AN ASSIGNMENT ON

BANK DEPOSIT
PREPARED BY
NAWSHIN NAWER 183006045
Table of Contents
What is a Bank...................................................................................................................................2

What is Banking................................................................................................................................2

Why Bank is Important......................................................................................................................2

What Are Bank Deposits and How Do They Work?.........................................................................3

Types of Bank Deposits.....................................................................................................................3

Current (Demand Deposit) Account..................................................................................................3

Features of a Current Bank Account..............................................................................................3

Benefits of a Current Account.......................................................................................................4

Savings Account............................................................................................................................4

Features Of a Savings Account......................................................................................................5

Benefits of a Savings Account.......................................................................................................6

Fixed Deposit (FD)........................................................................................................................6

Some benefits of FD’s are:............................................................................................................6

Conclusion.........................................................................................................................................7

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What is a Bank

Banking is described as the business of taking and securing money held by other people and
companies and then lending it out to execute economic activities such as creating a profit or
merely covering operational expenditures. Central banks are in charge of currency stability
above everything else. A bank is a type of financial institution permitted to accept deposits
and provide loans. Commercial/retail and investment banks are two of the most popular
banks. A bank may offer various financial services, ranging from safe deposit boxes and
currency exchange to retirement and asset management, depending on its nature.

What is Banking
Banks in the United States of America are governed by the Federal Reserve Bank of New
York, one of the world's largest central banks; the Bangladesh Bank regulates banks in
Bangladesh. Currency stability is the responsibility of central banks. They control money
demand and supply in the market, manage inflation, and prescribe monetary policy.
Commercial or retail banks provide a variety of services, including collecting money deposits
and withdrawals, offering basic checking and savings accounts, certificates of deposit, issuing
debit and credit cards to qualified customers, and providing short- and long-term loans such
as car loans, home mortgages, and equity line of credits. The services of investment banks are
geared toward business clients. They offer various investment services, including mergers
and acquisitions and underwriting.

Why Bank is Important

But why is this so significant? Because persons who are unbanked or underbanked cannot
take advantage of services that lead to financial security. Many people must use services
outside the banking system to cash checks or borrow money, incurring unnecessary
transaction fees and interest. Here are some of the reasons why banking is at the top of the list
of financial literacy pillars.

 Safeguard your cash

 Manage your finances – record keeping and budgeting
 Receive your paycheck quickly using direct deposit
 Facilitate financial transactions
 Insure your liquid assets

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  Use debit and credit card services
 Earn interest
 Borrow loans
 Invest your money
 Establish a credit history to generate a FICO credit score instrumental in borrowing
funds and building wealth

What Are Bank Deposits and How Do They Work?

Money is deposited in banking organizations for safekeeping and is referred to as a bank

deposit. These funds are deposited into deposit accounts such as savings, checking, and
money market accounts. According to the terms and conditions of the account agreement, the
account holder has the right to withdraw deposited funds.

The deposit is a responsibility due to the depositor by the bank. This responsibility, rather
than the actual monies placed, is referred to as a bank deposit. When a person establishes a
bank account and deposits cash, he relinquishes legal ownership of the capital, which
becomes a bank asset. As a result, the account is a bank obligation.

Types of Bank Deposits

Current (Demand Deposit) Account

A simple checking account, often known as a demand deposit account, is a current account.
Consumers deposit money, which may be taken on-demand as the user chooses. Bank cards,
cheques, and over-the-counter withdrawal slips are frequently accepted as withdrawal
methods from these accounts. Banks may impose monthly fees for current accounts in some
situations. Still, they may eliminate the price if the account user satisfies additional
conditions, such as setting up a direct deposit or transferring a particular amount of money to
a savings account regularly.

Features of a Current Bank Account

A current bank account is one of the primary requirements for starting a business. These
days, banks offer several attractive offers and benefits on current accounts to match the
diversified needs of businesses. Listed below are some of the basic features of a current bank
account:

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  A current account allows transactions beyond the scope of a savings account
 Compared to savings account, a current account requires a higher minimum balance
 It is designed to facilitate frequent transactions – transfer funds, receive cheques,
cash, etc.
 A current account can be operated by individuals, proprietary concerns, public and
private companies, associations, trusts, etc.
 No restriction on the number of transactions in a day
 Non-maintenance of the minimum balance can attract penalty charges
 Just like savings account, KYC guidelines are to be followed even for current
accounts
 For a single business, there cannot be multiple current accounts
 The prime objective of current account is to facilitate smooth transactions for
businesses
 Nowadays, some banks offer interest rates on current accounts as well
 Current accounts charge interests on short-term funds the account holder has
borrowed from the bank

Benefits of a Current Account

 Allows for prompt business transactions
 No limit on withdrawals
 No limit on deposits in the home branch
 Enables people in business to make direct payments using cheques, demand drafts, or
pay orders
 Provides overdraft facility
 Provides internet banking and mobile banking facilities

Savings Account
Savings accounts offer account holders interest on their deposits. However, in some cases,
account holders may incur a monthly fee if they do not maintain a set balance or a certain
number of deposits. Although savings accounts are not linked to paper checks or cards like
current accounts, their funds are relatively easy for account holders to access.

