TYPES OF BANK ACCOUNTS IN INDIA

1. DEFINITON
Deposit account is a savings account, current account or any other type of bank
account that allows money to be deposited and withdrawn by the account holder.
These transactions are recorded on the bank's books, and the resulting balance is
recorded as a liability for the bank and represents the amount owed by the bank to
the customer. Some banks may charge a fee for this service, while others may pay
the customer interest on the funds deposited.
The main banking activities consistof acceptance of deposit from the public for the
purposeof lending to businessmen and others who may seek loans. Actually the
money deposited in any bank is mostly the saving of the people. As you know, if
someone earns money and has regular income, he or she not only spends it for day-
to-day expenses but also tries to save a part of the income for future needs. Money
may be needed in future for various purposes like medical treatment in case of
illness in the family, expenses on accountof marriage, or for higher studies of the
children, or to celebrate religious festivals, etc. The money saved to meet future
needs may be kept at home. But will it be safe at home? It may be stolen.
Moreover, the money saved will remain idle at home without any return. So people
keep their savings with someone where it will be safe and earn a return. Bank is
such a place where money once deposited remains safe and also earns interest. In
this lesson, we shall learn about the types of deposit accounts that can be opened in
a bank, and also discuss how a savings bank account can be opened and operated.
Major types
Transactional account
Current account(Commonwealth)/Checking account(US)
A deposit account held at a bank or other financial institution, for the purposeof
securely and quickly providing frequent access to funds on demand, through a
variety of different channels. Because money is available on demand these
accounts are also referred to as demand accounts or demand deposit accounts,
except in the case of NOW Accounts.

2. TYPES OF BANK ACCOUNTS IN INDIA (Deposit Accounts)
CURRENT DEPOSITS/ ACCOUNTS
SAVING BANK / Saving Fund DEPOSITS/ ACCOUNTS
RECURRING DEPOSITS/ ACCOUNTS
FIXED DEPOSITS/ ACCOUNTS OR TERM DEPOSITS
Traditionally banks in India have four types of depositaccounts, namely Current
Accounts, Saving Banking Accounts, Recurring Deposits and, Fixed Deposits.
However, in recent years, due to ever increasing competition, some banks have
introduced new products, which combine the features of above two or more types
of deposit accounts. Theseare known by different names in different banks, e.g 2-
in-1 deposits, Smart Deposits, Power Saving Deposits, Automatic Sweep Deposits
etc. However, these have not been very popular among the public.
What is a Current Account ? Who uses current accounts?Current Accounts
in Banks
Current Accounts are basically meant for businessmen and are never used for the
purposeof 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 bookfacility is provided and the accountholder can deposit all
types of the cheques and drafts in their name or endorsed in their favour by third
parties. No interest is paid by banks on these accounts. Onthe other hand, banks
charges certain service charges, on such accounts.
Features ofCurrent Accounts :
(a) The main objective of Current Account holders in opening these account is to
enable them (mostly businessmen) to conducttheir business transactions smoothly.

3. (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
(as per banks' own guidelines) is paid
(d) The current accounts do not have any fixed maturity as these are on continuous
basis accounts
What is a Savings Bank Account ? Who uses Saving Bank Accounts ?
These deposits accounts are one of the most popular deposits for individual
accounts. These accounts not only provide cheque facility but also have lot of
flexibility for deposits and withdrawal of funds from the account. Most of the
banks have rules for the maximum number of withdrawals in a period and the
maximum amount of withdrawal, but hardly any bank enforces these. However,
banks have every right to enforce such restrictions if it is felt that the accountis
being misused as a current account. Till 24/10/2011, the interest on Saving Bank
Accounts was regulared by RBI and it was fixed at 4.00% on daily balance basis.
However, wef 25th October, 2011, RBI has deregulated Saving Fund account
interest rates and now banks are free to decide the same within certain conditions
imposed by RBI. Under directions of RBI, now banks are also required to open
no frill accounts (this term is used for accounts which do not have any minimum
balance requirements). Although Public SectorBanks still pay only 4% rate of
interest, some private banks like Kotak Bank and Yes Bank pay between 6% and
7% on such deposits. Fromthe FY 2012-13, interest earned upto Rs 10,000 in a
financial year on Saving Bank accounts is exempted from tax.
What are Recurring DepositAccounts ? Who use Recurring Deposit
Accounts ? or RD accounts
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. Normally, such deposits earn interest
on the amount already deposited (through monthly installments) at the same rates
as are applicable for Fixed Deposits / Term Deposits. These are bestif you wish

