3. SAVINGS ACCOUNT
• A savings account is a type of bank account designed to help
individuals save money while earning interest on the balance.
• Interest rate in savings A/C is regulated by RBI.
• It has been designed to meet the needs of individuals.
• Savings account offers absolute liquidity and at the same time enable
the depositors to earn interest on the balance maintained.
4. FEATURES OF SAVINGS ACCOUNT
1. Interest Earnings:
• Interest rates on savings accounts in India typically range from 2.5% to 7% per annum, depending on
the bank and the account type.
• Interest is usually credited to the account quarterly or half-yearly.
2. Minimum Balance Requirements:
• Min. Balance to be maintained is Rs. 100 without cheque facility and Rs. 500 with cheque facility.
• Some banks offer zero balance savings accounts, particularly for specific categories like salary
accounts or accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY).
3. Passbook and Account Statements:
• Account holders receive a passbook or regular account statements detailing all transactions.
• Many banks also provide e-statements, which can be accessed online.
5. FEATURES OF SAVINGS ACCOUNT
4. Cheque Book Facility:
• Savings accounts generally come with a cheque book facility for making payments and withdrawals.
• Banks may charge for additional cheque books beyond a certain number.
5. Branch and ATM Network:
• Wide network of branches and ATMs for easy access to banking services.
• Banks often offer free or discounted ATM withdrawals within their own network and may charge for
withdrawals from other bank ATMs beyond a certain number of transactions.
6. Automatic Fund Transfers:
• Options for automatic transfer of funds to fixed deposits or recurring deposits, helping account
holders earn higher interest.
6. CURRENT ACCOUNT
A current account, also known as a
checking account, is a type of bank
account designed primarily for
businesses, firms, companies, and
other entities that require frequent
and substantial transactions.
7. FEATURES OF CURRENT ACCOUNT
1 Minimum balance is 500 in rural and semi-urban areas and *1,000 in urban areas and metros.
₹
2. Account is not eligible for interest i.e. current accounts are non-interest bearing and banks are not
allowed to pay any interest or brokerage to the current accounts holders.
3.There are no restrictions on the number and amount of withdrawals/ deposits. Hence this account
is generally maintained for business purpose.
4. Cheque book facility is provided to each current accountholder and withdrawals are permit by
cheque in favour of self and also other parties.
5. Passbook, pass sheet, standing instruction are also available.
6. Helps in supporting day-to-day financial requirements.
7. Gives the advantage of maximum financial leverage for the customer's money thus saving time and
cost.
8. FEATURES OF CURRENT ACCOUNT
8. Overdrafts ad hoc for very short period or on regular basis up to specified limits are permitted in
current accounts. Regular overdraft facility is granted as per prior arrangement made by the
accountholder with bank.
9. Cheques/bills collection and purchase facilities may also be granted to the current
accountholders as per mutually agreed arrangements and charges.
10. Accountholder periodically receive statement of accounts for reconciliation and record letter
from the bank.The statement shows all the debit and credit transactions and balances, data wise, as
recorded in the bank's ledger account of the customer.
9. BENEFITS OF CURRENT A/C & SAVINGS A/C
Card
Convenienc
e
Easy & wide
accessibility
of money
Monitoring
Account
Sweep-in
Account
Money
Multiplier
Easy
Transaction
Other
benefits
11. TERM DEPOSIT/FIXED DEPOSIT
Term deposits are also called as fixed deposits and are repayable
after the expiry of the specified term varying from 7 days to 120
months.
Since fixed deposits are repayable only after the specific period, it is
not as liquid as savings deposits.
Due to low liquidity, the rate at which interest is paid on fixed deposits
is higher than on savings deposit. Normally, longer the period of the
deposit, higher is the rate of interest.
12. TERM DEPOSIT/FIXED DEPOSIT
All types of entities can make fixed deposits and the minimum amount of deposits
specified by various banks varies from 1,000 to *10,000 with additional deposits in
₹
multiples of 1,000.
₹
In case of repayment of deposit before the expiry of the deposit, interest will be
paid at the rate applicable to the period for which the deposit has remained with the
bank.
Different types of deposits are:
(a) Fixed deposit (b) Recurring deposit (c) Flexi deposits
13. FIXED DEPOSIT
Fixed deposits are repayable on the maturity date along with interest at an agreed
rate for the period. No operations are allowed to be performed by the customer
against the deposit, as permitted in demand deposits.
A type of an account opened by a customer where the money is deposited for a
longer period of time and to get a regular income, it is known as 'fixed deposit
account'. Like savings account and current account it also has nomination facility.
14. FEATURES OF FIXED DEPOSIT
(1) Fixed deposits are accepted for specific periods at specific interest rate as mutually agreed
between the depositor and the banker at the time of opening the account.
