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Question
State four types of deposits.
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Solution
- Fixed Deposit: A fixed deposit account is where a fixed amount is kept for a fixed period of time, bearing a fixed interest rate. The interest rate is higher than that of a savings bank account and varies with the deposit period.
- Recurring Deposit: It is operated by salaried persons and business people who have a regular income. A specific fixed sum of money is deposited into the account every month. Withdrawal of the accumulated amount, along with interest, is paid after the maturity date.
- Saving Account: It is generally operated by those with regular or fixed incomes, such as salary or wages. The main aim of this deposit account is to encourage the habit of savings among people. These deposit accounts are meant for maximum savings. There are restrictions on withdrawal limits from these accounts. These accounts carry low-interest rates. Interest is credited monthly, quarterly, half-yearly, and yearly on this account.
- Current Account: This account is operated by business firms and other commercial organizations, such as hospitals and educational institutions, that have regular banking transactions. This account has no restrictions on deposits and withdrawals of amounts. The bank pays no interest on this account. An overdraft facility is available for this account.
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