Types of Bank Accounts

TYPES OF BANK ACCOUNTS

FIXED OR TIME DEPOSIT

The deposits which are accepted by the bank under the conditions that they will not be payable on demand but will be payable on fixed or determinable future time or date are called fixed time or date are called fixed or time deposits.

These deposits represent such surplus funds of the depositors, which are not required by them for sufficiently long periods. Initially the banks used to accept such deposits, normally for a period of twelve months, after which they were renewable. In a developing economy where investment needs are most pressing and where investments have to be made for longer period than 12 month or 6 months. Of course the longer period, the higher is the rate of interest offered. Banker issue receipt for such deposits on their specially printed forms. Being receipt these cannot be negotiated.

Payment

Fixed deposit should ordinarily be presented by the depositor duly receipted/discharged on revenue stamps on its back on the due date of maturity. If not presented on the due date the amount is taken out of fixed deposit account and kept in a separate account in current account ledger.

If a customer desire to withdraw the amount of fixed deposit before its due date, the bank some time oblige him by repaying the principal amount and customer has to forego interest at one percent on the principal amount for the remaining period. Alternatively, the bank may an advance against the security of such a deposit. In such case, rate of interest charged by the bank on loan account is 1 to 2 % above the rate of interest paid by it on that particular fixed deposit.

Short-term deposits

This term generally applies to deposits placed with a bank for periods of less than six months. These are also termed as "special notice current accounts" which implies that these shall be with-draw able after giving notice for specified period, as may be agreed upon. Unlike fixed deposits they may or may not be for a specified amount. Further deposits can be made therein though withdrawal shall remain subject to the notice period. These accounts are maintained more or less, on the same pattern as current deposits though different sets of books are kept for recording transactions.

Deposits are to the bank as a back bone is to body of man. It is the life blood of a bank. Bank borrows money from the general public and by accepting deposits by offering suitable rates of interest on them or on simply a promise to repay on demand. With the deposits collected it carries day to day business of lending out to the needy persons at a higher rate of interest.

TYPES OF DEPOSITS

With the purpose and duration of deposits kept in bank can be classified in two categories.

1.   Demand Deposits

2.   Fixed or Time Deposits

DEMAND DEPOSITS

These deposits are payable by bank whenever demanded back depositors, these are

1.   Current Accounts

2.   Saving Bank Accounts

3.   Call deposits

CURRENT ACCOUNTS: It a statutory requirement of a bank maintain current accounts. These accounts are opened in a current Account Ledger for customers who have to make frequent deposits into their accounts and make numerous payments by cheques. According to all Pakistan Inter Bank Agreement no interest is paid on current account deposits. Customers are asked to maintain a fixed minimum balance. In case this minimum balance is not maintained at the bank, charges called "incidental charges" are recovered by the bank from the accounts of such defaulters.

Printed cheque books are supplied by banks. Statements of accounts are provided to customers generally at monthly intervals. Bank collects outstation cheques for their customers. Periodical remittance on behalf of the customer on account of premia. rent subscription etc. is also made if desired. These are called "standing instruction''. Current accounts are balanced at least once in a weak.

SAVING BANK ACCOUNT: Saving accounts are opened to inculcate and encourage the habit of saving in citizens of a nation. The facilities are provided for depositing small sums of money. Interest is paid at the end of June and December at fixed rate on minimum monthly balance on such deposits to encourage depositors to save as much as they can. Restrictions on withdrawals are laid down on such accounts and saving bank account holder is not allowed to withdraw amount more than fixed amount in one week. Ordinarily two withdrawals are allowed to be made in one week. Similarly a prior notice (7 to 15 days) is necessary when a customer wishes to withdraw a large amount of money from the bank. To make it more popular cheque books are issued to the depositors and customers are also opened for students in schools, colleges and industrial unit employees. Some banks depute their staff to visit schools, colleges and industrial units regularly to provide deposit / withdrawals facility on saving bank accounts at their customer door steps. Usually pass books are issued by the bank to their saving bank account holder wherein details of all the transactions made by them on the account recorded.