Types of accounts

TYPES OF ACCOUNTS:- 

There are different types of bank account in the Indian banking sector such as:- 

Savings deposits account:-

A savings deposit account is an account provided by a bank for individuals to save money and earn interest on the cash held in the account. there are some restrictions are imposed on the depositor under this account. For example, he can withdraw only a specified sum of money in a week. The rate of interest allowed on this account is rather low. This type of deposit account encourages small savings in the country.

Features of saving deposit account:-

1. There is no restriction on the number and amount of deposits.
2. The money can be withdrawn either by cheque or withdrawal slip.
3. The rate of interest payable is very nominal on saving accounts.
4. Saving account is of continuing nature. there is no maximum period.
5. A minimum amount has to be kept on saving account.
6. No loan facility is provided against saving account.
7. The main objective of saving account is to promote savings.

Current Deposit Account:-

The depositor can withdraw the money from his crrent account whenever he requires it. This account is generally opened by businessmen who may have to withdraw money several times a day. In technical language , it is known as demand deposit or checking deposit.

Features Of Current Deposit Account:-

1. Current bank account are operated to run a business. 
2. It needs a higher minimum balance to be maintained as compared in the current account.
3. There is no restriction on the number and amount of deposits. There is also no restriction on the withdrawals.
4. Current account is of continuing nature and as such there is no fixed period.
5. generally bank does not pay any interest on current account. Nowadays, some banks do pay interest on current accounts.

Difference Between Current Deposit and Saving Deposit Account:-

Basis of Difference	Current Account	Savings account
1. Meaning	Current account is maintained by businessman and others who have to do regular bank transactions.	Saving account is opened by individuals for the purpose of saving a part of their income.
2. Purpose	The main purpose of opening a current account is to facilities regular transactions.	The main purpose of opening a savings account is to save a part of the income.
3. Interest	Some current accounts offer very low interest.	Interest on savings accounts is usually higher.
4. Cost	The bank charges are high.	The bank charges are lower.
5. Access to money	people can get to their money quickly and easily by writing cheques.	People may have to arrange beforehand yo withdraw their money.

Fixed/term Deposit Account:-

Money in this account is accepted for a fixed period, say, one, two or five years. The money so deposited cannot be withdrawn before the expiry of the fixed period. The longer the period, the higher is the rate of interest. In technical language, this type of deposit is known as time or term deposit.

features of Fixed deposit Account:-

1. The amount can be deposited only once.
2. The main purpose of fixed deposit account is to enable the individuals to learn a higher rate of interest on their surplus funds.
3. A high interest rate is paid on fixed deposits. the rate of interest may vary as per amount, period and from bank to bank.
4. The period of fixed deposits range between 15 days to 10 years.
5. Withdrawals are not allowed.

Re-curing Deposit Account:-

Recurring deposit account is generally opened for a purpose to be served at a future date. Generally this account is opened to finance pre-planned future purposes like, wedding expenses of daughter, purchase of costly items like land, luxury car, air conditioner, etc. Recurring deposit account is opened by those who want to save regularly for a certain period of the time and earn a higher interest rate.

Features of recurring deposit account

1. The main objective of recurring deposit account is to develop regular savings habit among the public.
2. In India, minimum amount that can be deposited is Rs.10 at regular intervals.
3. The rate of interest is higher.
4. The period of deposit is minimum six months and maximum ten years.
5. No withdrawals are allowed.
6. The bank provides the loan facility. The loan can be given up-to  75% of the amount standing to the credit of the account holder.

Guidelines for opening accounts

GUIDELINES FOR OPENING ACCOUNT:-

A bank should be very careful in entertaining a new customer. it will be taking a great risk if it opens an account of a customer without knowing the whereabouts of the latter. The opening of an account involves the honouring of cheques on the part of the bank so long as customer's account has credit balance.Hence, it is essential that the bank should make thorough enquiry regarding the customer before opening an account with him.

APPLICATION FORM:-

  The prospective customer is first of all asked to sign an application form prescribed for that purpose after furnishing all particulars. application form contain the rules and regulations of the bank along-with the terms and conditions of the deposit.

SPECIMEN SIGNATURE:-

Every new customer is expected to give three or more specimen signatures. each bank maintains a signature book for this purpose.

LETTER OF INTRODUCTION:-

It is always advisable on the part of the banker to allow the prospective customer to open an account only with a proper introduction.

1.  Protection against fraud
2. Protection against inadvertent overdraft
3. Protection against an undercharged bankrupt

INTERVIEW:-

At the time of opening of new account, it is always advisable to have an interview invariably with the prospective customers so as to obviate the chances of perpetration of any fraud at a later stage.

ACCOUNT IN CASH:-

It is a common practice among bankers to allow a new party to open an account only in cash.

FOR EXAMPLE:- if customer's tittle to the cheque is defective, the banker is answerable for it.

MANDATE IN WRITING:-

If a new party wants its account to be operated by somebody else, the banker should demand a mandate from his customer in writing. The mandate contains the agreement between the two regarding the operation of the account, the specimen signatures of the authorized person and powers delegated to the authorized person.

VERIFICATION OF DOCUMENTS:-

If the new party happens to be a corporate body, it is essentail that the banker shoulld verify some of the important documents like memrandum of association, articles of associations, bye-law copy etc, etc.

