Banking

Define Bank and Explain various types of  bank deposits

Define of Bank - 

The term ' Bank ' has been defined in different ways by different economists. 

 According to Walter Leaf , " A bank is a person or corporation which holds itself out to receive from the public , deposits payable on demand by cheque . " Horace White has defined a bank , " as a manufacture of credit and a machine for facilitating exchange . "

 Bank Deposite Accounts : 

1. Fixed Deposit Account :

 Fixed deposits are made for a fixed time period and cannot be withdrawn before the expiry of the period , e.g. , one year , three years , five book or years and so on . A fixed deposit is also known as a time deposit or long - term deposit . A higher rate of interest is payable on a fixed deposit . No pass cheque book is issued to the deposit holder . Only a receipt containing the name and address of the depositor , the amount and period of deposit etc , is issued . The depositor can withdraw the money along with the interest on maturity date . 

2. Savings Deposit Account : 

Any person can open a Savings Deposit Account with the minimum specified amount . In this account , small savings are deposited by middle and low income people . Deposits can be made any number of times in a week . But there is a restriction on the number of withdrawals in a week . Interest is allowed on the minimum balance standing to the credit during a month . A book and a cheque book are issued to the account holder .The main purpose of savings deposit account is to develop the habit of savings among public . A savings bank account can be opened by two persons in their joint names . No overdraft is allowed on a savings account .

 3. Recurring Deposits Account :

 In this account , the account holder is required to deposit a specific amount every month . After the expiry of the specific period , the depositor gets back his deposits money together with interest thereon . The number of instalments may vary from 12 to 72. A pass book is issued to the depositor but no cheque book is issued .  

4. Current Account : 

Current Account is generally opened by business firms . Money can be deposited into and withdrawn from this account any ' number of times . Pass book , cheque book and overdraft facilities are available on a current account . Bank pays no interest but makes a small charge on current account .