One of the important
functions of the Banks is to accept deposits from the public for the purpose of
lending. In fact, depositors are the major stakeholders of the Banking System.
The depositors and their interests form the key area of the regulatory
framework for banking in India and Reserve Bank of India has been issuing broad
guidelines to the banks from time to time. Various deposit products offered by
the Banks are assigned different names. However, broadly the deposit products
are categorized into the following types.
a) “Current Deposits or Demand Deposits” mean deposits which are repayable on demand.
These deposits are generally maintained by businessmen with the intention of
making transactions with such deposits. The deposits can be drawn any number of
times depending upon the balance in the account or up to a particular agreed
amount. These accounts are meant purely to meet the business needs of
customers. No interest is paid on balances in Current/Demand deposit accounts.
Banks impose service charges for running these accounts. While opening of
current accounts for business entities, banks should make reference to CIBIL/CRILC
to ensure that the entity does not have borrowing arrangement and it is not in
the list of defaulters. In either case a reference should be made to the
lending banks before the current account is opened to ensure credit discipline
among the borrowers.
b) “Savings Deposits” means a form of demand deposit which is subject to restrictions on number of withdrawals and amounts as decided by the banks during any specified period. These deposits combine features of both current account deposits and fixed/term deposits. These deposits carry interest as decided by the respective banks. Normally interest on Savings Deposits is less than fixed deposit interest rates. Banks have discretion to introduce special schemes with insurance coverage and other benefits to the specified group of customers with or without additional charges depending on the scheme terms and conditions. Savings Deposit customers are allowed to withdraw deposit amount by way of withdrawal/cheque. As per RBI guidelines, no bank should open Saving Deposit account in the name of the following organizations.