4. to create a fund for your child's education or marriage of your daughter or buy a
car without loans or save for the future.
Under these type of deposits, the person has to usually deposit a fixed amount of
money every month (usually a minimum of Rs,100/- p.m.). 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 personis allowed to deposit even higher amount
of installments, with an upper limit fixed for the same e.g. 10 times of the
minimum amount agreed upon.
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 bookis usually issued wherein the personcan
get the entries for all the deposits made by him / her and the interest earned.
Banks also indicate the maturity value of the RD assuming that the monthly
instalents will be paid regularly on due dates. In case instalment is delayed, the
interest payable in the account will be reduced and some nominal penalty charged
for default in regular payments. 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.
The RD interest rates paid by banks in India are usually the same as payable on
Fixed Deposits, except when specific rates on FDs are paid for particular number
of days e.g. 500 days, 555 days, 1111 days etc i.e. these are not ending in a quarter.
What are Fixed DepositAccounts in India or Term Deposits
All Banks in India (including SBI, PNB, BoB, BoI, Canara Bank, ICICI Bank, Yes
Bank etc.) 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

5. maturity or tenor. Therefore, the depositors are supposedto continue such Fixed
Deposits for the length of time for which the depositordecides to keep the money
with the bank. However, in caseof need, the depositor can ask for closing (or
breaking) the fixed depositprematurely by paying paying a penalty (usually of 1%,
but some banks either charge less or no penalty). (Some banks introduced
variable interest fixed deposits. The rate of interest on such deposits keeps on
varying with the prevalent market rates i.e. it will go up if market interest rates
goes and it will come down if the market rates fall. However, such type of fixed
deposits have not been popular till date).
The rate of interest for Fixed Deposits differs from bank to bank (unlike earlier
when the same were regulated by RBI and all banks used to have the same interest
rate structure. The present trends indicate that private sector and foreign banks
offer higher rate of interest.
The earlier trend that private sector and foreign banks offer higher rate of interest
is no more valid these days. However, now a days small banks are forced to offer
higher rate of interest to attract more deposits. Usually a bank FD is paid in lump
sum on the date of maturity. However, most of the banks have also facility to pay/
credit interest in saving account at the end of every quarter. If one desires to get
interest paid every month, then the interest paid will be at a marginal discounted
rate. 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.
In today’s markets, there a myriad investment opportunities available to people in
India but of them all there is one which has been a favoured instrument in the
country for ages. This instrument is known as the fixed deposit or term deposit.
Imagine, if you will, that you find yourself flush with a lump sum of money which
you intend to save and want it to grow but don’twant it to be at risk in any way.
This is where the fixed depositcomes in because you can take that money and give
it to a bank for a specific period of time ranging from 7 days to 10 years. Once the
money is with the bank, it starts earning an interest that is based on the duration of
the deposit and can go to rates as high as 9% per annum, depending on the bank
and the scheme. Once the deposits tenure is over, the bank returns the money to
you along with all the interest that it has earned. Other than safe and steady growth,

6. the fixed depositalso offer features like extra interest rates for senior citizens, no
limits on how much can be invested in the FD and even tax benefits if the
investment is made in a tax saving fixed deposit; all of which make a favourite
among investors in India.
Features ofFixed DepositAccount
The main purposeof fixed depositaccount is to enable the individuals to earn a
higher rate of interest on their surplus funds (extra money).
The amount can be deposited only once. For further such deposits, separate
accounts need to be opened.
The depositoris given a fixed deposit receipt, which depositorhas to produceat
the time of maturity. The deposit can be renewed for a further period.
As per the Traditional scheme, the interest on the FD account is credited to the
Savings account specified by the depositor on a monthly basis or on a quarterly
basis. Forthe Reinvestment scheme, the interest is compounded to the principal
amount on a quarterly basis.
Tax is deducted at source, from the interest on Fixed Deposits, as applicable, as per
the Income Tax Act, 1961.
Compound Interest and Impact of Compounding frequency

