Demand Deposits :
(a) Current account:
A current account is a running and active account that may be operated upon any number of times during a working day. There is no restriction on the number and the amount of withdrawals from a current account. Current accounts can be opened by individuals, business entities (firms, company), institutions, Government bodies / departments, societies, liquidators, receivers, trusts, etc. The other main features of current account are as under:
– Current accounts are non-interest bearing and banks are not allowed to pay any interest or brokerage to the current account holders.
– Overdraft facility for a short period or on a regular basis up to specified limits – are permitted in current accounts. Regular overdraft facility is granted as per prior arrangements made by the account holder with the bank. In such cases, the bank would honour cheques drawn in excess of the credit balance but not exceeding the overdraft limit. Prescribed interest is charged on overdraft portion of drawings.
– Cheques/ bills collection and purchase facilities may also be granted to the current account holders.
– The account holder periodically receives statement of accounts from the Bank.
– Normally, banks levy charges for handling such account in the shape of “Ledger Folio charges”. Some banks make no charge for maintenance of current account provided the balance maintained is sufficient to compensate the Bank for the work involved.
– Third party cheques and cheques with endorsements may be deposited in the current account for collection and credit.
(b) Current Deposits Premium Scheme:
This is a deposit product which combines Current & Short deposit account with ‘ sweep-in’ and ‘sweep-out’ facility to take care of withdrawals, if any. Besides containing all features of a current account, the product is aimed at offering current account customers convenient opportunity to earn extra returns on surplus funds lying in account which may not normally be utilized in the near future or are likely to remain unutilized. The automated nature of facility for “Sweep In or Sweep Out” of more than a specified limit of balance to be maintained and creating fixed deposits for desired period, would save lot of operational hassles and add-on value in such accounts. Thus, with this facility the customer shall be able to deploy his funds which in ordinary current account were not attracting any interest.
Sweep out from current to short deposits may be automatically when balance in the account is more than a specified limit or weekly or on specific days which may be on 1st & 16th of every month or once within a month as prescribed by an individual bank.
(c) Savings Account
Savings bank accounts are meant for individuals and a group of persons like Clubs, Trusts, Associations, Self Help Groups (SHGs) to keep their savings for meeting their future monetary needs and intend to earn income from their savings. Banks give interest on these accounts with a view to encourage saving habits. Everyone wants to save for something in the future and their savings should be safe and accessible anytime, anyplace to help meet their needs. This account helps an individual to plan and save for his future financial requirements. In this account savings are completely liquid.
Main features of savings bank accounts are as follows:
– Withdrawals are permitted to the account-holder on demand, on presentation of cheques or withdrawal form/letter. However, cash withdrawals in excess of the specified amount per transaction/day (the amount varies from bank to bank) require prior notice to the bank branch.
– Banks put certain restrictions on the number of withdrawals per month/quarter, amount of withdrawal per day, minimum balance to be maintained in the account on all days, etc. A fee/penalty is levied if these are violated. These rules differ from bank to bank, as decided by their Boards. The rationale of these restrictions is that the Savings Bank account should not be used like a current account since it is primarily intended for attracting and accumulating savings.
– The Bank pays interest on the products of balances outstanding on daily basis. Rate of interest is decided by bank from time to time.
– No overdraft in excess of the credit balance in savings bank account is permitted as there cannot be any debit balance in savings account.
– Most banks provide a passbook to the account-holder wherein date-wise debit credit transactions and credit balances are shown as per the customer’s ledger account maintained by the Bank.
– Cheque Book Facility Accounts in which withdrawals are permitted by cheques drawn in favour of self or other parties. The payees of the cheque can receive payment in cash at the drawee bank branch or through their bank account via clearing or collection. The account holder may also withdraw cash by submitting a withdrawal form along with Pass Book, if issued.
– Non-cheque Book Facility accounts where account holders are permitted to withdraw only at the drawee bank branch by submitting a withdrawal form or a letter accompanied with the account passbook requesting permission for withdrawal. In such cases third parties cannot receive payments.
– Almost all banks which provide ATM facility, give ATM cards to their accounts holder, so that they avail withdrawal facility 24 hours and all days at any place.
(d) Basic Savings Bank Deposit Account
With a view to making the basic banking facilities available in a more uniform manner across banking system, RBI has modified the guidelines on opening of basic banking ‘no-frills’ accounts’. Such accounts are now known as “Basic Savings Bank Deposit” Account which offers the minimum common facilities as under:-
– The account should be considered as a normal banking service available to all;
– No requirement of minimum balance;
– Facilitate deposit and withdrawal of cash at bank branch as well as ATMs;
– Receipt/credit of money through electronic payment channels or by means of cheques/ collection of cheques drawn by Central/State Government Agencies and departments;
– Account holders are permitted a maximum of four withdrawals in a month including ATM withdrawals;
– Facility of ATM card or ATM-cum Debit Card
– Facilities are free of charge and no charge would be levied for non-operation/activation of in-operative ‘Basic Savings Bank Deposit Account’;
– Holders of ‘Basic Savings Bank Deposit Account’ are not eligible for opening of any other savings bank accounts and existing such accounts should be closed down within a period of 30 days from the date of opening of ‘Basic Savings Bank Deposit Account’.
– Existing ‘no frills’ accounts can be converted to ‘Basic Savings Bank Deposit Account’
(e) Premium or Savings Bank Plus Account:
Premium Savings Account provides an enriched version of Savings Bank account consisting of various concessions and add-ons. It is suitable for High Net worth Individual/ Mass Affluent customers. The account will be linked to Multi Option Deposit (MOD) account, for auto sweep, for issue of Term Deposits and unitized break-up facilities. Any surplus funds in the account exceeding the threshold limit, for a minimum amount of Rs. 10,000 and in multiple of Rs. 1000 in any one instance, are transferred as Term Deposit and earns interest as applicable to Term Deposits. The account is useful to those persons who have surplus funds for an uncertain period and by keeping the fund in this Savings Bank account, they may get interest of term deposit. This account provides a customer the convenience of a Savings Bank Account along with higher return of Term Deposit.
(f) Deposit at Call Accounts:
Call deposits or deposit at call accounts are maintained by fellow banks with another bank which are payable on demand only. Some banks have put restriction of giving advance notice of a week or less than that when depositor requires payment of call deposits. These accounts may or may not fetch interest, as per the rules framed by the RBI or Indian Banks Association (IBA) from time- to-time.