TYPES OF
ACCOUNTS IN A
BANK
VIGNESH 14SJCCC136
ADITI A 14SJCCC137
BENITA A 14SJCCC138
BRIJESH S 14SJCCC139
In India, banks usually have four major types of deposit accounts –
Current Account, Savings Account, Recurring Deposit and Fixed
Deposit. Recently banks have also introduced combining features of
these accounts as per customer and market requirements. But still these
accounts are not popular among the public and the traditional four
accounts are considered above all.
PROCEDURE TO OPEN AN
ACCOUNT
• Receiving duly-filled-in account opening form
• Obtaining two copies of photograph
• Obtaining introduction or reference and following it up
• Obtaining specimen signatures
• Obtaining mandate
• Receiving initial deposit
• Opening customer’s account
• Handing over the pay-in slip book, cheque book and pass book
CURRENT ACCOUNT
Current accounts are usually for businessmen and daily transactions. It doesn’t
serve a purpose of saving your investments. The transaction facility to this
account is so flexible that you can make innumerable transactions in a day.
Hence, the banks don’t pay any interest on your invested amount but it charges
certain service charges on such accounts.
FEATURES
• An account generally opened by business people for convenience.
• Money can be withdrawn and deposited at any time.
• Withdrawal is possible only by means of cheques.
• Banker generally does not allow any interest on this account.
• Two basic privileges which customers can enjoy are :
- Overdraft facility.
- Other facilities like collection of cheques, transfer of money and
rendering agency and general utility services.
• Banker charges interest on overdraft on day-to – day basis.
• Current account holders must keep a minimum balance of Rs. 5000/1000-
to keep the account running(varies according to Banks)
• If this minimum is not maintained, charges would be charged periodically
(varies according to Banks)
• Bank sends “Statement of Account” to customers every month.
• As deposits here are to be paid on demand, the banker should keep a
minimum cash reserve.
PROS OF CURRENT ACCOUNT
• Easy, fast access to your funds
• Fast, easy and charge-free transfers of funds for bill payments
• Package accounts provide additional money-saving benefits
• Overdraft facilities
• Electronic payment facilities
• Cheque book facility for cashless payments
• Specialized accounts for different customer groups; increasing the likelihood of
good-value services
• Management of regular payments
• Online, electronic management of money available
• Access to money abroad without the need to exchange cash
CONS OF CURRENT ACCOUNT
• Usually low interest rates
• Special services may incur heavy charges
• Security of electronic transfer and card payments can be
compromised
• Paperwork and terms and conditions can be confusing and
time-consuming
• Large corporate businesses may pay large fees on transactions
• Losing a card can restrict access to funds
• Chance of fraud when using internet banking
Savings Accounts are the SAVINGS ACCOUNT
most popular kind of
individual accounts for
personal purpose of saving
your investments and getting
interest rates. Savings
account provides cheque
facility along with flexibility
for deposit and withdrawal of
funds from your account.
FEATURES
• Meant for Small Savers primarily.
• Restrictions on withdrawals.
• Minimum balance Rs 500- Rs 1000 – this varies with different banks;
Rs 10000 for ICICI, HDFC Etc..
• Interest on deposit.
• No overdraft facility. It can be sanctioned though.
• ATM cards available, net banking and mobile banking facility available.
• Cheques collected on this account.
• Nomination facility available.
• Letter of introduction required to open an account.
• Fulfilling of KYC norms.
• SB facility available with Post Office.
• Account can be closed after one year. Incase of early closure, a service
charge of Rs. 100 will be levied.
PROS OF SAVINGS ACCOUNT
• Saving account encourages savings habit among salary earners and others who have
fixed income.
• It enables the depositor to earn income by way of saving bank interest.
• Saving account helps the depositor to make payment by way of issuing cheques.
• It shows income of a salaried and other person earned during the year.
• Saving account passbook acts as an identity and residential proof of the account holder.
• It provides a facility such as Electronic fund transfer (EFT) to other people's accounts.
• It helps to do online shopping via facility like internet banking.
• It aids to keep records of all online transactions carried on by the account holder.
• It provides immediate funds as and when required through ATM.
• The bank offers number of services to the saving account holders.
CONS OF SAVINGS ACCOUNT
• Low Returns
• Withdrawal Limitations
• Minimum Balance Requirements
• Missed Opportunities
FIXED DEPOSIT
• Fixed deposit (FD) is a financial instrument
where a sum of money given to a bank,
financial institution or company whereby the
receiving entity pays interest at a specified
percentage for the time duration of the
deposit. The rate of interest paid for fixed
deposit vary according to amount, period and
from bank to bank. At the end of the time
period of the deposit the amount that is
originally given is returned to the investor.
FEATURES
• Repayable after the specific time period.
• Emergency Closure.
• Penalty.
• Interest payable.
• Possibility of monthly payment.
• Nomination Facility.
Given below are the Highest Rate of Interest or the maximum rate
of interest on Fixed Deposits in certain buckets offered by banks in
India in 2015 (in the first week of february 2015 )
PROS OF FIXED DEPOSIT
• Fixed deposit encourages savings habit for a longer period of
time..
• Fixed deposit account enables the depositor to earn a high
interest rate.
• Safety of your future
• Risk free
• The bank can lend such funds for short term loans to
businessmen.
CONS OF FIXED
DEPOSITS
• Protection against inflation.
• Withdrawing funds
• The risk factor
• Income tax.
Recurring deposits also
known as RD accounts who
RECURRING DEPOSIT
wish to invest an average
amount of their savings on a
monthly basis. These
accounts gain interest on the
amount available in your
account. This account is
specially designed for the
working public who don’t
want to invest a large amount
at one instance.
FEATURES
• The main objective of recurring deposit account is to develop
regular savings habit among the public.
• In India, minimum amount that can be deposited is Rs.10 at
regular intervals.
• The period of deposit is minimum six months and maximum
ten years.
• No withdrawals are allowed. However, the bank may allow to
close the account before the maturity period.
• The bank provides the loan facility.
PROS OF RECURRING DEPOSIT
ACCOUNT
• Recurring deposit encourages regular savings habit among the people.
• Recurring deposit account holder can get a loan facility.
• The bank can utilize such funds for lending to businessmen.
• The bank may also invest such funds in profitable areas.
• No TDS is applicable on recurring deposits.
CONS OF RECURRING DEPOSIT
ACCOUNT
• You cannot withdraw the money anytime you wish
• You cannot change the amount you like to invest monthly
once decided.
• It has a comparatively lower rate of interest.
COMPARISON
CURRENT
POINT OF
COMPARISIO ACCOUN SAVINGS
N T ACCOUNT
•Purpose •Many transaction • To encourage saving
•Ideal for •Business person •Salaried person
•Over Draft •Allowed •Not Allowed
•Interest Rates •Normally, no interest is paid •4% - 6%
•Minimum Amount •Higher amount •Less amount
COMPARISON
FIXED DEPOSIT RECURRING DEPOSIT
• Money deposited only once • Money deposited several times
• Can be opened for a short • It is generally opened for a few years
period • Minimum deposit required is less
• Minimum deposit required is more • Slightly lesser rate of interest
• Higher rate of interest • Withdrawal can be done through
• Withdrawal can be done through surrender of pass book
surrender of fixed deposit receipt
THANK
YOU
