Question

what are demand deposits and explain three of its features

Answer 1

A deposit of money that can be withdrawn without prior notice, e.g.- in a current account.
The three features of demand deposit is:
1.They can be withdrawn any time.
2.Banks give interest on these deposit.
3.Used by bank to give loan.

Answer 2

Answer: People save their money in banks by opening an account. the deposits in the bank accounts can be withdrawn on demand, so these deposits are called demand deposits.

(i) banks accept the deposits and also pay an interest rate on the deposits. in this way people's money is safe with the bank and it also earns an interest.

(ii) the facility of cheques against demand deposits makes it possible to directly settle the payments without the use of money. since the demand deposits are widely used as a means of payment along with currency, they constitute money in the modern economy.

(iii) it is authorized by the government of the country.

(iv) it's demand and supply can be controlled by the RBI.

(v) in India, the law legalises the use of rupee as a medium of payment that cannot be refused in settling the transactions in the country. no individual can legally refuse a payment made in rupees.\

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