the bank may refuse to honour the cheque.
4. Photographs : Banks require four copies of photographs of the account holders. All forms of account openings necessitate the use of these photographs. If a consumer has a savings or current account at a bank branch, he can open a fixed deposit account without having to show identification. When a consumer visits a branch, he might be quickly recognised. With the help of photographs customer’s identify can be easily verified.
5.Initial Deposit: The applicant deposits the first sum after the foregoing steps are completed, and the banker establishes an account in the applicant’s name. The minimum amount that must be deposited at initially varies from bank to bank .
Operation of the bank 
When the banker opens the account in the name of the applicant, it provides him with__

1. Pay-in-slip books : A book of pay- in -slips is a collection of printed slips. This slip must be filled out by the depositor or his agent when depositing cash, cheque, or other items. In most cases, banks provide separate pay-in slips for cash and checks.
The date of deposit, the depositor’s name, the amount to be deposited, the name and account number to be credited, the details of currency notes in case of cash, and the cheque number and name of the drawee in the case of checks are all listed on the pay in slip.The depositor hands over the pay-in-slip to the counter along with cash or cheque to be deposited after filling it out.
The counter clerk double-checks the slip’s details and signs before stamping the counter foil. The depositor receives the counter foil, which serves as proof of the deposit. The main slip, which is kept by the bank, is given to the dealing clerk, who credits the customer’s account.

2. Cheque book : A cheque book is a book that includes blank cheques that are used to withdraw money from a bank. The blank sorts of Cheques and their counter foils are serially numbered . A cheque book typically has 10 to 100 of these forms. When a consumer wishes to withdraw money or make a payment to someone else, he must fill out and sign a Cheque.
3. Pass book : This is a book that the bank gives to the customer in which all of their transactions are documented. It’s a copy of the customer’s account in a bank’s book.The bank keeps track of the transactions in the pass book. This book contains information about the amount withdrawn, the date of withdrawal, and the account balance on a specific date. The major purpose of providing a pass book to a customer is to keep him informed about the status of his bank account on a regular basis.

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