This document compares and contrasts current accounts (C.A.) and savings accounts (S.A.). It notes that C.A.s allow overdrafts while S.A.s do not, C.A.s have no minimum balance requirements while S.A.s do, and businesses prefer C.A.s for overdraft facilities while individuals prefer S.A.s for interest earnings. It also discusses CASA accounts, which combine savings and checking accounts to attract customer deposits, flexi fixed deposits which allow funds to be swept between savings and fixed deposit accounts, and recurring deposits which allow regular monthly deposits into a fixed deposit.

2. current account (C.A.)
savings account (S.A.)
C.A - no interest
S.A - earns interest based
on minimal monthly balance
C.A - overdraft allowed
S.A - No overdraft (mostly - except some banks)
Overdraft means, once in a while
they are allowed more
money than what they
have in the account, as
long as they repay it
with interest
C.A - No minimum balance
S.A - Minimum balance requirement
C.A - Preferred by business
S.A - Preferred by individuals for interest
folks for overdraft facility
Apart from these basic difference, some banks might have
additional differences like quantum of money you can keep etc..

3. You will be allowed by the ATM to withdraw
Savings Account
Current Account
Purpose To encourage saving Many transaction
Ideal for Salarised person Business person
Minimum Amount Less amount Heigher amount(depending on the bank)
Interest Rates 4% - 6% Normally, no interest is paid
Over Draft Not Allowed Allowed
CASA account
CASA accounts are most prominent in middle and southeast Asia, and are an attempt to
combine savings and checking accounts to entice customers to keep their money in the
banks. The current account portion pays no or very low interest, while the savings
portion pays an above average return. They are offered free or for a fee depending on
minimum or average balance requirements.
How is it important for banks?
A higher CASA ratio means higher portion of the deposits of the bank has come from current
and savings deposit, which is generally a cheaper source of fund. Many banks don't pay
interest on the current account deposits and money lying in the savings accounts attracts a
mere 3.5% interest rate. Hence, higher the CASA ratio better the net interest margin, which
means better operating efficiency of the bank.
Net interest margin is difference between total interest income and expenditure and is shown
as a percentage of average earning assets. Higher income from CASA will improve the net
interest margin as the cost of this fund is relatively lower. For instance, most banks lend at
over 10%, whereas, the rate of interest that they pay on saving deposit is just 3.5%.
However, actual realisation depends on other expenditure, too.
Why is it in the news?
In spite of slowdown, CASA ratio of most of the banks have either posted healthy growth or
remained stable in the quarter ended March. For instance, in case of ICICI Bank, CASA ratio
improved to 28.7% in the quarter ending March 2009 from 26.1% in the same period a year
ago.
Also, CASA ratio of Axis Bank improved from 38.1% to 43.1% on the back of robust growth
of current and saving account deposits in the last quarter. Nevertheless, CASA ratio of

4. Allahabad Bank and Bank or Baroda remained stable.
How is CASA different from term and demand deposits?
Current and saving accounts remain operational. Depositors don't need to give prior notice
to withdraw money, however, in case of term deposits, the money is locked in for a specific
period. If a depositor wishes to withdraw the money before maturity, he may have to pay a
fine. Usually, an overdraft facility is available with the current account deposit. Demand
deposit gives you the facility to withdraw your money anytime
Flexi Fixed Deposits
From Wikipedia, the free encyclopedia
Flexi Fixed Deposit is a special kind of deposit scheme offered by banks in India, which is a combination of
Demand deposit and Fixed Deposits. The depositor is able to enjoy both the liquidity of Savings/Current
accounts as well as the high returns of Fixed Deposits.
Mode of Working[edit source | editbeta]
The scheme has 2 features which effectively combine the benefits of Savings/Current Accounts and Fixed
Deposits :
1. Auto Sweep Facility ( Sweep-In ) : Balance in excess of a stipulated amount is automatically
transferred to an Fixed Deposit for a default term of one year. Hence, amount in excess of a fixed limit can
now earn a substantially higher rate of return.
FDs formed through Auto Sweep carry the interest rate on FD of 1 year, prevalent on the day of the Auto
Sweep .
Hence, The Flexi Fixed Deposit scheme has 2 components : a Savings/Current Account component, and a
Fixed Deposit account component.
2. Reverse Sweep ( Sweep-Out ) : In case of shortfalls in the Savings account to honour any debit
instruction ( e.g. when the customer wants to withdraw money through cheque or through ATM ), balance
in the FD to the extent needed for meeting the shortfall is automatically withdrawn in multiples of Rs 1000 (
or any other amount set by the bank ) The remaining balance in the FD continues to earn higher interest at
the original rate applicable to FDs.
Hence in case the customer wants to withdraw more than what is deposited in the Savings account
component, the bank would withdraw money from the Fixed Deposit component.
Hence effectively, this scheme is linking of Savings/Current account with a FD.

5. In many banks, this " linking " is free of cost.
Many banks do not allow customers to avail loans against amount in the FD component of Flexi Fixed
Deposit.
A fixed deposit (FD) is a financial instrument provided by Indian banks which provides investors with
a higher rate of interest than a regular savings account, until the given maturity date . It may or may
not require the creation of a separate account. It is known as a term deposit
Recurring deposit
From Wikipedia, the free encyclopedia
Recurring Deposits are a special kind of Term Deposits offered by banks in India which help people with
regular incomes to deposit a fixed amount every month into their Recurring Deposit account and earn
interest at the rate applicable to Fixed Deposits.[1]
It is similar to making FDs of a certain amount in monthly
installments, for example Rs 1000 every month. This deposit matures on a specific date in the future along
with all the deposits made every month. Thus, Recurring Deposit schemes allow customers with an
opportunity to build up their savings through regular monthly deposits of fixed sum over a fixed period of
time.
The Recurring Deposit can be funded by Standing instructions which are the instructions by the customer
to the bank to withdraw a certain sum of money from his Savings/ Current account and credit to the
Recurring Deposit every month.
When the RD account is opened, the maturity value is indicated to the customer assuming that the monthly
installments will be paid regularly on due dates. If any installment is delayed, the interest payable in the
account will be reduced and will not be sufficient to reach the maturity value. Therefore, the difference in
interest will be deducted from the maturity value as a penalty. The rate of penalty will be fixed upfront.
Interest is compounded on quarterly basis in recurring deposits.
One can avail loans against the collateral of Recurring deposit up to 80 to 90% of the deposit value.
Rate of Interest offered is similar to that in Fixed Deposits. At present it seems to be one of the best
method to save the amount yield after years of deposit because TDS is not applicable on RDs.
Taxation of Recurring Deposit Tax Deducted at Source ( TDS ) is not applicable on RDs. However
interest from RD is not tax free. Income tax is to be paid on interest earned from a Recurring Deposit at the
rate of tax slab of the RD holder.