bank deposit accounts final
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8/2/2019 Bank Deposit Accounts Final
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3/5/12
Bank DepositAccounts
BySubhash NishadPGDM 3rd Term
Finance NCFM
PRISM SCHOOL OF BUSINESS &ENTREPRENEURSHIP
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Introduction
“deposits, are the money which
accepted by banks from customersto be held under stipulated terms
and conditions. Deposits are thusan instrument of savings”.
Definition:-” One of the most
important functions of any commercialbank is to accept deposits from thepublic, basically for the purpose of
lending. Because public are the3/5/12
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Gross Domestic Savings
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Financial savings of thehousehold sector
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c e u e o commerc abanks
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Safety of deposits
Depositor would want to be certainthat his/ her money is safe with thebank and at the same time, wants to
earn a reasonable return.
§ Regulatory framework for banking :-
§ Banking Regulation Act, 1949 (BR Act)
§ Deposit Insurance Corporation in 19623/5/12
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Deregulation of interestrates
• The process of deregulation of interest rates started in April 1992
• Now, banks have the freedom to fixtheir own deposit rates with only a
very few exceptions
• The RBI prescribes interest rates only
in respect of savings deposits and3/5/12
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Deposit policy
• The Board of Directors of a bank, alongwith its top management, formulatespolicies relating to :-
– rates of interest payable on each type
–
Special deposit schemes
– types of customers to be targeted
–
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Types of Deposit Accounts
• Demand deposits – deposits payable on demand through
cheque or Otherwise – Demand deposits serve as medium of
exchange ownership to one person toanother
– They have no fixed term to maturity.
• Time deposits :- – deposits which are not payable on
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certificate of deposit
• It is a negotiable money marketinstrument and is issued indematerialized form.
• It is eligible financial institution for aspecified time period.
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Three categories of bankdeposits
1. Current Deposits – The primary objective of a current account
is to provide convenient operation facility
to the customer – Current deposits are non-interest bearing – It is for the smallest fraction.
2. Savings Bank Deposits – It accrues the fixed interest rate set by
RBI (3.5% as of Jan. 2010) – It is used for large segment (in small
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CASA deposits
(Current Account and Savings Accountdeposits)
It offers to :-• salary accounts to companies• encouraging merchants to open
current accounts• cash-management facilities
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Market share of CASA
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3 .Term Deposits
– It is a deposit received by the Bank for afixed period
–
Interest is paid on term-deposits, either onmaturity or at stipulated intervalsdepending upon the deposit scheme
– term-deposit for a minimum period of 7days
–
Term Deposit Accounts can be opened by3/5/12
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Conti….
• It includes :- – Re-investment deposits :-the interest is
compounded quarterly and paid on
maturity, along with the principalamount of the deposit
– Recurring deposits:- under which a fixedamount is deposited at regular intervals,• These deposits are usually targeted at
persons who are salaried or receive otherregular income
• It can be opened for anr period of 6 to 1203/5/12
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Strategies of mobilizingdeposits
• To maximize their profits, commercialbanks always attempt to mobilizesavings at the lowest cost possible –
CASA (cash account saving account) – Staff members posted to educate
customers about their rights and obligation – personalized banking relationship (CRM) – Senior citizens/pensioners have become an
important category of customers to betargeted by a bank
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Common Guidelines of Opening and
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Common Guidelines of Opening andOperating Deposit A/C
• Due Diligence Process –
"Know Your Customer" (KYC) guidelines issued byRBI
• person's identity,
• occupation,
•
sources of income,• location.
• recent photographs of people
• Current address
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To promote financial inclusion in rural areas / tribal areas,KYC norms have been relaxed for below the poverty line(BPL) families
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Conti…
• Minimum Balance – 'No-frills Accounts(only for BPL)
• Transparency – the bank may specify charges for issue
of cheques books, additional statementof accounts, duplicate passbook, folio
charges, etc• Eligibility• Requirement of PAN (Permanent
Account Number)•
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Operation of Special Classes of Deposit A/CHolders
• Minors' Accounts :Savings bankaccounts can be opened by minorsalong with their guardians.
