CURRENT ACCOUNTS

 Is a form of demand deposit, which are repayable on demand and

constitute demand liabilities of the bank.
 No restrictions on the deposit/withdrawal
 Suitable for the requirements of business, trade, joint stock companies,
institutions, public entities whose daily transactions are numerous.
 No interest will be paid on this account (exception- If an account holder in
his single name or in the name of sole proprietory firm dies, simple interest
applicable to SB accounts can be paid on the credit balance from the date of his
death till the date of payment to the legal heirs)
Apart from the business/trading entities, current accounts can also be
opened for:

 All Scheduled Banks

 All apex co-operative Banks
 All district co-operative Banks
 All land mortgage banks
 All urban co-operative banks
Opening and operations of Current accounts

Cash deposit to be the first credit in the account. All accounts must be
introduced properly.

Before opening a current account of a company or firm, banks should ensure

that they do not enjoy any credit facilities with any other bank. This is to
discourage the likely misuse of such accounts to avoid the credit discipline.
Banks should obtain a declaration to this effect from the party. If they are
already enjoying credit facility with other bank, bank should obtain a
declaration about the particulars and the concerned lending branch/bank
should be duly informed and a credit report to be obtained and kept on record.

Whenever notices are received from IT officers under Sec.133 of the IT Act
1961, requiring banks to earmark the amount in a party’s account or asking
for any information about the account of a customer, it should be ensured that
such instructions are definite and not vogue or of a roving nature.
Inoperative Accounts

All current accounts where there are no operations for two years, should be
treated as inoperative accounts
 SAVINGS BANK ACCOUNTS

Savings Bank accounts means a form of deposit account primarily means for
developing the habit of savings among the public.

 These are major component of CASA deposits relatively stable in nature.

 There are restriction on number of withdrawals.
 Account can be opened in the names of one or more persons.
 Can be opened and operated in the name of minor provided the minor is
10 years of age or above, able to read and write and capable of signing
uniformly.
 Can be opened in the name of HUFs, provided the HUF is not engaged in
trading and business activity, preferably opened in the name of Karta.
 Cannot be opened in the name of Sole Proprietorship, Partnership Firms
and Companies they are engaged in in trading or business activities.
 Accounts in the name of Clubs, Societies and Associations can be opened
subject to their satisfying conditions stipulated by RBI. No interest will
be paid in such accounts unless specifically authorized by RBI.
 Accounts of Trusts, Executors and Trustees can be opened by banks. No
interest will be paid in such accounts unless specifically authorized by
RBI.
 No bank can open any savings bank accounts in the name of any other
bank, including RRBs, Co-operative Banks, Land Development Banks.
 Banks cannot open savings accounts of professional concerns like
Chartered Accountants, lawyers etc. Personal accounts in the individual
names can be opened.
 Interest in the savings bank accounts of resident Indians has been
deregulated by RBI w.e.f.25.10.2011
 Interest is paid half yearly based on the daily product.
 If no transactions in the account for over a period of 2 years, then it will
be treated as Dormant.
Unclaimed Deposits

If an account is not operated for a period of 10 years or any amount is

unclaimed for 10 years, it should be transferred to Depositor Education and
Awareness Fund (DEAF) within a period of 3 months from the expiry of the
said period(as per Sec.26A of BR Act 1949). This fund will be utilized for
promotion of depositors’ interest and educating them as specified by RBI
from time to time.

The depositor would, however, be entitled to claim from the bank his/her
deposit even after the expiry of ten years and after the transfer of funds to
DEAF. The bank would be liable to pay the amount to the
depositor/claimant and claim refund of such amount from the Fund.
Basic Savings Bank Deposit Account (BSBDA)

As a part of Financial Inclusion and as directed by the RBI, Banks

introduced BSBD accounts.

Salient features of BSBDA

 No minimum balance requirement

 No limit to the number of deposits, but max 4 withdrawals will be
allowed in a month, including ATM withdrawals
 No other charges
 Holders will not be eligible to open any other SB accounts
 Aggregate of all credit in a financial year should not exceed Rs.1.00
lakh.
 Aggregate of all withdrawals and transfers in a month should not
exceed Rs.10,000/-.
 Balance at any time should not exceed Rs.50,000/-
 TERM DEPOSIT

- Term Deposit is deposit which is repayable on a fixed date or after

a period of notice ie., not repayable on demand.
- Overdue deposits are term deposits which are not withdrawn on
maturity dates. Overdue deposits are demand deposits.
- Recurring Deposits or cumulative deposits are deposits of equal
amounts deposited monthly over a period and the maturity
amount will be paid on the maturity date.
- Min.Period- 7 days for a deposit of Rs.15 lakhs and above and 15
days for amount less than Rs.15 lakhs.
- Generally accepted FD for a period not exceeding 120 months. In
special cases, under court order or where interest of a minor is
involved or Govt undertakings, corporate bodies to meet their
special needs etc, banks may open the accounts for periods over
10 years. However, the period of deposits should not exceed 20
years.
- Generally minimum deposit is Rs.1000/-
- Can be opened as payable to ‘Either or Survivor’, Jointly, Former
or survivor, Latter or survivor.
- Nomination facility is also available.
- Intimation for renewal may be sent. If the customer does not
require, it need not be sent.
- If the customer does not give any instruction for renewal, bank
automatically renews the deposits. If the deposit is kept for more
than 1 year, the automatic renewal will be for 1 year. If it is less
than 1 year, the deposits will be renewed for the same period.
- Generally Banks should not pay the proceeds to a third party
unless the receipt is discharged and is accompanied by a separate
letter of authority signed by the depositor(s).
- Nominee vis-à-vis legal heirs
- Prepayment penalty of 1 % for the applicable period.
- If the principal and interest is Rs.20,000/- or more, the repayment
should be made by means of A/c payee cheque/draft or by
crediting the account of such depositor.(I T Act 1961).
- Advance against the FD may be granted by keeping a margin of 5
to 10 % on the amount of deposit with interest rate from 1 to 2 %
over the deposit rate. Loan to third parties at a higher rate of
interest.
Tax Saver 5 year deposit scheme

- Can get tax deduction under Sec. 80 C of IT Act 1961

- Maturity period is fixed as 5 years. Tax deduction on amount
invested upto Rs.1,50,000- in a financial year.
- Premature withdrawal is not available
- No loan can be availed against this type of deposit.
- Interest earned from this deposit is taxable and the tax is deducted
at source.
 RECURRING DEPOSITS

Accepted in pre-determined monthly instalments of Rs.100/- or in multiples

thereof for the minimum period of 6 months and in multiples of 3 months upto
120 months. Amount of monthly instalment or period selected at the time of
opening a recurring deposit account cannot be subsequently changed. Interest
is compounded quarterly.
Conclusion

Traditionally banks in India have four types of deposit account, namely,

Current Account, Savings Bank Accounts, Fixed Deposit accounts and
Recurring Deposit accounts. Over a period of time, several banks introduced
new products by combining the features of two or more deposit accounts with
different names viz., Power Saving Deposit Accounts, Super Saving accounts,
Automatic Sweep Deposit etc.