types of bank accounts

Topics: Deposit account, Cheque, Fractional-reserve banking Pages: 6 (1632 words) Published: June 4, 2014
A bank is a financial intermediary that accepts deposits and channels those deposits into lending activities, either directly by loaning or indirectly through capital markets. A bank links together customers that have capital deficits and customers with capital surpluses. Due to their importance in the financial system and influence on national economies, banks are highly regulated in most countries. Most nations have institutionalised a system known as fractional reserve banking, in which banks hold only a small reserve of the funds deposited and lend out the rest for profit[citation needed]. They are generally subject to minimum capital requirements based on an international set of capital standards, known as the Basel Accords. CURRENT DEPOSITS / ACCOUNTS

SAVING BANK / Saving Fund  DEPOSITS / ACCOUNTS
RECURRING DEPOSITS / ACCOUNTS
FIXED DEPOSITS / ACCOUNTS OR TERM DEPOSITS
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 favour by third parties.  No interest is paid by banks  on these accounts.  On the other hand, banks charges certain  service charges, on such accounts.     

Features of Current Accounts :
 
(a) The main objective of Current Account holders in opening these account is to enable them (mostly businessmen) 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 (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 ?  Recurring Deposit Calculator  - India

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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 account is 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 Sector Banks still pay only 4% rate of interest, some private banks like Kotak Bank and Yes Bank pay between 6% and 7% on such deposits.  From the FY 2012-13, interest earned upto Rs 10,000 in a financial year  on Saving Bank accounts is exempted from tax.   

 
 
Click Here to know Which Banks are Paying the Highest  Saving Bank Interest Rates / Interest Rates on Savings Account  
 
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What are Recurring Deposit Accounts ?  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...
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