7. OBJECTIVES OF DEPOSITS
Deposits are a crucial part of any investment and savings plan. Although during a
recession deposit accounts may pay considerably less interest due to low rates,
bank deposits provide savers with a measure of safety that cannot be found
elsewhere. Actively managing your deposit accounts will ensure that you know
how these savings instruments work, a first step toward reaching your financial
goals.
Basics
 The main objective of a deposit is to save money in a safe account. Savers
normally use depositaccounts for the long range, although banks offer
deposit products forterms as short as one week for a certain threshold of
funds (normally at least $100,000). Depending on the saver's own appetite
for risk, depositaccounts may be just a part of the portfolio, the bulk of the
total savings plan or even the only investment made. The Federal Deposit
Insurance Corporation (FDIC) reminds us that no depositorhas ever lost
even a penny of FDIC-insured accounts, an important consideration for
conservative investors who want a safe place to put money, while earning
modest interest rates.
Types
 Deposits help savers reach financial goals by providing a wide variety of
account types. If the objective of deposits is to provide interest accrual in a
safe environment, then many options are available from which to choose.
Certificates of deposit, or CDs, are one of the most popular deposittypes.
CDs offer a fixed rate on a sum of money in return for a fixed-term
commitment from the depositor. A large draw for CDs is flexibility; CD
terms range from a week to 10 years or longer, generally paying the highest
rates of return for the lengthiest terms. Although CD account owners may
remove the interest as it accrues, withdrawals from principal amounts can
trigger penalties.
By contrast, a savings accountpays interest while also allowing the owner to make
a certain amount of withdrawals per month without penalty. Savings accounts have

8. historically paid lower interest rates than CDs, although this has changed in recent
years with the popularity of money market savings accounts. Money markets pay
banks higher rates of interest on the money they invest, allowing the banks to pass
on the higher interest rate to depositcustomers.
Function
 Deposit accounts reach fulfillment of their objective by harnessing the time
value of money. This means that as interest accrues it is "compounded,"
allowing you to earn interest on top of interest. Basically, if you have $1,000
in a savings account, and the account earns $30 in interest in a month, the
next month the bank will pay you interest on $1,030 (provided you make no
withdrawals).
Another key function of deposits is rate competitiveness. Because so many banks
and other financial institutions offer deposit accounts, the saver is the beneficiary
of a highly competitive environment. This means that, even in times of generally
low interest rates, banks will always need and desire depositors, offering customers
additional benefits and perks.
Strategies
 Because of the sheer number of bank depositoptions, savers can plan
objectives based on varying term lengths and account types. For instance, a
depositorcan "ladder" a deposit of $9,000, breaking the sum into three
$3,000 CDs, each coming due two months apart. This strategy relieves the
saver from having the entire sum tied up for a longer period of time, creating
flexibility.
Many depositors use savings and CDs as a supplement to monthly income (or, if
you are fortunate enough to have large deposits, the entire monthly income). This
interest income can be mailed to the depositor or transferred to a checking account.
Just keep in mind that this strategy will reduce your long-term interest total
normally accrued through compounding.
Considerations

9.  Historically, CDs (including individual retirement accountCDs) have paid
the most interest, followed by savings accounts and then interest-bearing
checking accounts. This order has changed significantly in recent years, as
banks have found that CDs in particular provide relatively little revenue to
banks. High-yield checking accounts, which pay rates comparative to
savings accounts, have become increasingly popular. In summary, you
should ask your banker what accounts are paying the best interest rates.
Another consideration is that deposit accounts' main objective of paying interest
with safety does not guarantee high rates of return, especially compared with risk-
inherent investments like stocks. During the recession that began in 2007, for
instance, the government was loaning banks cheap money; this meant that banks
did not require as many depositors, decreasing interest rates overall. Remember to
consider safety and flexibility, along with interest rates, when planning your
deposit savings goals.
THE ADVANTAGES OF DEPOSIT ACCOUNTS
Term deposit accounts are a sure way of increasing the amount of your savings.
The interest rates plus the fact you can choosehow long you want to lock up your
money are definitely worth tying it up for a fixed period. The advantages of these
types of accounts are:
 High rates of interest on your money throughout the fixed term
 Guaranteed returns
 They are a very safe investment
 You controlhow long your money is locked away
You really can’t go wrong if you have a sum of cash and want to invest it as you’ll
know exactly what you’ll get back at the end of the fixed term and if you don’t
want to put it all into just the one term you can optfor the “ladder” strategy. This
means investing in several term deposits with varying maturity dates.
Laddering allows you to take advantage of fluctuating interest rates and to invest
when the rates are higher and allows you access to your funds. You can then

