Useful for 1 hour session in PGDB or PGDBM course.

1. A R Mankodi
Faculty- NIIT IFBI (PGDB),MBA
Director- Karnavati Coop Bank
Ex CEO- Guj State Coop Union
Ex DGM- A D C Bank
AMCO Bank
Secretary- Bankers’ Club, Ahmedabad
1

2. What is Banking?
 As per BR Act 49 (5b) 49 Bank is an institute collecting
money from the public for the purpose of investment
and lending, payable on demand by cheque/draft
See the word “Money”
See the purpose
See the term “Demand”
See the mode of payment

3. Who is customer?
 Person or entity who is having an account in bank, the dealings
in which are of banking nature
 Relationship changes with dealings type
 Some relations are
Creditor- Debtor
Debtor - Creditor
Trustee – Beneficiary
Bailer -Baillie
Duration of account or status of account is immaterial
Just Visitor or inquirer is not customer

4. Sources of Funds

5. Types of Deposits
Deposit Services
(Liability Products)
Residents
Demand deposits
Savings
Current
Term deposits
Fixed
Cumulative
Recurring
Non residents
Demand deposits
NRO
NRE
Term deposits
NRO
NRE
FCNR
Other facilities
RFC and EEFC (RFC -
domestic)

6. Savings Deposit
 Purpose is saving so no business transaction allowed
 Restriction on number of withdrawals
 Minimum quarterly average balance requirement in most cases to meet
with cost of funds.
 Basic savings account or PMJDY have liberal terms
 Combination like 2-in-1 or 3-in-1 offered
 Combination of other products/services offered on terms
 Cheque book/debit card/passbook offered.
 ROI is 4% up to 1 lac QAB as fixed by RBI rest fixed by bank
 Single/Joint account allowed
 Nomination allowed
 KYC/AMLA guidelines/rules/Due diligence codes are applied.
 High liquidity low yield to customer Part of Low cost(CASA) for bank

7. Current Accounts
Purpose is convenience of business so unlimited transactions
High cost to bank hence no interest paid by bank.
High liquidity no yield to customer
QAB is required. Non maintenance may attract penalty
Verity of product packages offers like 2-in-1,3-in-1,others
Cheque book debit card/net banking/fund transfer offered
Individual , firm , co. ,association, Society ,HUF, Govt Dept,
trusts, AOP, administrator, executor can open
 More documents like registration, constitution ,resolution, Incorporation
certi.bye laws etc. required
KYC/AMLA/Due diligence applied.
Various charges like cash handling , stationery etc applied.
Part of Low Cost (CASA) deposit for bank
Nomination allowed
Credit facilities can be linked with this.

8. Term Deposits
 Short term or long term offered as time liability
 Competitive ROI offered on cost and mode of payment
 Fixed of Floating rate offered
 Overdraft/loan or premature withdraws on some conditions
 Nomination allowed
 Can be offered as security.
 Interest paid monthly/quarterly/six monthly/yearly
 TDS applicable
 Single/joint/legal person can open
 KYC/AMLA applied.
 More than 20000/can not be paid in cash
 PAN required in some cases.
 CD or RD are variation of term deposits
 CD are market instruments offered as NI(Usance DP)and in demate form to
offered flexibility to market investor

9. NRI Accounts
 Who is NRI? What is condition?
Non Resident
Ordinary (NRO)
account
• Current,
savings, fixed
deposit and
recurring
deposit in
rupees
Non Resident
External (NRE)
account
• Current,
savings,
fixed
deposit and
recurrent
deposit in
rupees
Foreign Currency
Non-Resident
(FCNR) account
• Fixed deposit
account in foreign
currency

10.  NRO account:
Is for the local funds and income of the non residents.
Is for parking funds from local sources such as rent, interest or
profit from business in India.
Does not allow repatriation or remittance of balance abroad
except an amount not exceeding USD one million per financial
year i.e. interest earned on deposits ,bonds ,loans given to local
persons , income from business in India dividend, profit from sale
of shares, MF or units, rental income subject to TDS
Medical treatment abroad of up to USD 100000 per year
Proceeds from the sale of property to the extent of funds
brought in from abroad for buying the property

11.  NRE account:
Is opened only by non residents.
Can be either single or joint accounts.
Credits have to be from foreign inward remittances.
Funds can be withdrawn freely for local payments.
Transfer (from NRE to NRO accounts) is permitted, reverse is not.
Transfer (from NRE to local accounts of residents) is permitted,
reverse is not allowed.
Interest is not taxable.
 Transfer between NRE accounts and NRE and FCNR accounts are permitted.
 Local funds cannot be deposited into the NRE account except in the following
cases:
Sale proceeds of shares or bonds, which are purchased with funds
from the NRE account
Sale proceeds of real estate property purchased with funds from
the NRE account

12.  FCNR account:
Refers to fixed deposits of one to five years maintained in
foreign currency.
Deposits can be maintained in USD, British Pounds, Euros,
Yen, Canadian Dollars and Australian Dollars.
Can be either single or joint accounts.
Balances:
Are freely repatriable.
Can be credited to the NRE or NRO accounts.
In the NRO accounts cannot be invested in the FCNR accounts.
Earns simple interest on deposits of one year.

13.  RFC (Domestic account):
Is for depositing foreign exchange received by residents.
Can be utilised for making remittances abroad.
Can be maintained only as a current account.
Does not have any interest payable.
 EEFC:
Facility is extended to exporters to maintain their export earnings
in foreign currency.
Can be utilised for making payments abroad.
Does not have any interest payable.