Savings deposit, Current Deposit & Fixed Deposit

2. Saving Account
A saving account have been defined as, “a deposit account
which is subject to the restrictions as to the number
of withdrawals as also the amount of withdrawals
permitted by the bank during any specified period.
Saving account is meant to encourage savings
and is focused on individuals.

3. Who can Open Account & Procedure for It
An individual open saving accounts with conditions and
procedure.
1. Introduction from another account holder subject to full
KYC procedure
2.Photograph of the person and his address
3.Customer should be advices about keeping minimum balance
Exceptions :In times of calamities RBI permitted to open A/c
with
1. Introduction from another account holder
2. Against electrical bill, document of identity
3. Introduction by two neighbors

4. When a cheque book is exhausted, customer should fill a
cheque requisition slip in prescribed format and handover to the
bank. Generally, bank sends cheque book by courier. Banks either
gives customer a passbook or monthly statement. The R.B.I. has
stated that the entries in statements/pass books should not be
inscrutable and that brief, intelligible particulars must be entered.

5. A current account is defined by the Reserve Bank
as, “ a form of demand deposit wherefrom withdrawals
are allowed any number of times depending upon the
balance in the account or up to particular agreed
amount and shall also be deemed to include other
deposit accounts that are not savings deposit nor term
deposit.” A current account is opened usually for
commercial or business purpose.

6. As stated earlier this account is opened for business
or commercial use. Normally Current account is opened
by those who have commercial interest and have need to issue many
cheques.
These include;
•Individuals
•Sole Proprietorships
•Hindu Undivided Family
•Partnerships
•Trusts, Associations / Societies and clubs
•Limited Companies.

7. At the time the account is opened, customer would
mention how the account should be operated.
The terms used are;
Single
Joint
Either or survivor – in this case, should one of the
account orders die, the survivor can drawthe balance in the
account.
An account should not be opened, on a zero balance as the
banker in this instance has not taken on deposit any amount. An
account holder will deposit cash or cheques in two his
account by providing details entered in paying slip.

8. The RBI has stated that ‘No bank should refuse an
acknowledgement if the customer makes deposit at the counter of
the bank’.
There is no restriction on the amount that may
be deposited in a current account.
There are no restrictions on the number of withdrawals
that may be made in a period.
Customers make withdrawals from the account by drawing
cheques or withdrawal slips if they do not have a cheque book.

9. Third party cheques and cheques with endorsement may
be deposited in current accounts.
If an individual or HUF withdraws Rs. 50,000/- or
more in cash in one day banking cash transaction tax is payable.
In case of companies and other bodies, the same is
payable if the withdrawal is Rs. 1,00,000/- or more.

10. Banks do not pay interest on balances maintained in a
current account.
The RBI prohibits the payment of interest in the current
account. In addition, RBI also prohibits the payment of
countervailing interest.

11. Fixed deposits are deposits placed with the bank for
fixed period. It is repayable on the expiry of that period,
the rate of interest offered to these are higher than on
savings accounts. The minimum period of such deposit
may be placed is 7 days, whereas the maximum period is
120 months. If there is court order in case of minors, the
same period can be extended. The interest rate on deposits
are fixed by bank. Before 1992 it was stipulated
by R.B.I.

12. Those who have funds in hand can open fixed deposit
account. These include :
-Individuals
-Sole Proprietorships
-Hindu Undivided Families (HUF)
-Partnerships
-Trusts
-Associations / Societies and Clubs
-Limited Companies

13. The study of interest paid on fixed deposit can be
summarised in points as below;
-Banks are now free to determine the rate of interest.
-Banks may offer deposit on a floating rate
-Interest should be paid at quarterly or longer rests.
-Interest is calculated on the daily balance.
-Interest on deposit of less than 3 months or where the
quarter is incomplete, interest should be paid on the number of
days reckoning the year at 365 days.

14. -Interest is credited only if it is one rupee or more.
-Scheduled bank with deposits of less than Rs.25 Crores are
permitted to give an additional ½% of interest.
-All transactions including the payment of interest should be
rounded off to the nearest rupee.
-Additional interest of 1% is also payable to retired
employee (not resigned) and the spouse of a deceased retired
employee.