the information about bank accounts (types of accounts)

1. WELCOME
INDIAN BANKING SECTOR
DESIGNED BY KRISHNA.V

3. BANK
SAVING’S
BULK
DEPOSIT
FIXED
DEPOSIT
CURRENT
RECURRING
ACCOUNTS

4. SAVINGS ACCOUNTS
 For individuals / small businesses
• Idea is to save a little out of their current incomes
• Also to make them earn some interest on their savings
 Minimum balance (varies from bank to bank)
• Normally Rs 500/- (without cheque book facility)
• Rs 1000/- (with cheque book facility)
(some banks allow premium savings a/c deposits with min. balance of Rs. 5000 to Rs. 25000/-)
 Banks offer zero balance accounts previously known as No-Frill accounts / BSBDA and now under
PMJDY
 Eligible for Resident Indians above 18 years age (for 10 to 18 years age group account is allowed with
some restrictions and for persons below 10 years, minor account with guardian is to be opened)
 Can be opened by individuals (single / jointly) and HUF’S
 Interest rates vary from 4% to 6% (Most of the banks offer 4% at present)
 They are classified as Demand Deposits as the customer can withdraw anytime.
Only minor portion is classified as time deposit
 Banks impose restrictions on the number of transactions in a specified period as well as maximum
amount that can be withdrawn (but not enforced strictly, because of stiff competition from other
banks)
DEPOSIT
SAVINGS
WITHDRAW

5.  Money can be withdrawn either by cheque or by withdrawal slip
 Minimum balance / minimum quarterly balance is to be followed (However, zero balance accounts / No-Frill
accounts / BSBDA / PMJDY are allowed by the banks, where maintaining minimum balance is not necessary)
 There is no maturity date as the savings account is continuous in nature.
 Regular monthly payments through ECS are allowed for payment of house loans, personal loans etc…
 As per the Banking Regulation Act 1949, the interest earned on savings account is not subject to TDS, as
savings accounts are demand deposits
 No tax is payable on interest earned on saving bank account up to Rs.10,000 per year i.e. interest income up
to Rs.10,000/- is exempted from income tax.
 From 25th October 2011, RBI has deregulated savings bank interest rates and now the banks are free to
decide the same within certain conditions imposed by RBI.
 From 1st April 2010, the interest is calculated on daily basis taking into account minimum balance available on
every day.
 Some banks have got facility to convert saving deposits into money multiplier schemes / multi option
deposits etc., to earn more interest.

6.  Firms and companies are eligible to open account
 Basically meant for business men, to run businesses
 Normally firms / companies / trusts / association of persons can open them
 It is also called running and active account
 Carry no interest on deposits
 No limit on either the number of transactions or the maximum amount of transaction
 Sometimes banks stipulate higher minimum balance depending on the services offered
 Overdraft facility (short term loan facility) is available
 Standing instruction facility is also available
CURRENT ACCOUNT

7. Transfer of account to any branch is highly liberalized
ATM /Debit card facility is available
Nomination facility is normally not available (Allowed only in
some cases)
Deposits and withdrawal of money (cash) at any location
Multi-location fund transfer
Support from customer care executives
Periodical download of bank statements in ‘XLS’, ‘TXT’, ‘PDF’
formats

8. FIXED DEPOSIT
ACCOUNTS
(TERM DEPOSITS)
FIXED ACCOUNT
 Can be operated for a tenure ranging from 7 days to 10 years
 Not payable on demand and do not enjoy cheque facility
 Interest rates increases with the time period
 Approx. 4.5% for 7 day period to 9% for 10 year period
 Interest rates will be slightly higher for senior citizens (60 + years
of age)
 Premature withdrawal of the deposits is possible, but it attracts
penalty at the rates varying from 0.5% to 1.5%
 If the deposits are Rs 1 crore or more, they come under the bulk
deposits and interest rates may vary further
 Interest will be paid at the contracted rate for the agreed period

9.  Loan facility is available up to 90% of the outstanding principal and accrued interest,
generally
 Interest is taxable (No exemption) and nomination facility is available
 Moreover, Tax Deduction at Source (TDS) will be ensured by the bank, if the interest
income is more than Rs.10,000/- in a financial year
 Once the tax is deducted, banks will give form no. 16 A to the depositor to show in
their IT returns
 If the depositor does not come in to the bracket of Income Tax purview, he can deposit
form no. 15G or 15H (for senior citizens) so as to avoid ‘TDS’ by banks
 Quoting PAN is made mandatory for FD’s of Rs. 50,000/- and above

10.  Most of the features are like fixed deposits
 It is a monthly deposit with the bank for an agreed period
 Interest is credited on the accumulated balance at regular intervals
 These are designed to induce small savers to save regularly
 Minimum period and minimum monthly deposit varies from bank to bank
 Maximum period is normally 120 months (10 years)
 Loan / overdraft facility is available up to 90% against the balance in RD account
 Nomination facility is available
 Interest is taxable, TDS is also applicable, as per the Budget 2015-16
 Penalty for premature closure
RECURRING DEPOSITS

11. BULK DEPOSITS
 Deposits of Rs 1 crore and above constitute bulk deposits
 Interest rates vary based on the quantum of deposit
 High interest rates, so the cost of funds is high
 Normally these deposits are obtained from High Net-worth Individuals (HNIs)
 Present limit of bulk deposits is 15% of their total deposits as it will increase cost of funds.
But,banks are not following these guidelines strictly
In a nut shell, these bulk deposits will be helpful to the banks to maintain asset
liability ratio, but it will increase the cost of funds.