Deposits in Commercial Banks

We always hear different type of scheme and deposits offered by banks in our childhood days and by this time we are familiar with them .these are one type of liability of the banks.Today I would like to discuss about some basic type of deposits here.

Current Deposits

These are account basically opened for the smooth transaction of money by the businessmen.Generally there are  no interest paid on such deposits but now a days some interest is paid if the money in account doesn’t fall below a particular amount.Bank generally charges small amount which are incidental charges.there is no restriction on no of transaction or amount of transaction in a day .Cheque book facility are available.There is high liquidity in this type of deposit.

Saving Deposits 

These Accounts are popular among individual who want to save also along with liquidity.Here the no of transaction and amount of transaction in a day  are restricted but most banks hardly enforce them.I can say it by my own experience. But banks have every right on this type of restriction if found saving account misused as current. Cheque book facility is not  available but there is a lot of flexibility in deposition and with drawl of funds.Till Oct 2011,the interest paid on this was regulated by RBI as 4% but after that banks were empowered to give interest according to their intelligence.Although public sector banks pay the same rate but some private banks bank as more as 6% to 7%.

Fixed Deposit(FD)

In some countries it is called Term Deposit .In this Account people are paid high interest rate as from 7% to 9% But people have to deposit for a specified period which varies from 7 days to 15 year which is decided at the time of opening the account.that period is called maturity period .We can break the FD prematurely  and in such case we will able to receive interest upto that period but we have to pay penalty .Here we are given a FD certificate not the passbook.we may apply for the facility of interest to be credited in saving account on the quarterly basis.

Recurring Deposits(RD)

RD are getting much popularity these days .Depositors are required to deposit money on monthly basis for a fixed period of time.each installment may vary from Rs 5 to Rs 500 and maturity period 1 year to 10 year.Any default in monthly payment attracts a small penalty .

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