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Bank

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description

  • Bank
  • Types of bank account

definition

  • Bank: A bank is a government recognized organisation that carries out transactions of money. It is a financial organisation. Finance relates to money.
  • Passbook: A passbook is issued for a savings account and a recurring deposit account. Amounts deposited, withdrawn and the balance are recorded in it with their dates.

notes

Bank:

A bank is a government recognized organisation that carries out transactions of money. It is a financial organisation. Finance relates to money.

We save money for use in the future. Our savings are meant to meet expenses on education, building a house, medical treatment, on our occupation such as for using improved methods of agriculture, etc. Small savings made regularly accumulate over a period to become a large amount and prove useful in the future. An amount kept in a bank remains safe and also grows over the years.

1. Financial Transactions:

A bank is a business that is based almost entirely on financial transactions. In addition to acting as a lender for loans and mortgages, banks act as a borrower in a special type of loan called an account. The lender is known as a customer and gives unspecified amounts of money to the bank for unspecified amounts of time. The bank agrees to repay any amount in the account at any time and will pay small amounts of interest on the amount of money that the customer leaves in the account for a certain period of time. In addition, the bank guarantees that the money will not be stolen while it is in the account and will reimburse the customer if it is. In return, the bank gets to use the money for other financial transactions as long as they hold it.

2. Bank Accounts:

To use banking services one has to open an account in a bank. We need the following documents or papers to open a new bank account.

1) Proof of residence: Ration card, electricity bill, telephone bill, domicile certificate, identity card, etc.

2) Proof of identity: Aadhaar card, voter’s identity card, PAN card, passport or any other proof suggested by the bank, besides a reference from another customer who is an account holder.

3. Types of Account:

In India, banks usually have four major types of deposit accounts - Current Account, Savings Account, Recurring Deposit, and Fixed Deposit. Recently banks have also introduced combining features of these accounts as per customer and market requirements. But still, these accounts are not popular among the public and the traditional four accounts are considered above all.

1. Current Account: Current accounts are usually for businessmen and daily transactions. It doesn't serve the purpose of saving your investments. The transaction facility to this account is so flexible that you can make innumerable transactions in a day. Hence, the banks don't pay any interest on your invested amount but it charges certain service charges on such accounts.

A current account is mainly for traders and those dealing in money on a daily basis. An account holder can deposit or withdraw money any number of times in a day. The bank issues a passbook for this account and also a cheque book on-demand. The bank does not pay any interest on the money in this type of account. Money can also be withdrawn or deposited by cheque.

2. Saving Account: Saving Accounts are the most popular kind of individual accounts for the personal purpose of saving your investments and getting interest rates. Saving account provides a cheque facility along with flexibility for deposit and withdrawal of funds from your account. Banks give an interest of 4% to 6% on the money in the savings account. The customer gets facilities like a pass-book, cheque book, ATM card, mobile banking, SMS banking, Internet banking, etc. to operate the account.

A person can deposit a minimum amount and open a savings account. In some banks, no minimum amount is required for opening an account. The bank pays some interest on the basis of the daily credit balance in the account. There are some restrictions on how often money can be withdrawn from this account. For this account too, the bank issues a passbook and, on-demand, a cheque book.

3. Recurring Deposit: Recurring deposits also known as RD accounts who wish to invest an average amount of their savings on a monthly basis. These accounts gain interest on the amount available in your account. This account is specially designed for the working public who don't want to invest a large amount at one instance.

The account holder can decide the amount to be deposited every month in the account. The bank gives interest on the deposit which is more than that paid for the savings account. Such an account is a means of compulsory savings. Often it is convenient to have a joint account for say, husband and wife or guardian and ward, etc. Besides, accounts of business partners, housing societies, trusts of voluntary agencies, etc. are required to be operated by more than one person.

4. Fixed Deposit: Fixed Deposits Popularly known as FD are available at various schemes with tenure from 7 days to 10 years. This account is specially designed who want to deposit their savings for the long term to gain a good rate of interest. But the interest rate on these accounts varies from bank to bank. The term 'Fixed' denotes the period of maturity or tenure.

A depositor deposits a certain amount for a fixed period in the bank. This deposit attracts a greater rate of interest than the savings account. However, these rates are different in different banks. Senior citizens get a slightly greater rate of interest than the usual.

4. Passbook:

A passbook is issued for a savings account and a recurring deposit account. Amounts deposited, withdrawn and the balance are recorded in it with their dates.

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