CHAPTER 1

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 INTRODUCTION

1.1 MEANING :
A deposit in a bank refers to the act of
placing money into a bank account. Banks typically
offer a range of deposit accounts, including savings
accounts, checking accounts, and certificates of
deposit (CDs). When a person makes a deposit in a
bank, they earn interest on their balance, and they
can withdraw their money at any time using an
ATM, through online banking, or by visiting a bank
branch.

A deposit in a post office refers to the act of placing

money into a savings account offered by a
government-operated postal service. In many
countries, post offices offer savings accounts to
individuals as a way to encourage people to save
money. Post office savings accounts are considered
to be low-risk because they are backed by the
government of the country. However, post office
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savings accounts generally offer lower interest rates
than bank deposits.

Both bank deposits and post office deposits allow

individuals to safely store their money and earn
interest on their deposits. However, there are some
key differences between the two, such as interest
rates, minimum deposit requirements,
convenience, safety, and withdrawal flexibility,
which may influence an individual’s decision on
where to deposit their funds.

1.2 TYPES BANK DEPOSIT :

1. Savings Account: A basic deposit account that

typically earns interest on the balance.

2. Checking Account: An account that allows

frequent deposits and withdrawals and is
typically used for everyday transactions.

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3.Money Market Account: An account that typically
offers a higher interest rate than a savings
account, but may require a higher minimum
deposit.

4.Certificate of Deposit (CD): An account that

typically requires a fixed deposit for a fixed period,
and offers a higher interest rate than a savings
account.

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1.3 ADVANTAGES OF BANK DEPOSIT:

1.Safety and security: Banks are highly regulated

institutions that are required to follow strict
guidelines and regulations to ensure the safety
and security of their customers’ deposits.

2.Highuidity: Deposits in banks are highly liquid,

meaning that you can easily access your funds
when you need them.

3.Competitive interest rates: Banks offer

competitive interest rates on deposits, which
can help your savings grow over time.

4.Additional services: Banks offer additional

services, such as ATM access, online banking,
and mobile banking, which make it easy to
manage your finances.
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1.4 DISADVANTAGES OF BANK DEPOSIT:

1.Low interest rates: While banks do offer

competitive interest rates, the interest rates on
deposits may not keep pace with inflation,
which means that the value of your savings may
be eroded over time.

2.Fees and charges: Banks may charge fees for

various services, such as account maintenance
fees, transaction fees, and ATM fees.

1.5 FEATURES OF BANK DEPOSIT :

Fixed deposit scheme offered by a

company. Similar to a bank deposit
Used by companies to borrow from small
investors
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 The investment period must be selected
carefully as most FDs are not encashable
prior to their maturity

Not as safe as a bank deposit. Company

deposits are ‘unsecured’
Offer higher returns than bank FDs, since
they entail higher risks

Rating can be guide to their safety. Go in

for FDs with a higher and stable Rating

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1.6 POST OFFICE DEPOSIT :

Deposit in a post office refers to the act of putting money

or other valuables into a savings account provided by the
post office, which can then be withdrawn or accumulated
with interest over time.

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1.7 TYPES OF POST OFFICE DEPOSIT :

1.Savings Account: A basic deposit account that

earns interest on the balance.

2.Recurring Deposit Account: An account where

a fixed amount is deposited every month for a
fixed period.

3.Time Deposit Account: An account that

requires a fixed deposit for a fixed period, and
offers a higher interest rate than a savings
account.

4.Monthly Income Scheme: An account that

pays a fixed amount of interest every month
on the deposited amount for a fixed period.

1.8 ADVANTAGE OF POST OFFICE DEPOSIT :

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1.Guaranteed returns: Deposits in post offices are
backed by the government, which means that
they offer guaranteed returns.

2.High interest rates: Post office deposits offer high

interest rates, which can help your savings grow
at a faster rate.

3.Tax benefits: Some post office deposits offer tax

benefits, which can help you save on taxes.

4.Easy accessibility: Post offices are easily

accessible, and you can deposit or withdraw your
funds from any post office branch.

1.9 DISADVANTAGES OF POST OFFICE DEPOSIT:

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 1.Limited services: Post offices may not offer
additional services, such as online banking or
mobile banking, which can make it difficult to
manage your finances.

2.Lack of liquidity: Post office deposits may have a

lock-in period, which means that you may not
be able to access your funds when you need
them.

3.Limited availability: Post office branches may

not be available in all areas, which can make it
difficult for some people to access their
services.

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1.10 FEATURES OF POST OFFICE DEPOSIT :

1.Interest: Post offices pay interest on the money

you deposit into your account, with the interest
rate depending on the type of account you
have. Generally, post office savings accounts
offer lower interest rates than fixed deposit
accounts.

