Types of Bank Deposit Accounts
Banks offer three main types of deposit accounts: savings, term, and recurring deposits.
1. Savings Deposit Account:
Designed for depositing daily surplus funds.
Allows withdrawals anytime as needed.
Offers overdraft facilities for emergency loans.
2. Term Deposit Account:
Money is deposited for a fixed term.
Typically earns higher interest than savings accounts due to the fixed term.
Early withdrawal is possible but may result in reduced interest earnings.
3. Recurring Deposit Account:
Allows regular deposits of a fixed amount daily, weekly, or monthly.
Suitable for accumulating savings over a period.
Opening a Savings Bank Account
To open a savings account, complete an account opening form, attach a recent photograph, and provide documents to meet "Know Your Customer" (KYC) requirements, such as proof of identity and residence.
Know Your Customer (KYC)
KYC regulations require banks to verify your identity before opening an account. You need to submit a photograph, identity proof, and residence proof. An Aadhar Card can also be used for verification. For those without standard documents, accounts can be opened under a relaxed KYC procedure using an MGNREGA job card or self-certification, resulting in "small accounts" with certain limitations.
Features of a Basic Savings Bank Deposit Account
Allows a zero balance.
No charges for multiple deposits and up to four withdrawals per month.
Provides a passbook and an ATM/Smart card free of charge.
Suitable for everyday transactions like deposits, withdrawals, remittances, and direct credits of social benefits.
Banking Without a Local Branch
If no bank branch is available in your village, you can use services from Business Correspondents (BCs), who act as bank agents. BCs are local individuals with ties to the community who provide banking services using technology like handheld devices and mobile phones.
Business Correspondents (BCs)
Role and Function:
Appointed by banks to facilitate banking services in remote areas.
Perform transactions using ICT-based devices.
Transactions are securely accounted for in bank records, and customers receive immediate receipts.
Services Provided by BCs:
Manage savings deposit accounts with overdrafts.
Offer fixed and recurring deposits.
Facilitate fund transfers and receipts.
Provide credit for farming (Kisan Credit Cards) and non-farming (General Credit Cards) activities.
Overdraft vs. Other Loans
Overdraft:
A small credit limit linked to savings accounts for emergency needs.
Allows withdrawal up to a limit without separate documentation.
Interest is charged on the borrowed amount, similar to a loan.
Other Loans:
Kisan Credit Cards (KCC): For farming activities.
General Credit Cards (GCC): For non-farm income-generating activities.
Both require specific documentation and are for particular purposes.
*The information in this document has been adapted from articles available on https://www.rbi.org.in/FinancialEducation/Home.aspx . The original articles can be accessed directly for more comprehensive insights.
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