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In contrast, a money market account offers slightly higher interest rates than a savings
account. Still, account holders face more limitations on the number of checks or transfers
they can make from money market accounts.

A savings account allows you to get a monetary return on funds you have saved for future
needs through the interest rate. Interest rates can be compounded daily, weekly, monthly, or
annual basis. Savings accounts vary by monthly service fees, interest rates, a method used to
calculate interest, and minimum opening deposit.

Features Of a Savings Account

Savings Accounts usually come with certain advantages which makes a perfect investment choice.
They also come with additional features that make them more suitable for certain purposes. Here is a
list of features of Savings Account to help you understand why a Savings Account might be just what
you need:

 Easy Transactions: You can use your Savings Account to send and receive payments. This
can be done through Net Banking, or through your Debit/ATM Card. This feature cuts down
the dependency on cash for all transactions, especially when it comes to payment of bills.
 Payment of Bills: These days, banks offer payment facilities such as BillPay with Savings
Accounts. This enables account holders to make payments for utilities such as electricity,
water and phone recharges directly from their account.
 ATM facility: Should you feel the need to withdraw cash, then you can do so from your
Savings Account via an ATM. Most banks have their ATM branches spread all over the
country. But in case you cannot find one in your vicinity, and the need for cash is too
pressing, then you can access your account from another bank’s ATM as well. All you need is
your ATM/debit card.
 Debit Card: Banks provide Savings Account holders with ATM/Debit Card not just for
accessing the account through the ATM, but also for making payments, whether at the
merchant’s store, or through an online payment gateway.
 Savings interest rates: With every Savings Account, banks offer an interest rate enabling
your idle money to grow over time.
 Cross Product benefits: Some banks offer their Savings Account holders cross product
benefits. This means that if you already have a Savings Account with the bank, then you will
get special benefits and offers in case you decide to open another account with the same bank
or want to avail of any of their other products.

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Benefits of a Savings Account
 Easy Access: Savings accounts offer easy access to your cash. In other words, your
money is liquid and can be easily withdrawn with cheque book or debit card.
 Bank Savings account grows your money: When you have money in a bank savings
account, your money earns interest. This is a nice feature. Your bank savings account
pays a rate of return on all the money in the account. That means that you get "paid"
for keeping your money in the account. If you were not going to use the money
anyway, then getting paid a little is better than nothing. When you have money in a
bank savings account, your money earns interest. This is a nice feature. Your bank
saving when you have money in a bank savings account, your money earns interest.
 Savings account keeps your money safe: The safest thing to do with your money is
to put it into a savings account. If you carry the money around with you, you might
lose it. If the money is under your mattress, your house could burn down or be
robbed. However, if the money is in a bank savings account, your banking institution
is responsible for the safekeeping of that money. If the bank burns down, your money
won't go with it, and any reputable bank will not just lose your savings.

Fixed Deposit (FD)

A fixed deposit (FD) is a financial instrument provided by banks or NBFCs which provides
investors a higher rate of interest than a regular savings account, until the given maturity date.
It may or may not require the creation of a separate account. It is known as a term deposit or
time deposit in Canada, Australia, New Zealand, India and The United States, and as a bond
in the United Kingdom and for a fixed deposit is that the money cannot be withdrawn from
the FD as compared to a recurring deposit or a demand deposit before maturity. Some banks
may offer additional services to FD holders such as loans against FD certificates at
competitive interest rates. It's important to note that banks may offer lesser interest rates
under uncertain economic conditions.

Some benefits of FD’s are:

 Customers can avail loans against FDs up to 80 to 90 percent of the value of deposits.
The rate of interest on the loan could be 1 to 2 percent over the rate offered on the
deposit.
 Residents of India can open these accounts for a minimum of seven days.

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  Investing in a fixed deposit earns customers a higher interest rate than depositing
money in a saving account.
 Tax saving fixed deposits are a type of fixed deposits that allow the investor to save
tax under Section 80C of the Income Tax Act.

Besides these three types of accounts, banks may also offer the following
types of accounts:
• Home Savings Account

• School Savings Account

• Women's Savings Account

• Laborers' Savings Account

• Insurance Savings Account

• Foreign Exchange Savings Account

• Post Office Savings Account

• Deposit Pension Scheme Account

• Loan Deposit Account

• Recurring/ Repeated Deposit Account on maturity

Conclusion

Banks are vulnerable to illiquidity and insolvency. Because of banks’ importance to the
economy, most governments have chosen to implement a financial safety net to deal with
such contingencies. A system of depositor protection that guards the holders of small deposits
when their bank fails has in recent years become part of this safety net in a growing number
of countries. A well-designed system of deposit insurance can strengthen incentives for good
governance for banks (via strong internal governance from owners and managers, firm
discipline from the markets, and effective bank supervision bank regulation).