2.Deposits: You can deposit money into your post

office account at any time. Depending on the
type of account you have, there may be a
minimum deposit amount required.

3.Withdrawals: You can withdraw money from

your post office account at any time, either in
person at a post office branch, through an ATM
or through online banking. However, there may
be some restrictions on the number of

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 withdrawals you can make per month,
particularly with savings accounts.

4.Fees: Post offices typically charge lower fees

than banks for maintaining a deposit account or
for certain transactions, such as withdrawing
money.

5.Fixed term: Some post office accounts, such as

fixed deposit accounts, have a fixed term,
meaning that you can only withdraw your
money after a certain period of time. However,
fixed deposit accounts usually offer higher
interest rates than savings accounts.

6.Security: Deposits in a post office are backed by

the government, providing security for your
money.

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1.11 DIFFERENT BETWEEN BANK DEPOSIT AND POST
OFFICE DEPOSIT :

There are several differences between deposit in bank

and deposit in post office, including:

1. Interest rates: Generally, banks offer higher interest

rates on deposits than post offices. However, post
office deposits are usually backed by the
government, which provides an added level of
security.

2. Fees: Banks may charge higher fees for maintaining

an account or for certain transactions, such as
withdrawing money from an ATM that belongs to a
different bank. Post offices typically charge lower
fees.

3. Accessibility: Banks offer a wider range of services

and are more easily accessible through a network of
branches, ATMs, and online banking. Post offices

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 have a more limited range of services and may be
less accessible in some areas.
4. Flexibility: Banks offer a wider range of deposit
account options with different features, such as
overdraft facilities and credit cards. Post offices
typically offer fewer options and may have more
limited features.

5. Government backing: Deposits in banks are not

backed by the government, but may be insured by a
government-backed deposit insurance program up
to a certain amount. Deposits in post offices, on the
other hand, are often backed by the government
itself.

Overall, the choice between a bank and a post office for

depositing money depends on individual needs and
preferences. While banks may offer higher interest rates
and greater accessibility, post offices may offer lower
fees and greater security due to government backing

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1.12 HISTORY:

The first bank in India, the Bank of

Hindustan, was established in 1770. Over the years,
many other banks were set up, including the Bank of
Bengal, the Bank of Bombay, and the Bank of Madras,
which were merged in 1921 to form the Imperial Bank of
India. The Reserve Bank of India was established in 1935
to regulate the banking sector in the country. Today,
there are many public sector banks, private sector banks,
foreign banks, and cooperative banks in India.

Examples of Deposits in Banks in India:

In India, banks offer various types of deposit accounts,
including savings accounts, current accounts, fixed
deposit accounts, recurring deposit accounts, and senior
citizen savings accounts. Savings accounts are the most
common type of bank deposit account, which offer
interest on the deposited amount and allow customers
to withdraw money whenever they need it. Fixed deposit
accounts offer higher interest rates than savings
accounts but require customers to leave their money in
the account for a specific period of time. Current

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accounts are typically used by businesses and offer fewer
restrictions on withdrawals.

1.13 History of Deposits in Post Offices in India:

The Indian Postal Service began offering savings services
in 1882 with the launch of the Post Office Savings Bank.
This service allowed people to deposit small amounts of
money and earn interest. Over the years, the Indian
Postal Service has expanded its financial services,
offering various savings schemes and other financial
products.

Examples of Deposits in Post Offices in India:

In India, post offices offer various savings schemes,
including the Public Provident Fund (PPF), National
Savings Certificate (NSC), Monthly Income Scheme (MIS),
and Senior Citizens Savings Scheme (SCSS). The PPF is a
long-term savings scheme that offers tax benefits and is
often used for retirement planning. The NSC is a fixed
income investment that offers tax benefits and is backed
by the government. The MIS is a monthly income scheme

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that offers a regular income stream to investors, and the
SCSS is a savings scheme designed for senior citizens.

1.14 COMPARATIVE ANALYSIS :

In India, both banks and post offices offer

a range of deposit options to customers. While banks
offer more flexibility in terms of deposit and withdrawal
options, post offices often offer higher interest rates on
their savings schemes. Additionally, post offices are more
accessible in rural areas where banking services may be
limited. Overall, the choice between a bank deposit and a
post office deposit in India depends on the customer’s
needs and preferences

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1.15 CONCLUSION :

both banks and post offices offer options for

depositing money, but they have some key differences.
Banks offer a wider range of services and are more
convenient, with a larger network of branches and ATMs.
On the other hand, post offices generally offer higher
interest rates, particularly for small savings schemes, and
are backed by the government. Both banks and post
offices are considered safe for depositing money, but
banks have deposit insurance provided by DICGC, while
post office deposits are guaranteed by the government.
Ultimately, the choice between a bank and a post office
for depositing money depends on your individual needs
and preferences

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