10. reinvest if you wish as each fund matures. This is a very lucrative way to grow
your savings.
DISADVANTAGES OF DEPOSIT ACCOUNTS
The basic downside of investing your money in a term depositis that you cannot
access it during the investment period.
In the case of an emergency you could cancel the term before the maturity date but
there’s no advantage as the release fees, which vary depending on how much time
the term still had to run, means that you won’t really have benefitted.
You need to be very sure that you can afford to lock up your savings. Also, the
longer you lock your money away, the better it is going to perform so weigh that
up against the possibility that you may need to access some or all of it before the
term ends.
If in doubt, consider placing only some of your money in a term deposit and put
the rest into another high interest account that allows you to access your money.
Savings account
Accounts maintained by retail banks that pay interest but can not be used directly
as money (for example, by writing a cheque). Although not as convenient to use as
checking accounts, these accounts let customers keep liquid assets while still
earning a monetary return.
Time deposit
A money depositat a banking institution that cannot be withdrawn for a preset
fixed 'term' or period of time. When the term is over it can be withdrawn or it can
be rolled over for another term. Generally speaking, the longer the term the better
the yield on the money.
Call deposit
A deposit account that allows for the withdrawal of funds without penalty,
generally without notification to the bank. Often it bears a favourable interest rate,
but also requires a minimum balance to take advantage of the benefits

11. Legal framework
Subject to restrictions imposed by the terms and conditions of the account, the
account holder (customer) retains the right to have their money repaid on demand.
The customer may or may not be able to pay money into or out of the account by
cheque, internet banking, EFTPOS or other channels, depending on those terms
and conditions.
The banking terms "deposit" and "withdrawal" mean a customer paying money
into, and taking money out of, the account. From a legal and financial accounting
standpoint, the term "deposit" is used by the banking industry in financial
statements to describe the liability owed by the bank to its depositor, and not the
funds that the bank holds as a result of the deposit, which are shown as assets of
the bank.
For example, a depositoropening a checking account at a bank in the United States
with $100 in cash surrenders legal title to the $100 in cash, which becomes an asset
of the bank. On the bank's books, the bank debits its currency and coin on hand
account for the $100 in cash, and credits a liability account (called a demand
deposit account, checking account, etc.) for an equal amount. (See double-entry
bookkeeping system.)
In the audited financial statements of the bank, the $100 in currency would be
shown on the balance sheet as an assetof the bank on the left side, and the deposit
account would be shown as a liability owed by the bank to its customer, on the
right side of the balance sheet. The bank's financial statement reflects the economic
substanceof the transaction—which is that the bank has borrowed $100 from its
depositorand has contractually obliged itself to repay the customer according to
the terms of the agreement. To offset this depositliability, the bank now owns the
funds deposited (either in notes and coin or more usually as a debtowed by another
bank) and the bank shows those funds as an asset of the bank. These "physical"
reserve funds may be held as deposits at the relevant central bank and will receive
the interest as per monetary policy.
Typically, an account provider will not hold the entire sum in reserve, but will loan
most of the money out to other clients, in a process known as fractional-reserve

12. banking. This allows providers to earn interest on the asset and hence to pay out
interest on deposits.
By transferring the ownership of deposits from one party to another, banks can
avoid using physical cash as a method of payment. Commercial bank deposits
account for most of the money supply in use today. For example, if a bank in the
United States makes a loan to a customer by depositing the loan proceeds in that
customer's checking account, the bank typically records this event by debiting an
asset account on the bank's books (called loans receivable or some similar name)
and credits the depositliability or checking account of the customer on the bank's
books. Froman economic standpoint, the bank has essentially created economic
money (although not legal tender). The customer's checking account balance has
no dollar bills in it, as a demand deposit account is simply a liability owed by the
bank to its customer. In this way, commercial banks are allowed to increase the
money supply (without printing currency, or legal tender).
Regulatory protection
Banks are normally subject to prudential regulation which has the purposeof
reducing the risk of failure of the bank. It may also have the purposeof reducing
the extent of depositorlosses in the event of bank failure.
Bank deposits may also be insured by a depositinsurance scheme, if applicable.
Objectives
After studying this lesson, you will be able to:
 classify bank depositaccounts;
 discuss the steps to be taken for opening a Savings Bank Account; and
 describe the procedure of operating a Savings Bank Account.
Business Studies
Types of Bank Deposit Accounts
Bank deposits serve different purposes for different people. Some people cannot
save regularly; they deposit money in the bank only when they have extra income.
The purposeof depositthen is to keep money safe for future needs. Some may

