Commercial banks rely mainly on deposits to fund their operations. They accept various deposit types like current accounts, savings accounts, fixed deposits, and recurring deposits. Current accounts are meant for businesses and offer chequebook facilities and overdrafts but no interest. Savings accounts encourage personal savings and offer modest interest rates. Fixed deposits allow higher interest for locking away funds longer, while recurring deposits build savings with regular installments. Non-resident accounts serve Indian citizens living abroad.

1. Prof. Isha Jaiswal

2.  Deposits are the main source of funds for
commercial banks, which play a very important
role in the economic life of the country through
their assistance to trade, commerce, industry and
agriculture.
 One of the main functions of commercial banks is
to accept deposits of various types on different
terms and conditions.

3. 1) Current Account
2) Saving Account
3) Fixed Deposits Account
4) Recurring Account
5) Non-residents’ Account

4. Current Accounts are basically meant for
businessmen and are never used for the purpose of
investment or savings. These deposits are the most
liquid deposits and there are no limits for number
of transactions or the amount of transactions in a
day. Most of the current account are opened in the
names of firm / company accounts. Cheque book
facility is provided and the account holder can
deposit all types of the cheques and drafts in their
name or endorsed in their favor by third
parties. No interest is paid by banks on these
accounts. On the other hand, banks charges
certain service charges, on such accounts.

5.  The main objective of Current Account holders in
opening these account is to enable them to conduct
their business transactions smoothly.
 (b) There are no restrictions on the number of times
deposit in cash / cheque can be made or the amount
of such deposits.
 (c) Usually banks do not have any interest on such
current accounts. However, in recent times some
banks have introduced special current accounts
where interest is paid.
 (d) The current accounts do not have any fixed
maturity as these are on continuous basis accounts.
 Overdraft facility is given to current account
holder.

6.  Segregate business finance from personal finance.
 Professionalism in business.
 Ability to prove credit worthiness.
 Overdraft facility.
 Ease in banking transactions

7.  Commercial bank, co-operative banks, public
sector banks (like State bank of India, Bank of
India, etc.) and postal departments accept deposits
by way of opening saving bank account with them.
 The 'saving account' is generally opened in bank
by salaried persons or by the persons who have a
fixed regular income. This facility is also given to
students, senior citizens, pensioners, and so on.
 Saving accounts are opened to encourage the
people to save money and collect their savings.

8.  The main objective of saving account is to promote savings.
 In India, mandatory PAN (Permanent Account Number) details are
required to be furnished for doing cash transactions exceeding
र50,000.
 Withdrawals are allowed subject to certain restrictions.
 The money can be withdrawn either by cheque or withdrawal slip
of the respective bank.
 The rate of interest payable is very nominal on saving accounts.
At present it is between 4% to 6% p.a in India.
 Saving account is of continuing nature. There is no maximum
period of holding.
 A minimum amount has to be kept on saving account to keep it
functioning.
 No loan facility is provided against saving account.
 Electronic clearing System (ECS) or E-Banking are available to
pay electricity bill, telephone bill and other routine household
expenses.

9.  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.
 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.

10.  Fill the account opening form. The vital points are name,
address, occupation and the amount to be deposited.
 Provide declaration of accepting the rules and regulations of
bank.
 An existing customer of the bank should introduce you to
the bank or from a respectable citizen known to the bank.
 The following are the documents to be submitted for
accounting opening procedure:
 Photocopy of Voter ID or Passport
 Address Proof
 Passport size photographs – 2
 After submission, the bank complete the paper work and
process your account opening form. On its completion the
bank will send cheque book and debit card via post.

11.  Banks in India offer fixed deposits schemes with a wide range of
tenures for periods from 7 days to 10 years.
 These are also popularly known as FD accounts. However, in some
other countries these are known as "Term Deposits" or even called
"Bond".
 The term "fixed" in Fixed Deposits (FD) denotes the period of
maturity or tenor. Therefore, the depositors are supposed to continue
such Fixed Deposits for the length of time for which the depositor
decides to keep the money with the bank.
 However, in case of need, the depositor can ask for closing the fixed
deposit prematurely by paying a penalty .
 The rate of interest for Fixed Deposits differs from bank to bank.
 In the changed computerized environment, now the Interest payable
on Fixed Deposit can also be easily transferred on due dates to
Savings Bank or Current Account of the customer.

12.  The main purpose of fixed deposit account is to enable the
individuals to earn a higher rate of interest on their surplus
funds.
 The amount can be deposited only once. For further such
deposits, separate accounts need to be opened.
 The period of fixed deposits range between 15 days to 10
years.
 The rate of interest may vary as per amount, period and
from bank to bank.
 Withdrawals are not allowed. However, in case of
emergency, banks allow to close the fixed account prior to
maturity date. In such cases, the bank deducts 1% from the
interest payable as on that date.
 The depositor is given a fixed deposit receipt, which
depositor has to produce at the time of maturity. The deposit
can be renewed for a further period.

13.  Fixed deposit encourages savings habit for a longer
period of time..
 Fixed deposit account enables the depositor to earn a
high interest rate.
 The depositor can get loan facility from the bank.
 On maturity the amount can be used to make purchases
of assets.
 The bank can get the funds for a longer period of time.
 The bank can lend such funds for short term loans to
businessmen.
 Fixed deposits indirectly boost economic development
of the country.
 The bank can also invest such funds in profitable areas.