(2) The interest rate of fixed deposits, which were previously regulated by the RBI, have been
deregulated and bank offer varying interest rate for different maturities as decided by their
Boards.
(3) Minimum period of fixed deposit is 7 days, as per the extant directive of RBI.The maximum term
and bond of term maturities are determined by each bank along with the respective interest
rates for each bond.
(4) A deposit receipt is issued by bank branch accepting the fixed deposit - mentioning the
depositor's name, principal amount, maturity period & Interest rate, date of deposits and its
maturity.
15. RECURRING DEPOSIT ACCOUNT
A type of bank account where the customer makes a deposit on a periodical interval upto a certain
period of time is known as 'recurring deposit account'. This account is ideal for convenient
savings.
The deposit is made in as low an amount of 250 and It enables to build up sizeable capital in a
regular and in multiples of 50.There is no ceiling limits on the maximum amount.
₹
Nomination facility is available too.
Recurring Deposit (RD) account help people with regular income to save a fixed amount every
month and at the same time earn interest at the rate applicable to fixed deposits.
These are intended to inculcate regular and compulsory savings habit among the low/ middle
income group people for meeting their specific future needs, e.g. higher education, marriage of
children, purchase of vehicle, etc.
16. FEATURES OF RECURRING DEPOSIT A/C
1. The customer deposits a fixed sum in the account at pre-fixed frequency
(generally monthly/quarterly) for a specific period (12 months to 120 months).
2. The interest rate payable on recurring deposit is pre-fixed and is generally a little
lower than the fixed deposit rate for the same period.
3. The total amount deposited, is repaid along with the interest on the
date of maturity.
17. HYBRID DEPOSITS OR FLEXI DEPOSITS
A type of a deposit account operated by a banker which combines the advantages of
savings account and fixed deposit account. i.e. this deposits are a combination of demand
and fixed deposits, invented for meeting customer's financial needs in a flexible manner.
The new private sector and foreign banks had introduced this new deposit product some
years ago to attract bulk deposits from individual also with high net worth.This account
enables the consumer to earn maximum interest.
Banks have given their own brand names such deposit. e.g.
(i) Quantum Deposit Scheme of ICICI bank.
(ii) Multi Option Deposit Scheme (MODS) of SBI etc.
18. ADVANTAGES OF FLEXI DEPOSIT A/C
1. Higher Liquidity: Flexi deposits often allow partial withdrawals or premature closures without
significant penalties.This makes them more liquid than traditional fixed deposits, which usually
lock in your money for a fixed term.
2. Interest Rates: Some flexi deposit schemes offer competitive interest rates, often higher than
regular savings accounts and sometimes even higher than traditional fixed deposits, depending
on the bank's offerings and prevailing market rates.
3. Flexibility: As the name suggests, flexi deposits provide greater flexibility in terms of deposit
tenure and amount. Customers can usually make multiple deposits or withdrawals during the
tenure, which helps in managing their finances more effectively.
4. Interest Calculation: Interest on flexi deposits may be calculated on a daily or monthly basis,
rather than quarterly or annually.This frequent compounding can result in higher overall returns.
19. OTHER TYPES OF ACCOUNT
A. Resident Foreign Currency (Domestic) Account:
• It is a type of an account operated by a banker where it is possible for a customer to
deposit foreign currency in USD, GBP, and Euros.
• This account can be opened as a current account only.The account carries no
interest with it and there is no minimum amount for opening the account.
• Foreign exchange acquired in the form of currency notes, travellers cheques, gifts,
honorarium received outside India, gifts received from relatives and earnings
through the export of goods and services, can be credited to this account.
20. B. Non- Resident Indian (NRI) Account:
• Many major banks and financial institutions in India offer the facility of opening an
NRI account to Non-Resident Indians or Persons of Indian Origin (PIOs).
• This account is designed to cater to the specific banking needs and requirements of
the NRI community.
C. Reinvestment Deposit Account:
A type of a deposit account in which there is a facility of reinvestment of money
immediately after the expiry of the term of the fixed deposit. Apart from safety and
liquidity, if offers the highest growth option in the form of compounded interest.
21. Features of Reinvestment A/C
Minimum account balance is 1000.
₹
There is no maximum ceiling.
As regards the period of deposit, it ranges from the minimum of 5 months to
maximum of 120 months.
It offers high returns.
Usually interest is compounded every quarter.
Easy liquidity.
Closure before maturity
Loan against deposit permissible.
Nomination facility is available
22. D. Senior Citizen Deposit Account-
A type of account ( operated by the banker for the benefits of the senior citizens of the
country is known as 'Senior Citizen Deposit Account'.The objective of this type of account
is to respect the age of the people of the country.
