Question

Explain the types of bank Deposits

Answer 1

Answer:

Well,

Explanation:

Primarily, banks offer two kinds of deposit accounts.

These are demand deposits like current/saving account and term deposits like fixed or recurring deposits. When you open a deposit account in a bank, you become an account holder or a depositor.

• A current account is always a Demand Deposit and the bank is obliged to pay the money on demand. The Current accounts bear no interest and they account for the smallest fraction among the current, saving and term deposits. They provide the convenient operation facility to the individual / firm. The cost to maintain the accounts is high and banks ask the customers to keep a minimum balance.
• Fixed amount is deposited at regular intervals for a fixed term and the repayment of principal and accumulated interest is made at the end of the term. These deposits are usually targeted at persons who are salaried or receive other regular income. A Recurring Deposit can usually be opened for any period from 6 months to 120 months.
• Further, banks also provide a combination of demand and time deposits in the form of various products. Examples of such products include Recurring Deposits, Flexible RDs, Multiplier FDs, Special Term deposit accounts etc.