13. want to deposit money in a bank for as long as possible to earn interest or to
accumulate savings with interest so as to buy a flat, or to meet hospital expenses in
old age, etc. Some, mostly businessmen, deposit all their income from sales in a
bank account and pay all business expenses out of the deposits. Keeping in view
these differences, banks offer the facility of opening different types of deposit
accounts by people to suit their purposeand convenience.
On the basis of purposethey serve, bank depositaccounts may be classified as
follows:
a. Savings Bank Account
b. Current DepositAccount
c. Fixed DepositAccount
d. Recurring DepositAccount.
Let us briefly note the nature of the above accounts.
a. Savings Bank Account :
If a person has limited income and wants to save money for future needs, the
Saving Bank Account is most suited for his purpose. This type of account can be
opened with a minimum initial deposit that varies from bank to bank. Money can
be deposited any time in this account. Withdrawals can be made either by signing a
withdrawal form or by issuing a cheque or by using ATM card. Normally banks
put some restriction on the number of withdrawal from this account. Interest is
allowed on the balance of depositin the account. The rate of interest on savings
bank account varies from bank to bank and also changes from time to time. A
minimum balance has to be maintained in the account as prescribed by the bank.
b. Current DepositAccount:
Big businessmen, companies and institutions such as schools, colleges, and
hospitals have to make payment through their bank accounts. Since there are
restriction on number of withdrawals from savings bank account, that type of
account is not suitable for them. They need to have an accountfrom which
withdrawal can be made any number of times. Banks open current account for

14. them. Like savings bank account, this account also requires certain minimum
amount of deposit while opening the account. On this depositbank does not pay
any interest on the balances. Rather the accountholder pays certain amount each
year as operational charge.
For the convenience of the accountholders banks also allow withdrawal of amounts
in excess of the balance of deposit. This facility is known as overdraft facility. It is
allowed to some specific customers and upto a certain limit subject to previous
agreement with the bank concerned.
c. Fixed DepositAccount (also knownas Term DepositAccount):
Many a time people want to save money for long period. If money is deposited in
savings bank account, banks allow a lower rate of interest. Therefore, money is
deposited in a fixed deposit account to earn a interest at a higher rate.
This type of deposit accountallows depositto be made of an amount for a
specified period. This period of depositmay range from 15 days to three years or
more during which no withdrawal is allowed. However, on request, the depositor
can encash the amount before its maturity. In that case banks give lower interest
than what was agreed upon. The interest on fixed deposit account can be
withdrawn at certain intervals of time. At the end of the period, the depositmay be
withdrawn or renewed for a further period. Banks also grant loan on the security of
fixed deposit receipt.
d. Recurring DepositAccount:
This type of account is suitable for those who can save regularly and expect to earn
a fair return on the deposits over a period of time. While opening the account a
personhas to agree to deposita fixed amount once in a month for a certain period.
The total depositalong with the interest therein is payable on maturity. However,
the depositor can also be allowed to close the account before its maturity and get
back the money along with the interest till that period. The account can be opened
by a person individually, or jointly with another, or by the guardian in the name of
a minor. The rate of interest allowed on the deposits is higher than that on a
savings bank depositbut lower than the rate allowed on a fixed deposit for the
same period.