The features of the senior citizen deposit account are as follows:
(a) Eligibility: Individuals, who have completed the age of 60 years and above, in single
or joint name, are eligible to open this account
(b) Joint Account: Accounts can be opened jointly with other senior citizens or with other
persons below the age of 60 subject to the condition that the senior citizen is number one
depositor.
(c) Proof of Age: At the time of opening of new deposit a certified copy of any of the
following documents may be produced: (i) Secondary school leaving certificate
indicating the date of birth. (ii) LIC Policy. (iii) Voters Identity Card. (iv) Pension Payment
Order. (v) Birth Certificate. (vi) Passport. (vii) Any other documents acceptable to the
bank.
23. (d) High returns: This account offers an attractive rate of interest
(e) Investment limit: Minimum is 1,000 and there is no maximum limit of deposit
₹
investment.
(f) Period of deposit: Period of deposit varies from 15 days to 120 months.
(g) Other features:
(i) Easy liquidity.
(ii) Loans against deposit permitted.
24. E. Floating Rate Deposit Account-
A type of account operated by a banker where the rate of interest payable on the deposit made by
a customer is allowed to vary is known as 'floating rate deposit account.
FEATURES:
1. Purpose:
(i) To provide a deposit scheme with a floating interest rate linked 91 days T-Bill rate.
(ii) To provide the depositor an option to invest in floating rate deposit scheme to take advantage
of interest rate fluctuation.
2. Eligibility:
(i) Individuals, both single or joint account.
(ii) A guardian on behalf of minor HUF, Partnership firm, company,Trusts, Association or any other
institution.
25. 3. Amount:
(i) Minimum 10 lakhs and in multiple of 1 lakhs, thereafter.
₹
(ii) There is no maximum ceiling.
4. Period of deposit:
(i) Minimum 6 months and maximum of 24 months.
(ii) Deposits can be made in multiples of month.
26. KNOWYOUR CUSTOMER
Prior to the introduction of "Know Your Customer (KYC)
guidelines by the RBI in 2002, the banking practice was to
obtain introduction for a new customer from an existing
account holder of satisfactory standing and for certain period
or from a staff member who knows the customer properly. The
purpose of this practice was for getting protection provided
under the Negotiable Instruments Act to a collecting
banker. After RBI guidelines on KYC the banks have been
advised not to obtain introduction. Every bank is required to
have a KYC Policy laying down the KYC.
27. KEY ELEMENTS OF KNOWYOUR CUSTOMER POLICY
(i) It is to be approved by the Board of Directors or any committee of the Board (if
delegated).
(ii) It should be reviewed regularly, at least once in a year.
(iii) Usually, the Principal Officer is responsible for keeping the KYC Policy updated
and relevant.
KYC Policy is a comprehensive document that contains norms related to handling of
the customer's business, organization set-up for various responsibilities, creating
awareness among customers and staff.
29. CUSTOMER ACCEPTANCE POLICY
The customer acceptance policy of a bank lays down the criteria for accepting a
customer from the perspective of ML (Money Laundering) risks. Customer
acceptance policy should include the following norms:
(a) No account is opened in anonymous or fictitious/benami name.
(b) No account is opened where appropriate customer due diligence measures
cannot be applied either due to non-cooperation of the customer or non-reliability
of the documents/information furnished by the customer.
c) No transaction or account-based relationship is undertaken without following the
CDD procedure.
d) Circumstances in which, a customer is permitted to act on behalf of another
person/entity, is clearly spelt out.
(e) To ensure that the identity of the customer does not match with any person or
entity, whose name appears in the sanction lists circulated by RBI.
30. (f) To verify Permanent Account Number (PAN) obtained through the facility of the issuing
authority.
(g) To verify the digital signature of an e-document given by the customer.
(h) The mandatory information to be obtained for KYC purpose during
on-boarding/periodic updation should be specified in the KYC Policy. (i) In case of joint
accounts, CDD procedure is to be carried out for all joint account holders.
Customer Acceptance Policy should not result in denial of banking/financial facility to
members of the general public, especially those, who are financially or socially
disadvantaged.
In case of non-compliance of the KYC guidelines by an existing customer, banks may
decide to close the account after giving due notice to the customer
32. STRENGHT OF INDIAN COMMERCIAL BANKS
Extensive
Network
Regulatory
Support
Adoption
of
Technology
Diverse
Product
Portfolio
Financial
Inclusion
Initiatives
Skilled
Workforce
33. WEAKNESSES OF INDIAN COMMERCIAL BANKS
High Non-
Performing
Assests
Operationa
l Ineffiency
Capital
Adequacy Issue
Limited
Penetration of
Advance
Banking
services
Dependence on
Govt. Policies
CyberSecurities
Risk
Low Profit
Margins
