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Unit 6: Type of Deposit Account
2. Bank account helps in making payments: The bank account holder can make payment to Notes
third parties through his bank account. It may be regarding electricity bills, insurance
premium, etc. The bank also makes direct payment on the instructions of the customer.
3. Bank account holders get advances and loans: The current account holder can obtain an
OD facility from his bank. The savings account holders can also obtain loans to purchase
computers and such other equipments. The recurring and fixed deposit account holders
can get a loan up to 75% of the amount to their credit.
4. Bank account helps in smooth transactions: The bank account makes it possible for the
businessmen to conduct their business operations smoothly in both domestic trade as
well as foreign markets.
5. Bank account holders get a safe deposit locker: The bank provides safe deposit locker
facility to its account holders to keep their valuables like gold jewellery, share certificates,
property documents, etc.
Self Assessment
Fill in the blanks:
9 Bank account facilitates ............................. money.
10 The recurring and fixed deposit account holders can get a loan up to ............................. of the
amount to their credit.
6.4 No Frills Account
In 2005-06, the RBI called upon Indian banks to design a ‘no frills account’, low ‘minimum
balance maintenance’ account with simplified KYC (Know Your Customer) norms. Low income
groups having no access to formal banking systems can well be brought under the umbrella of
savings & credit – key factors which form the basis of financial inclusion. While there is no
shortage of credit programs, the equally important savings aspect can rightly be nicknamed as
the ‘forgotten half of microfinance’. ‘No frills’ savings accounts appear capable, at least on paper,
to cater to the small and irregular income flows of the poor.
The RBI has insisted the banking community to introduce the no-frills account to bring a large
section of underprivileged people into the banking web. Even with 70,000 bank branches in the
country, a large section of the population continues to remain credit-starved. The no-frills bank
account is an innovative instrument to introduce the concept of banking to the underprivileged
people. These no-frills accounts involve zero or a very low balance with limited transaction
facilities.
In may 2012, Reserve Bank of India asked banks to drop the ‘no-frills’ label from the basic saving
accounts as the terminology has become a stigma. It has asked banks to provide the zero balance
facility in the basic banking accounts along with ATM-cum-debit cards without any extra charge.
Self Assessment
Fill in the blanks:
11 The no frills account was designed for the .............................
12 The no-frills accounts ............................. with limited ............................. facilities.
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