BANK DEPOSITS

INTRODUCTION

A Bank account is a financial account recording the financial transactions between the customer and the bank & resulting the financial position of the customer with the bank.

Deposit Management One of the main functions of banks is to

accept deposits. Deposits may be fixed, saving, current etc Banks will have to pay interest to the customers on the basis of the amount deposited by them. Deposits are used for the purpose of lending but since banks are using other peoples money to do business, it should make sure that it will be able to repay the deposits to the respective customers when they claim for it. The management of all this is called deposit management.

Types Of Deposits

Savings DepositCurrent DepositsFixed Deposits Recurring Deposits

SAVINGS ACCOUNT

A Savings account is meant to promote the habit of saving among the people. It also facilitates safekeeping of money. In this scheme fund is allowed to be withdrawn whenever required, without any condition. Hence a savings account is a safe, convenient and affordable way to save your money. Bank also pays you a minimal interest for keeping your money with them.   .

Features of savings account

1.Minimum amount2.It can be opened individually or

jointly3.It is a safe account4.The interest rate varies

between 2.5%to 4%5.Does not have any fixed period

for deposit

How do you open a savings account

1. You open a savings account at the bank.

2. Opened in the name of an individual or in joint names of the depositors by filling up the appropriate forms.

3. Submitting the documents like photocopy of passport or Electoral card, Postal identification cards as address proof and two passport size photos. 

4. The bank pays you interest on the money that you deposit and leave in that account.

5. Most banks also require an introduction for opening an SB account. 

6. The bank then loans that money out to other people, only they charge a slightly higher interest rate on the loan than what they pay you for your account.

7.   If your account earns one percent interest, then each day 1/365th of that one percent of the amount of money you have in your savings account is then added to your total. It is calculated by;-

Daily compounding = Principal (1 + interest rate/365)365 = (daily compounded amount)

• Meaning• Features• Advantages• Disadvantages

Current Account Deposits

Current account

Current account can be opened in co-operative bank and commercial bank. Incurrent account, amount can be deposited and withdrawn at any time without giving any notice. The customers are allowed to withdraw the amount with cheques and they generally do not get any interest. In India Co-operative bank may allow interest upto 1%.Current account holder gets one important advantage of overdraft facility. Features of Current Bank Account The main features of current account are as follows:-• The main objective of current bank account is to enable the

businessmen to conduct their business transactions smoothly.• There is no restriction on the number and amount of deposits.

There is also no restriction on the withdrawals.• Generally bank does not pay any interest on current account.

Nowadays, some banks do pay interest on current accounts.• Current account is of continuing nature and as such there is no

fixed period.

Advantage of Current Bank Account

The advantages of current account are as follows:-• Current account enables businessmen to conduct his business

transactions smoothly.• The businessmen can withdraw any amount at any time from their current

accounts. There are also no restrictions on withdrawals.• The businessmen can make direct payment to their creditors with the help

of cheques.• Current account enables the account holder to obtain overdraft facility.• The creditors of the account holder can get credit-worthiness information

of the account holder through inter bank connection.• Current account facilitates the industrial progress of the country. Without

the help of this account, businessmen would have difficulties in running their business.

• Specialised accounts for different customer groups; increasing the likelihood of good-value services

• Management of regular payments (for example your monthly salary)• Access to money abroad without the need to exchange cash• No need to carry large amounts of cash, increasing safety• Statements issued to simplify money management and budgeting• interest paid on account balance  

Drawbacks:-

1. Usually low interest rates2. Maximum daily limits on cash withdrawals3. Fees charged for package current accounts4. Security of electronic transfer and card payments can be

compromised5. Paperwork and terms and conditions can be confusing and time-

consuming6. Large corporate businesses may pay large fees on transactions7. Losing a card can restrict access to funds8. Chance of fraud when using internet banking

  

Fixed Deposits A deposit of money that pays higher interest

than a savings account but imposes conditions on the amount, frequency and the period of withdrawals.

