Question

What are the different types of deposit accounts that can be opened in a commercial bank? Briefly explain them.

Explain the different types of accounts in which a bank may receive deposits.

Answer 1

1. Fixed Deposit Account: Fixed deposits are made for a fixed time period and cannot be withdrawn before the expiry of the period, e.g., one year, three years, five years, and so on. A fixed deposit is also known as a time deposit or long-term deposit. A higher rate of interest is payable on a fixed deposit. No passbook or chequebook is issued to the deposit-holder. Only a receipt containing the name and address of the depositor, the amount and period of deposit, etc., is issued. The depositor can withdraw the money along with interest on the maturity date.
2. Savings Deposit Account: Any person can open a savings deposit account with the minimum specified amount. In this account, small savings are deposited by middle and low-income people. Deposits can be made any number of times in a week. But there is a restriction on the number of withdrawals in a week. Interest is allowed on the minimum balance standing to the credit during a month. A passbook and a chequebook are issued to the account holder. The main purpose of a savings deposit account is to develop the habit of saving among the public. A savings bank account can be opened by two persons in their joint names. No overdraft facility is allowed on a savings account.
3. Recurring Deposit Account: In this account, the account holder is required to deposit a specific amount every month. After the expiration of the specified period, the depositor gets back his money along with interest thereon. The number of installments may vary from 12 to 72. A passbook is issued to the depositor, but no chequebook is issued.
4. Current Account: A current account is generally opened by business firms. Money can be deposited into and withdrawn from this account any number of times. Passbook, chequebook, and overdraft facilities are available on a current account. The bank pays no interest but makes a small charge on a current account.
5. Automatic Teller Machines (ATM): Banks with high-tech computerised branches are providing round-the-clock banking facilities through ATMs. The facilities available through ATM can differ depending on the software being used. For example, ICICI Bank offers a TRICE (Transaction Related Interactive Customer Exchange) ATM Card. This card can be obtained by a current account holder or savings account holder who is an individual or proprietor. With the help of this card, ₹ 15,000 can be withdrawn ON-LINE ATM and ₹ 3000 at OFF-LINE ATM. The cardholder can access 10 accounts and deposit 50 notes at one time. A mini statement of the last four transactions can also be obtained.