INTRODUCTION

A bank account is a financial account maintained by a bank for its

customer. It can be a deposit account, or any other type of account, and
represents the capital that a customer has entrusted to the bank and from
which the customer can make withdrawals. If the account is a loan
account, the customer owes money to the Bank.
A bank account is essential not only to keep ones money safe but also to
multiply it by getting an interest over the amount deposited. Different
kinds of bank accounts may be savings account, recurring deposit
account or a fixed deposit account. The most common and usually the
first account that a person opens is a savings account. The money held in
this account can be freely withdrawn. However, banks generally require its
customers to hold a minimum balance in such account.
Opening a Bank Account is fairly simple. It includes the following steps

Filling up an Account Opening Form, affixing photographs and

providing the requisite documents like Identity proof, Address
Proof, PAN card, Aadhaar Card, etc.
Providing the bank with Know Your Customer (KYC) details.

TYPES OF ACCOUNTS
Bank accounts can be classified under the following heads:
1. DEMAND DEPOSITS: These are the deposit accounts from which
the deposited funds can be withdrawn on demand by the customer.
This type of account can be further classified into

Current Account: These accounts are opened for liquidity of

funds and meeting day to day requirements of businesses.
There is no restriction on the number of withdrawals or the
amount of withdrawals made from this account and they can
be
opened
by
individuals,
businesses,
Government
organizations, societies, trusts, etc. No income is gained on
these deposits, i.e., banks do not pay any interest or
brokerage to current account holders. Current Account holders
also gain benefits life overdraft facilities, cheque and bill
collection facilities, etc.

Savings Account: A savings bank account helps individuals in

maintaining whole or part of their income in savings which
could be used to meet some future monetary need. This
amount remains completely liquid and can be withdrawn on
demand. It also helps customers earn income over there
deposited fund as the banks give interest on such accounts to
promote saving habits. As opposed to a current account,
banks may put restrictions on the number of withdrawals
made from this account, or fix a minimum balance to be
maintained in the account. Overdraft is not allowed in savings
account. The customer is provided with a passbook to keep
tract of his debit and credit transactions. Access to the
deposited amount is given by providing cheque book facility,
ATM
facility,
etc.

Call Deposits: Call deposits are a type of investment account.

The money deposited in such accounts can only be withdrawn
on call or demand by the customer. Generally, advance notice
to be given to the bank before the depositor requires payment
of deposit is not required, but some banks may make giving
such notice necessary. Call deposits may or may not fetch
interest.

2. TERM DEPOSITS: In a term deposit, the bank holds the deposited

amount for a predetermined period or term. The depositor
understands that the funds he/she has deposited can only be
withdrawn at the end of the aforesaid fixed term and at the same
time he/she is also guaranteed no change in the rate of interest
during this period. These type of account can be further classified
into
Fixed Deposits: This type of account is opened to invest
money for a fixed amount of time and for gaining higher
interest over such deposit. The principal amount invested is
only repayable on and after the pre-determined maturity date.
There is definite lack of liquidity of funds. The rate of interest
on such deposit cannot be altered and each bank decides its
own rate in accordance with the term of deposit. A receipt is
issued against such deposit containing the depositors
personal details, the term of deposit, the rate of interest, the
date of maturity, and the amount to be paid on maturity, etc.
This receipt is not transferrable. On maturity, the deposit can

either be renewed for another term or it can be paid up to the

depositor.
Recurring Deposits: Recurring deposit account requires a
certain amount of money to be deposited with the bank at
specified intervals for a fixed term or period of time. The
frequency of deposit may be weekly, monthly or yearly. This
type of account promotes saving habits in people and also
provides a higher rate of interest than that provided in a
savings account. The total amount accumulated over the fixed
period along with interest is repaid, on maturity, to the
depositor. In case of pre- mature withdrawal or default in
payment of instalments, the rate of interest could be reduced
from the one contracted originally. The depositor may also be
made liable for penalties.
3. HYBRID DEPOSITS OR FLEXI DEPOSITS: This type of account
includes the features of both savings account and fixed deposit
account. It is a hybrid account specially created to provide flexibility
to the customer. It provides liquidity of funds along with high rate of
interest. Different banks call this type of account by different names.
The main advantage of this type of account is that the customer
only has to open one saving or current account and the particulars
of any term deposits are reflected in the statement of such saving or
current account itself. The depositor accrues a higher interest on the
surplus money than he would have received if he/she opened two
separate accounts.