Question

Write Short Notes on.
Types of deposits.

Answer 1

There are four major types bank deposits which are as follows:

1. Saving deposit: Saving deposit account refers to the type of bank account which is opened by the people in order to save a part of their income. The rate of interest offered in such type of account is very nominal as there is no restriction towards the withdrawal and deposit limit in the account. It is the most suitable account for salaried class people as they can save a part of their monthly income in this type of account.

2. Current deposit: Current deposit account is a type of bank account which is opened by the people in order to do business transaction which is why it is also known as business account. In this type of bank account, withdrawals can be made throughout the tenure of the account without any notice in order to keep the efficient flow of business transactions so that there is no delay in business decisions. The rate of interest earned on such deposits are very nominal and lowest among all other bank deposits as these are solely made for transaction purpose and not savings purpose.

3. Recurring deposit: Recurring deposit account refers to the type of bank account where a fixed sum of money is deposited in the bank in monthly installment regularly for a fixed period of time. Withdrawals are not permitted until the expiry of the fixed period and on the expiry of the fixed period, the total sum of money deposited in the bank account is paid to the depositor along with the accrued interest. The rate of interest earned in such deposits are higher than the rate of interest earned in saving deposit and current deposit but lower than the rate in fixed deposit.

4. Fixed deposit: Fixed deposit account is a type of account where a fixed sum of money is deposit for a fixed period of time with no withdrawals permitted until the expiry of the fixed period and on the expiry of the fixed period, the total sum of money deposited in the bank account is paid to the depositor along with the accrued interest. The rate of interest is usually high in order to attract such deposits from the people due to which the rate is directly proportional to the sum of money deposited in the bank account.