• Account of illiterate/visuallychallenged persons: bank opens the
A/c in the presence of a mutuallyknown witness.
•
Deposit schemes for Senior Citizens3/5/12
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Deposit Related Services
• Customer Information• Interest Payments
– Savings bank accounts –
Term deposits – Tax deducted at source (TDS)
• Premature Withdrawal of Term Deposit
•
Premature Renewal of Term Deposit• Advances against Deposits
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Settlement of Dues inDeceased Deposit A/C
• If the depositor has registerednomination with the bank
• In the absence of nomination, thebank will pay the amount outstandingto all legal heirs against joint
application and on receipt of thenecessary documents, including courtorder.
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Stop payment facilities
• The Bank will accept 'stop payment'instructions from the depositors inrespect of cheques issued by them.
Charges, as specified, will berecovered.
Dormant Accounts :-
Accounts which are not operated for aconsiderable period of time (usually 12/24months• Such accounts can be used again on an
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Safe Deposit Lockers• This facility is not offered through all
bank branches
– Safe deposit lockers may be hired by an
individual (not a minor) singly or jointlywith another individual.
•
Redress of Complaints andGrievances : if customer has anycomplaint regarding to service of thebank ,so has authority to approch. – If bank doesn’t response he has a right3/5/12
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Non Resident indians
• Definition according to FEMA 1999 : – Non-Resident Indian National (i.e. Non-
resident Indian holding Indian passport)
• Indian citizens who proceed abroad foremployment
• Indian citizens working abroad for WTO.WHO, IMF and so on
•
Officials of Central and State Governmentsofficers .
– Persons of Indian Origin (i.e., Non-residents holding foreig passports)
» PIO is defined as a citizen of any country .3/5/12
Depos t Serv ces O ere to
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Depos t Serv ces O ere toNRI
•
Non Resident Ordinary Accounts(NRO) – These are Rupee accounts and can be
opened by any person resident outside
India – it is basically a domestic account of an
NRI which help him get credits whichaccrue in India
– NRO accounts can be opened :-• savings account
• current account
•
Term-deposit accounts3/5/12
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Conti….
• Non-Resident (External) RupeeAccounts( introduced in 1970) – Any NRI can open an NRE account with
funds remitted to India through a bankabroad.
– Interest rates on NRE accounts aredetermined by the RBI, for both savings
and term deposits• Foreign Currency Non Resident Account
(Banks) May 15, 1993 –
NRI can opened a/c in these currencies:3/5/12
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Deposit Insurance
• Deposit Insurance and CreditGuarantee Corporation of India(DICGC)
• Deposit insurance helps sustainpublic confidence in the bankingsystem through the protection of
depositors• DICGC is a wholly-owned subsidiary
of the RBI
Banks insured by the DICGC3/5/12
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Features of the DICGC
• When is DICGC liable to pay? – A bank goes into liquidation – A bank is merged with another bank –
In the event of a bank failure• Methods of protecting depositors'
interest:-
(i) by transferring business of the failedbank to another sound bank (in case of merger or amalgamation)
(ii) where the DICGC pays insurance
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Types of deposit covered byDICGC
• Deposits of foreign Governments• Deposits of Central/State
Governments• Inter-bank deposits;• Deposits of the State Land
Development Banks with the State
co-operative bank• Any amount due on account of any
deposit received outside India
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• Maximum deposit amount insured bythe DICGC:- – Rs100,000 for both principal and
interest amount• Cost of deposit insurance• Premium charged and claims paid by
DICGC:- – The premium rates charged by DICGC
were raised to Re 0.10 per deposit of Rs.100 with effect from April 1, 2005
• Withdrawal of insurance cover3/5/12
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