CONVERSANT WITH THE PROVISIONS OF SPECIAL ACTS:-

Since a banker has to deal with different classes of customers, he has to be thoroughly conversant with certain laws like Indian companies Act, Indian partnership Act, insolvency Act, the various trust acts, the cooperative societies act etc.

PASSPORT SIZE PHOTOGRAPH:-

Their is need a passport size photographs on the application forms at the time of opening accounts.

Relationship between customer & banker

BANKER AND CUSTOMER:-

DEFINITION OF BANKER:-

Banker is who take deposit account, take current account, issue and pay cheques, collect cheques crossed and uncrossed for his customers.

Banker is an institution which borrows money by accepting deposits from the public for the purpose of lending to those who are in need of money.

A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and the lender. He borrows from one party and lends to another.

DEFINITION  OF CUSTOMER:-

A customer is a person who has some sort of account, either deposit or current  or some similar relation with a bank and from this it follows that any person could become a customer by opening or current account or having some similar relation with a bank.

Relationship between Banker and Customer:-

There are two types of relationship between banker and customer

1. General relationship
2. Special relationship

General relationship:- 

The general relationship between banker and customer are describes into 2 forms:-

• Primary relationship 
• secondary relationship 

Primary Relationship:-  Relation of debtor and creditor:-  The true relationship between a banker and his customer is that of a debit and a creditor.

Creditor must demand payment:- 

The banker is a debtor and customer is creditor, it is not at all necessary for the debtor to go to the creditor to pay the amount.

demand must be made in proper from:-

it means that the demand for the refund of money deposited must be made through a cheque or an order as per the common usage amongst the banker.

 Secondary relationship:-

Bailee-Bailor:-  Whom delivered the goods are bailee. delivering the goods one person to another for some purpose upon a contract, they are bailor.

Lessor-Lessee:- On hiring out of locker, bank becomes lessor and the hirer a lessee and the relationship is that of landlord and tenant.

Guarantor and Guarantee:- A bank as guarantor gives guarantee to its customer by issuing a letter of credit. A bank guarantee contains an undertaking to pay the amount without any demur on mere demand of the principal amount on the ground for non-performance or beach of contract.

Agent principal:-

• Purchasing or selling of securities.collection of income.collecting cheques, hundies, drafts of the customers.Receiving safe custody valuables and securities lodged by his customers.

Fiduciary relationship:- 

Every relation of trust and confidence is a fiduciary relation. 

Special relationship between banker & customer:-

Duties of a banker:- these duties are as following:-

1. Duty to provide proper service to customer.
2. Duty to pay bill
3. Duty to submit periodical statements.
4. Duty to care
5. Duty to maintaining secrecy of customer's account.
6. Duty to honour the customer's cheques.
7. Duty to give reasonable notice before closing the account.

Duties of customer's to banks:-

1. To draw cheques in such a manner so as to avoid any change of alternation.
2. To pay reasonable charges for services rendered.
3. To make a demand on the banker for repayment of deposit.

Rights of banker:-

1. Right to retain goods
2. Right to recover extra ordinary expenses.
3. Right to full value of goods.
4. Right to close accounts.
5. Right not to produce books of accounts.

BANKING SYSTEM

BANKING SYSTEM:-

The modern banking system in India started with the establishment of general bank of India in 1786.

MEANING OF BANKING:-  

Bank is German word which means 'to collect'. The main functions of the banks is collection of funds as deposits. A bank is a financial institution that accepts deposits from the public and creates credit.

Features of Banking:-

There are some important features of banking.

• It deals with money and accepts deposits from public.

• The buying and selling of bullion and specie.

• The receiving of all kind of bonds or valuable  on deposit or for safe custody. 

• The buying and selling of foreign exchange including banks notes.

• The drawing, accepting, buying, selling, collecting and dealing in bills of exchange,promissory notes,debentures, and other instruments and securities whether transferable or negotiable or not. 

• The purchasing and selling of bonds, scripts or other forms of securities on behalf of constituents or others, the negotiating of loans and advances.
• The borrowing, raising or taking up of money.
• The granting and issues of letters of credit, traveler's cheques and circular notes.

TYPES OF BANKS:-

Banks can be divided into two groups. 

1. The scheduled banks.
2. Non-scheduled banks.

SCHEDULED BANKS:- 

A scheduled bank is one which is registered in the second scheduled  of the RESERVE BANK OF INDIA. Scheduled banks are further classified into:-

1. commercial banks.
2. co-operative banks. 

COMMERCIAL BANKS:- 

 Commercial banks are those banks which perform all kinds of banking functions such as accepting deposits, credit creation, and agency functions. some of the commercial banks in India are Andhra bank, Canara bank, Indian bank, Punjab national bank etc.

CO-OPERATIVE BANKS:- 

 Co-operative banks came into existence with enactment of the co-operative of the co-operative credit societies act of 1904 which provided for the formation of co-operative credit societies.

NON-SCHEDULED BANKS:-

Banks which are not included in the Second schedule of the RBI, are known as non- scheduled banks.

Banks can be classified into the following categories.

1. COMMERCIAL BANKS
2. CENTRAL BANK
3. CO-OPERATIVE BANK
4. SAVING BANK
5. EXPORT-IMPORT BANK
6. DEVELOPMENT BANK