Page 78 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 5: Banker Customer Relationship

(f) Panchayat samitis. Notes
(g) State housing boards.
The difference between savings account and current account can be summed up as follows:

Feature/Service Savings Account Current Account
Business Banking Not Applicable Yes
Minimum Balance Required Higher
ATM Cards Available Available
Interest Rate Applicable Mostly No
Bank Overdraft No Yes
International Transactions Depends Yes
Deposit Interval Not Applicable As per bank
Daily Withdrawal Limits Applicable Not Applicable, Mostly

Savings account and Current account come under the demand deposits account.

5.3.3 Recurring Account

In order to inculcate the habit of savings on a regular or recurring basis, the banks have started
various daily, weekly, or monthly deposit schemes in recent yea. In these accounts, the money
is generally deposited in monthly installments for a fixed period and is repaid to the deposito
along with interest on maturity. These are referred to as recurring deposits. The period of
recurring deposit varies from bank to bank. Generally banks open such accounts ranging from
one to ten yea.
1. Opening and functioning of account: The RD account can be opened by any peon, by a
guardian in the name of a minor and even by a minor, more than one peon jointly or
individually.
While opening the account, a pass book is provided to the depositor which is to be presented
to the bank at the time of deposits and repayment of amount. Installments for each month
should be paid before the last working day of that month.
2. Rate of interest: According to the directive of the RBI, the interest provided by banks on
RD must be in accordance with the rates prescribed for various term deposits. The rate of
interest is therefore almost equal to that of fixed deposits.

5.3.4 Fixed Deposits

Fixed deposits refer to the deposits repayable after the expiry of a certain period, which generally
varies from 3 months to 5 yea. The fixing of the period enables the banker to invest money
without having to keep a reserve and hence is very popular with the banke.

1. Rate of interest: Higher rates of interest are offered on fixed deposits as the depositor
parts with liquidity for a certain period. The longer the period, the higher will be the rate
of interest.
2. FD for senior citizens: Special FD schemes have been formulated by RBI for senior citizens
in which they are offered higher and fixed rates of interest.

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