Banking Awareness- DEPOSITS

DEPOSITS:-

In Banking System, deposits are of two types:-

(a) Demand Deposit.
(b) Term/ Time Deposit.

(a) Demand Deposit :-
In this type of deposits, we can submit or withdraw money anytime. There are two types of Accounts under demand deposits:-
(i) Current Account (CA)
(ii) Saving Account (SA)

(b) Time / Term Deposit :-
In this type of deposits, our money is fixed for some particular period. We can withdraw our money anytime bu the loss in interest will be ours.
There are two types of Accounts under Term deposits:-
(i) Fixed Deposit (FD)
(ii) Recurring deposit (RD)
In FD & RD, for same time period same interest rates will be there for deposits of less than 1 Crore.
Loss of interest on Breaking FD/RD is governed by RBI.

--> Interest Rates for both demand and term deposits is decided by the Bank.
--> Interest type is compound i.e., Interest is calculated on the compound interest formulae.

BULK TERM DEPOSIT:- 

(i) Bulk term deposits means deposit of Rs.1 Crore and Above.
(ii) Banks are free to decide different interest rates for the same time period bulk term deposit.
(iii) Banks are free to decide penalty interest rates on premature withdrawal of Bulk term Deposits.
(iv) Banks can Deny premature withdrawal facility on bulk term deposits.

	Time Period
	Minimum	Maximum
F.D.	7 days	10 years
R.D.	6 months	10 years

	Amount
	Minimum	Maximum
F.D.	As decided by Bank	Unlimited
R.D.	As decided by Bank	Less Than Rs.15 Lakh/Month

Tax Saving Products:-
Bank Offers tax saving FD with a lock in period of upto 5 Years & Maximum investement can be upto Rs. 1 Lakh for claiming Tax deduction under 80C of Income Tax.

Current Account	Saving Account
(i) For Businessmen, Company	(i) For Household
(ii) No Interest Given	(ii) Interest Provided
(iii) No. of Transactions Unlimited	(iii) limited Number of transactions
(iv) Overdraft Facility provided	(iv) No Overdraft Facility Provided

Saving Accounts:-
Interest is decided by the Bank.
Interest is Compound interest & it can be credited by the bank in the account either quarterly or in six months i.e., Half- yearly.

RBI guidlines on Saving Account Interest rates:-
(i) Banks are free to decide the interest rates on saving account.
(ii) On deposits upto Rs.1 lakh, interest shall be same.
(iii) On deposits above 1 lakh, interest rates may differ depending upon the amount.

RBI guidlines on Calculation of Interest Rates on Saving Accounts:-
(i) The interest rates shall be calculated on end of day balance.
(ii) RBI has allowed the banks to decide the periodicity of compounding interest and payment of interest on saving accounts.