Bank Deposits

Bank Deposits

Accepting deposits is one of the two major activities of the Banks.

Banks are also called custodians of public money. Basically, the money is accepted as deposit for safe keeping. But since the Banks use this money to earn interest from people who need money, Banks share a part of this interest with the depositors. The quantum of interest depends upon the tenor - length of time for which the depositor wishes to keep the money with the Bank - and the ease of withdrawal. The thumb rule is, longer the tenor, higher the rate of interest and lesser the restrictions on withdrawal, lesser the interest. Exceptions, however, exist. Deposits are accepted from both resident (domestic) or non-resident Indian customers.

It is the business of the banker to accept deposits so that he can lend it to others and earn interest. Depending upon the liquidity position of the market and the size of deposit, the earnings can vary and if the size of the deposit is big enough, it is advisable to shop around and get the best rate.

Type of deposit accounts (Domestic Customers)

1. Fixed Deposit Accounts

2. Demand Deposits

o Savings Account

o Current account

Most of the other products offered by the Banks viz. Recurring Deposit Account, Multi Option Deposit Account, Special Term Deposit Accounts, Current Fixed Account etc. are essentially combinations of the above basic type of accounts and are packaged by different Banks to attract different groups of customers.