GNEC BALC X02X EN15

Before going into the deposits, please don’t forget …

Deposits are liabilities for banks and loans are assets.

TYPES OF ACCOUNTS

1. SAVINGS ACCOUNTS
2. CURRENT ACCOUNTS
3. FIXED DEPOSIT ACCOUNTS
4. RECURRING DEPOSIT ACCOUNTS
5. BULK DEPOSIT ACCOUNTS

Let us discuss one by one…

1. SAVINGS ACCOUNTS
COST OF FUNDS
FD
SD RD BD
CD
Approx. interest
rates in %
Salient features 0 1 2 3 4 5 6 7 8 9 10 11 12

 For individuals / small businesses

• Idea is to save a little out of their current incomes
• Also to make them earn some interest on their savings
 Minimum balance (varies from bank to bank)
• Normally Rs 500/- (without cheque book facility)
• Rs 1000/- (with cheque book facility)
(some banks allow premium savings a/c deposits with min. balance of Rs. 5000 to Rs. 25000/-)
 Banks offer zero balance accounts previously known as No-Frill accounts / BSBDA and now under
PMJDY
1. SAVINGS ACCOUNTS
COST OF FUNDS
FD
SD RD BD
CD
… Contd Approx. interest
rates in %
Salient features 0 1 2 3 4 5 6 7 8 9 10 11 12

 Eligible for Resident Indians above 18 years age (for 10 to 18 years age group account is
allowed with some restrictions and for persons below 10 years, minor account with guardian
is to be opened)
 Can be opened by individuals (single / jointly) and HUF’S
 Interest rates vary from 4% to 6% (Most of the banks offer 4% at present)
 They are classified as Demand Deposits as the customer can withdraw anytime. Only minor
portion is classified as time deposit
 Banks impose restrictions on the number of transactions in a specified period as well as
maximum amount that can be withdrawn (but not enforced strictly, because of stiff
competition from other banks)
1. SAVINGS ACCOUNTS
COST OF FUNDS
FD
SD RD BD
CD
… Contd Approx. interest
rates in %
Salient features 0 1 2 3 4 5 6 7 8 9 10 11 12

 Money can be withdrawn either by cheque or by withdrawal slip

 Minimum balance / minimum quarterly balance is to be followed (However, zero balance
accounts / No-Frill accounts / BSBDA / PMJDY are allowed by the banks, where maintaining
minimum balance is not necessary)
 There is no maturity date as the savings account is continuous in nature.
 Regular monthly payments through ECS are allowed for payment of house loans, personal
loans etc…
 As per the Banking Regulation Act 1949, the interest earned on savings account is not
subject to TDS, as savings accounts are demand deposits.
1. SAVINGS ACCOUNTS
COST OF FUNDS
FD
SD RD BD
CD
… Contd Approx. interest
rates in %
Salient features 0 1 2 3 4 5 6 7 8 9 10 11 12

 No tax is payable on interest earned on saving bank account up to Rs.10,000 per year i.e.
interest income up to Rs.10,000/- is exempted from income tax.
 From 25th October 2011, RBI has deregulated savings bank interest rates and now the banks
are free to decide the same within certain conditions imposed by RBI.
 From 1st April 2010, the interest is calculated on daily basis taking into account minimum
balance available on every day.
 Some banks have got facility to convert saving deposits into money multiplier schemes / multi
option deposits etc., to earn more interest.
 COST OF FUNDS
FD
2. CURRENT ACCOUNT CD SD RD BD

Approx. interest
rates in %
Salient features 0 1 2 3 4 5 6 7 8 9 10 11 12

 Firms and companies are eligible to open account

 Basically meant for business men, to run businesses
 Normally firms / companies / trusts / association of persons can open them
 It is also called running and active account
 Carry no interest on deposits
 No limit on either the number of transactions or the maximum amount of transaction
 Sometimes banks stipulate higher minimum balance depending on the services offered
 Overdraft facility (short term loan facility) is available
 Standing instruction facility is also available
 COST OF FUNDS
FD
2. CURRENT ACCOUNT CD SD RD BD

Approx. interest
… Contd rates in %
Salient features 0 1 2 3 4 5 6 7 8 9 10 11 12

 Transfer of account to any branch is highly liberalized

 ATM /Debit card facility is available
 Nomination facility is normally not available (Allowed only in some cases)
 Deposits and withdrawal of money (cash) at any location
 Multi-location fund transfer
 Support from customer care executives
 Periodical download of bank statements in ‘XLS’, ‘TXT’, ‘PDF’ formats
 COST OF FUNDS
FD
WE DISCUSSED ABOUT CD SD RD BD

CURRENT ACCOUNTS Approx. interest

rates in %
0 1 2 3 4 5 6 7 8 9 10 11 12
SAVINGS ACCOUNTS

CASA RATIO IN %
CASA RATIO
CASA RATIO IS THE RATIO
OF THE DEPOSITS IN THE
FORM OF CURRENT AND
SAVINGS ACCOUNTS TO THE
TOTAL DEPOSITS
(NORMALLY EXPRESSED IN
PERCENTAGE)

Tentative Figures