15. Recurring Deposit Accounts may be of different types depending on the purpose
underlying the deposit. Some of these are as follows:
a. Home Safe Account (also known as Money BoxScheme): Small savers find it
convenient to depositmoney under this scheme. For regular savings, the bank
provides a safe or box (Gullak) to the depositor. The safe or boxcannot be opened
by the depositor, who can put money in it regularly, which is collected by the
bank’s representative at intervals and the amount is credited to the depositor’s
account. The deposits carry a nominal rate of interest.
b. Cumulative-cum-Sickness DepositAccount: Regular deposits made in this
type of account serve the purposeof having money to meet large expenses in case
there is sudden illness or other unforeseen expenses. A certain fixed sum is
deposited at regular intervals in this account. The accumulated deposits over time
along with interest can be used for payment of medical expenses, hospital charges,
etc.
c. Home Constructiondeposit Scheme/Saving Account: This is also a type of
recurring deposit accountin which money can be deposited regularly either for the
purchase or construction of a flat or house in future. The rate of interest offered on
the deposit in this case is relatively higher than in other recurring depositaccounts
How to open a Savings Bank Account
To open a savings bank account in a commercial bank, you have to first decide
what amount of money you would like to deposit initially. You may enquire and
find out from the nearest bank what is the minimum amount to be deposited while
opening a savings bank account. You have to depositat least that amount or more,
if you want. On entering a bank (any branch of a bank) you will find a counter for
enquiry (or a counter with: ‘May I help you’ board). Having known the minimum
amount to be deposited, you should ask for a form of application for opening
Savings Bank Account. You are not required to pay anything for it. You should
then take the following steps:
Filling up the Form
The application form has to be filled up giving the following necessary
information:

16. a. Name of the person(applicant)
b. His/her occupation
c. Residential Address
d. Specimen signature of the applicant
e. Name, address, accountnumber and signature of the personintroducing the
applicant Bank Deposit Account
Besides the above information you have to give an undertaking that you will abide
by the rules and regulations of the bank, which are in force. At the end of the
application form, you have to put your signature. (In some banks it is required to
attach two passportsize photographs of the applicant along with the application.)
ii. Proper Introduction
Every bank requires that a personknown to the bank should introduce the
applicant. It may be convenient to be introduced by a personhaving already an
account in that bank. Some banks may acceptthe attested copyof Passportor
Driving Licence, if any, of the applicant. In that case personal introduction is not
necessary. Introduction is required to prevent the possibility of opening of account
by an undesirable person.
iii. SpecimenSignature
The applicant has to put his/her specimen signatures at the blank spaceprovided on
the application form for that purpose. In addition, specimen signatures have to be
put separately on a card on which a photographof the applicant may be pasted,
along with his/her name and account number.
After the above steps have been taken and the officer concerned is satisfied that the
application form is in order, money is to be deposited at the cash counter after
filling in a printed ‘Pay-inslip’. An account number will then be allotted and
written on the application form as well as the card having your specimen
signatures. At the same time you will be issued a Passbookwith the initial deposit
recorded in it. All future deposits and withdrawals will also be entered in the
passbook, and it will remain with you. If you want to use cheques for withdrawal

17. or payment of money out of your deposits, a cheque bookwill be issued on your
request. A cheque form is a printed form in which you may issue an order to the
bank to pay the amount specified in it to a person.
Procedure for Operating Savings Bank Account
Once you have opened the account, you must also know how to operate the
account. In other words, you have to know the procedureto be followed for further
deposits to be made in the account and for withdrawing money from the account.
i. Depositin the Account
How will you deposit money in your account? You have already used a ‘Pay-in-
slip’ for deposit of the initial amount while opening your account. It is a printed
form, which you get in the bank.
Each ‘pay-in-slip’ has two parts divided by perforation, the right-hand part known
as ‘foil’ and the left-hand part known as ‘counter-foil’. The slip has to be filled up
while depositing cashor a cheque. Separate pay-in-slip form will have to be filled
up while depositing both cash and cheques.
Supposeyou have to depositcash in your account. The pay-in-slip has to be filled
giving the date of deposit, your name or account-holder’s if you deposit money in
somebody’saccount, accountnumber, and the amount deposited in figures and
words. Besides you have to enter on the slip, in the place indicated, how many
currency notes of different denominations (Rs. 5, 10, 20, 50, 100, etc.) are being
deposited along with the amount against the types of notes. The bank will have a
counter for cash receipts. You have to sign and present the pay-in-slip there and
also hand over the amount of cash. The receiver will keep the foil (right hand part)
of the pay-inslip while the left-hand part (counter-foil) will be rubber-stamped,
signed by him, and returned to you.
Instead of cash, supposeyou have to deposit cheque, which you have got in
payment of your salary from the office in which you are employed. You may like
to deposit it in your bank account instead of going to another bank to encash it.
Your bank will collect the amount of the cheque and record it as a depositin your
savings bank account.

