This article throws light upon the three main types of accounts that can be opened in a bank. The types are: 1. Saving Account 2. Current Account 3. Fixed Deposits Account.
Type # 1. Saving Account:
Mostly individuals open saving accounts for depositing their surplus money so that they are able to withdraw the cash in case of need. After opening the account a cheque book is issued to the customer for withdrawing the cash money or making payments of any type. It is a Demand deposit with the bank and therefore demand liability for the bank.
A saving account can be opened in single name as well as in joint names. In case of Joint accounts a mandate is required to be given to the bank as to who shall operate the account. Mostly this account joint account is opened by Either or Survivor.
Means any of two can operate the account and on the death of any joint account holder survivor can operate it. If joint account is in name of more than two ns are required by the bank as to who whether in single or joint authority shall operate the account.
At present an interest at the rate of 3.5 % is paid on the deposits in saving accounts. Previously the banks used to pay interest for the minimum amount held in saving account between 10th day to last day of the month. Now RBI has instructed all the banks to pay interest on day to day basis.
If saving account is not operated continuously for long time say one year it becomes a dormant account and bank does not allow withdrawals unless it is revived again by the customer. If account remains dormant for 3 years it becomes an In-operative account and the outstanding balance from this account is transferred by the bank to separate ledger where the money of all the in-operative accounts is parked. Each bank has to inform the Reserve Bank of India about the position of in-operative accounts from time to time as prescribed by the RBI.
Type # 2. Current Account:
This account is opened for conducting the transactions relating to business only. There is no bar on number of withdrawals. No interest is paid in such accounts rather bank charges certain fee for keeping and maintaining such accounts. Current accounts can be opened by Individuals, Jointly, by a sole propertor firm, Partnership firm, A Limited or Public company, a trust, a society local and Government bodies. This is also a Demand deposit account.
Type # 3. Fixed Deposits Account:
Fixed deposits are those accounts where people deposit surplus money for a fixed period or term and is also known as Term Deposit. Since deposits in these account are held for a longer time bank utilizes this money in future investments and loans and earn more profit. They also pay higher rate of interest in these accounts.
You can open a Saving Account, a current account, a term Deposit account in any bank. All these accounts are known as deposit accounts. Deposit accounts are those accounts in which the customers of any bank deposit their money.
This money is kept in a bank in the name of the depositor in a particular account for which a particular account number is provided to the customer by the bank. Any future transaction in such accounts is done by giving this account number provided by the Bank.
An account can be opened provided that all necessary formalities as per KYC norms are completed. The new customer pays something in to open an account, and gives the bank a specimen of his signatures and name of one or two referees according to the practice of a particular bank.
In case you are introduced by some existing customer of the same bank in which you are wishing to open an account the names of referees may or may not be required depending upon the policy of an individual bank. In case you are introduced by some exiting customer of the bank a simple letters shall be written to him for verification whether or not he has introduced the account.
If an introducers calls on personally to the bank and provides introduction in the presence of bank officials such letters may not be issued. In the absence of introducers a letter is written to the referees. When the referees have replied satisfactorily, and in return they have been favorably reported on by their bankers a cheque book can be issued to a new customer.
The bank does, however where the existing customer of the same bank has introduced the account but names of any referee has been given, an independent verification of the address of the new customer. This independent verification can be done both by deputing some official to go and verify the address or by way of sending some letter to the new customer by way of post office.
If such letter sent to customer is brought to the bank by the customer himself it stands that independent verification has been done and a cheque book is issued to the customer. In case such a letter posted to a customer at the address given in his application does not reach him, it tantamount not to be fulfillment of KYC norms. Banks take extra precaution in such cases while allowing issuing a cheque book in such newly opened accounts.
In case of a joint account or a partnership account the appropriate mandate must be signed indicating how cheques and correspondence are to be signed, and establishing joint and several liabilities.
In case of a Limited Company a bank will see a signed copy of the Memorandum and Article of Association, the certificate of incorporation and, in case of Public Limited Company, the trading certificate. A Resolution should be provided giving names of the officials who will act for the company, the way in which the cheques and authorities will be singeing along with appropriate specimen signatures of such official.
Now you have opened an account with a bank of your choice and you have become a customer of the said bank. Would you not like to know what is a customer of a bank as per the law? It has been tried to explain who is a customer of a bank. Simply a customer of bank is who has an account with any bank.
Having an account with a bank confirms a person to be known as an account holder. The word Account holder is very important and has its importance and significance under the banking law. You should therefore also know what an account holder is.