14.  These are popularly known as RD accounts and are special kind of Term
Deposits and are suitable for people who do not have lump sum amount of
savings, but are ready to save a small amount every month.
 Under these type of deposits, the person has to usually deposit a fixed amount
of money every month. Any default in payment within the month attracts a
small penalty. However, some Banks besides offering a fixed installment RD,
have also introduced a flexible / variable RD. Under these flexible RDs the
person is allowed to deposit even higher amount of installments, with an
upper limit fixed.
 These accounts can be funded by giving Standing Instructions by which bank
withdraws a fixed amount on a fixed date of the month from the saving bank
of the customer (as per his mandate), and the same is credited to RD account.
 Recurring Deposit accounts are normally allowed for maturities ranging from
6 months to 120 months. A Pass book is usually issued wherein the person
can get the entries for all the deposits made by him / her and the interest
earned.
 Premature withdrawal of accumulated amount permitted is usually allowed
(however, penalty may be imposed for early withdrawals).
 These accounts can be opened in single or joint names. Nomination facility is
also available.

15.  Recurring Deposit schemes aim to inculcate a regular habit of
saving among the public.
 Minimum amount that can be deposited varies from bank to bank.
 The minimum period of deposit starts at six months and the
maximum period of deposit is ten years.
 The rate of interest is equal to that offered for a Fixed Deposit and
is hence higher than any other Savings scheme.
 Premature and mid term withdrawals are not allowed. However,
the bank may allow to close the account before the maturity
period, sometimes with a penalty for premature withdrawal.
 RD offers the additional benefit of taking loan against the deposit,
i.e., by using the deposit as a collateral. About 80 to 90% of the
deposit value can be given as loan to the account holder.
 The Recurring Deposit can be funded periodically through
Standing Instructions which are the instructions given by the
customer to the bank to credit the Recurring Deposit account
every month from his/her Savings or Current account.

16.  Fixed monthly investment: A recurring deposit fixed monthly
investment builds up a savings discipline which is otherwise very
tough to have in today’s society which is so spend oriented.
 Fixed duration: The investment in a recurring deposit comes with
a clear horizon. This allows the customer to plan for certain
predictable events in their lives.
 Fixed rate of interest: The rate of interest is locked-in in a
Recurring Deposit, which as compared to certain other investment
instruments insulates the customer from swings in the interest
rates.
 No TDS is applicable on recurring deposits
 Ease of investment: As a customer you can give a Standing
Instruction over your savings account to fund your Recurring
Deposit with a fixed value every month. This makes it very easy
to operate recurring deposits without actually visiting the bank
branch.

17. Non-Resident bank accounts are those, which are
maintained by Indian nationals and persons of Indian
origin resident abroad. Bank branches can open
ordinary non-resident accounts in the names of
private individuals provided initial deposits for
opening the accounts are received from abroad in an
approved manner or the initial amount is tendered in
foreign currency while on a visit to India or transfer
of funds from the existing non-resident account of
the same person. RIs / PIOs / OCBs are permitted to
open bank accounts in India out of funds remitted
from abroad, foreign exchange brought in from
abroad or out of funds legitimately due to them in
India, with an authorized dealer. Such accounts can
be opened with banks specially authorized by the
Reserve Bank in this behalf.

18.  These are Rupee denominated non-repatriable accounts and can be in the
form of savings, current, recurring or fixed deposits. These accounts can
be opened jointly with residents in India. When an Indian National
resident in India leaves for taking up employment, etc. outside the
country, his bank account in India gets designated as NRO account.
 The deposits can be used to make all legitimate payments in rupees.
 Interest income, from NRO accounts is taxable. Interest income, net of
taxes is reportable.
 NRO account can be funded through any of the following sources:
1. By proceeds of foreign exchange remittance from abroad through
banking channels in an approved manner
2. By proceeds of foreign currency notes and traveler cheques
brought into India by the non-resident while on a temporary visit
to India
3. By transfer from an existing non-resident account in the name of
the same person
4. By funds from a local source representing bonafide transactions in
rupees

19.  These are rupee denominated accounts and can be in the form of savings, current, recurring or
fixed deposit accounts. Accounts can be opened by remittance of funds in free foreign
exchange. Foreign exchange brought in legally, repatriable incomes of the account holder, etc.
can be credited to the account. Joint operation with other NRIs/PIOs is permitted. Power of
attorney can be granted to residents for operation of accounts.
 The deposits can be used for all legitimate purposes. The balance in the account is freely
repatriable. Interest lying to the credit of NRE accounts is exempt from tax in the hands of the
NRI. Funds held in NRE accounts may be freely transferred to FCNR accounts of the same
account holder. Likewise, funds held in FCNR accounts may be transferred to NRE accounts
of the same account holders.
 Immediately upon return of the account holder to India and on his becoming a resident in
India, NRE Account will be re-designated as Resident Rupee Account or converted to RFC
account as per the option of the account holder. However, if the account holder is only on a
short visit to India, the account will continue to be treated as NRE account.
 The initial deposit in NRE account can be made in any of the following manners:
1. By proceeds of foreign exchange remittances from abroad through banking channels in an
approved manner
2. By proceeds of foreign currency notes and traveler cheques brought into India by the non-
resident while on a temporary visit to India
3. By transfer from an existing NRE Account of the same person