18. To deposit the cheque you have to use the pay-in-slip again, filling in particulars
like the date of deposit, the account number, name of the account-holder, the serial
number and date of the cheque, name and address of the bank on which the cheque
is drawn, and the amount of the cheque in figures and words. After signing the slip,
you have to attach the cheque with the foil by an awl pin, and present the slip at the
counter for cheque receipt. The personat the counter will keep the foil with the
cheque attached, and return to you the counter-foil with bank rubber stamp and his
signature. In some banks, there is a box kept near the counter. The bank rubber
stamp is also available at the counter. The depositoris to put the rubber stamp on
the foil and counterfoil. Then after separating the counter-foil, the cheque along
with the foil is to be dropped in the box through a slit.
ii. Withdrawal from DepositAccount
You deposityour savings for use in future. The need for money may arise any
time. So you should know how to get back your money from the bank. In the
above section you have learnt about the procedure for deposit of money in the
savings bank account. Let us know the procedurefor withdrawal of money from
your account.
Money can be withdrawn by using
a) Withdrawal form
b) Cheque
c) ATM card
a. Withdrawal Form: Every bank has printed withdrawal forms, which can be
used by accountholders to withdraw cash from deposit accounts.
The form has to be filled in, mentioning the date of withdrawal, account number,
amount to the withdrawn (in figures and words) and the signature of the account
holder. You have to produceit along with your passbookat the counter at which
your account is handled. At the counter the officer concerned generally passes the
form for payment after checking the balance in the account and the signature on
the form against the specimen signatures on record. The amount of withdrawal is
recorded in the passbook, and payment is made at the counter if the amount is

19. within a certain limit (say, Rs. 5,000), otherwise a disc or token is given which
bears a number. This has to be presented at the cash payment counter for receiving
the amount withdrawn.
b. Cheque: As an account-holder you can withdraw cash from your savings bank
account either by filling in and signing a withdrawal form or by issuing a cheque.
Withdrawal forms can be used only by the account-holder, no one else.
Cheques can also be issued for payment to other parties. Thus, a cheque issued to
another personcan be either encashed by him at the bank, or deposited in his
account in some other bank to be collected on his behalf.
Withdrawal by issue of cheque requires the same procedure to be followed as that
for withdrawal by filling in and signing the withdrawal form explained above. In
both cases the amount of withdrawal is recorded in the books ofthe bank in the
relevant savings bank account. Interest allowed on the balance of deposit is also
recorded in the relevant accounts maintained in the books ofaccount of the bank.
These are also entered in the Pass Book as and when presented by the account-
holder to the bank.
c. ATM Card: Banks issue ATM card to its depositors for easy withdrawal of
money from their accounts. This card is used for withdrawal of money from saving
and current deposit account through Automated Teller Machine (ATM). It is a
magnetic card, which can be operated by using a particular secrete number. It is the
most convenient system of withdrawal of money.
TellerCounters : To facilitate quick transaction, banks provide teller counters to
withdraw money from the deposit account. There are two types of teller counters:
a) Manual teller counter; and
b) Automatic teller counter.
In manual teller counters banks generally allow withdrawal of money from the
savings accounts for amount upto a limit (which may be from Rs. 5,000 to Rs.
10,000). The cheque or withdrawal form is presented at the counter and payment is
made after verifying the balance in the account, and tallying the specimen
signature of the account holder.

20. In automatic teller counters ATMs are installed to handle cash transactions 24
hours without any break. There is no need to appoint any bodyto verify your
balance, compare the specimen signature or hand over or take over the cash. Let us
learn how an ATM machine operates.
When a bank installs ATMs, it gives a magnetic card along with a secret code
number to every accountholder. This codenumber is called Personal Identification
Number (PIN). When a cardholder wants to withdraw or deposit money, first he
has to establish his identity to operate the ATM by mentioning his PIN. When an
ATM card is inserted into the machine it asks for the PIN. The PIN can be entered
either by using the keyboard or touching the screen of the machine. Once the
identity is established then money can either be deposited or withdrawn simply by
following the instruction given by the machine. For depositof cash it is required to
keep the amount in a special envelop, which is available at the ATM center. After
sealing the envelope and writing the necessary information on it, the envelope will
be kept near a slit. Then on pressing the depositbutton the envelope will
automatically be entered into the machine. The bank officials will collect those
envelops at regular interval and credit the amount in the respective accounts.
Similarly, withdrawal of money can be made by pressing or touching the
withdrawal button and then mentioning the amount of money required. The exact
amount of money will be made available to you instantly through the outlet.