Fixed deposits are those deposits which mature after specific or long period of time. They are also called time deposits.

FEATURES OF FIXED DEPOSITS

The main purpose of fixed deposit account is to enable the individuals to earn a higher rate of interest on their surplus funds (extra money).

Minimum deposit amount is Rs 1000/- and there is no upper limit.

The amount can be deposited only once. For further such deposits, separate accounts need to be opened.

A high interest rate is paid on fixed deposits. The rate of interest may vary as per amount, period and from bank to bank.

FEATURES OF FIXED DEPOSITS

Term of FD can range from 15days to n of years .

The interest can be compounded quarterly, half-yearly or annually and varies from bank to bank.

Minimum deposit amount is Rs 1000/- and there is no upper limit.  

Withdrawals are not allowed. However, in case of emergency, banks allow to close the fixed account prior to maturity date. In such cases, the bank deducts 1% (deduction percentage many vary) from the interest payable as on that date.

ADVANTAGES OF FD’s

Fixed deposit encourages savings habit for a longer period of time..

Fixed deposit account enables the depositor to earn a high interest rate.

The depositor can get loan facility from the bank.

On maturity the amount can be used to make purchases of assets.

ADVANTAGES OF FD’S

The bank can get the funds for a longer period of time which they can be used in profitable areas

The bank can lend such funds for short term loans to businessmen.

Fixed deposits indirectly boost economic development of the country.

The amount invested in fixed deposits with a maturity period of 5 years in a Scheduled bank is eligible for tax deduction under section 80C but the interest earned on the deposit is taxable.

Prevailing rates for FD’sBANK NAME / DURATION 1 - 2yrs 2 - 3yrs 3 - 5yrs

Bank of Baroda 9.00 9.00 8.50

UCO Bank 9.50 9.25 9.25

Axis Bank 9.25 8.50 8.50

HDFC Bank 9.00 9.25 8.25

ICICI Bank 8.25 8.50 8.75

ING Vysya Bank 9.50 9.25 9.00

Karnataka Bank 9.75 9.50 9.50

Kotak Bank 9.25 9.25 9.25

The Federal Bank 9.80 9.50 9.25

Yes Bank 9.25 8.75 8.75

RECURRING DEPOSITS

The Recurring deposit account is an account in the bank (or a Post office in some countries) where an investor deposits a fixed amount of money every month for a fixed tenure.This scheme is meant for investors who want to deposit a fixed amount every month, in order to get a lump sum after some years. 

FEATURESThe main objective of recurring deposit account is to develop regular savings habit among the public.

•In India, minimum amount that can be deposited is Rs.10 at regular intervals.

•The period of deposit is minimum six months and maximum ten years.

•The rate of interest provided is the second highest.

•No withdrawals are allowed. However, the bank may allow to close the account before the maturity period.

•The bank provides the loan facility. The loan can be given up to 75% of the amount standing to the credit of the account holder.

Recurring deposit encourages regular savings habit among the people.•Recurring deposit account holder can get a loan facility.•Recurring deposit accounts are suitable for salaried persons.•The bank can utilize such funds for lending to businessmen.•The bank may also invest such funds in profitable areas.

ADVANTAGES

CONCLUSION There is a lot of confusion that which of the deposits suit our needs.

For that I will give you a small recap of what my friends explained you’ll.

The Types of Deposits:-

1. Fixed Deposits.2. Savings Deposits.3. Recurring Deposits.4. Current Deposits.

Acknowledgement

We would like to thank our subject Mam, Miss. Reshma for guiding us with our project. We learnt a lot from this and also enjoyed the experience of working with different kind of people.

Presented By:- Group No.3 Bhavesh Bajaj (3) Dipti Jethwani (16) Geet Mehta (28) Roshnee Patel (61) Sahil Visaria (51) Palak Sanghvi (39)

Thank You.