TYPES OF DEPOSIT

ACCOUNTS1) Fixed Deposit2) Saving Deposit3) Recurring Deposit4) Current Account Deposit

Deposits with the bank is for fixed period of time Principal is repayable on expiry of the term Also known as term deposit Deposit period=3-6 years No cash reserves to be maintained High rate of interest

1.FIXED DEPOSIT

Rate of interest: After october 1997,banks were permitted to charge their

own interest rates Interest to be paid according to the schedules in the act Interest rate varies from bank to bank Depends upon the amount and period of deposit

Period of deposit: Minimum period of deposit was reduced to 7days from

April 1997 Maximum period=5-10 years

Payment of interest:

Interest may be paid quarterly or half-yearly or on the request of the depositor

It is based on “half-yearly rests” or ”quarterly rests” Amount is credited to the depositor’s saving or

principal a/c Withdrawal is not permitted through cheques

It is a document of title

Features: Not a negotiable instrument Cannot be transferred by mere endorsement Duly assigned and given to the bank No cheques can be drawn FDR signed by the depositor and presented by 3rd

party,banker to get “Letter Of Authority”

FIXED DEPOSIT RECEIPT:

Amount can be claimed by court’s order if FDR is lost Amount due can be attached by court No stamp to be fixed if the depositor is the

prospective claimant FDR is concerned with Donotio Mortis causa Joint FD repayable to all or to one person Limitation period=according to conditions printed on

back of the receiptIf FDR is lost/destroyed-duplicate receipt

-Indemnity Bond

FDR

Meant for personal savings Interest rate is less than that of FD Until 24.10.2011, interest rate=4%

2.SAVINGS DEPOSIT

Restriction on withdrawal: Number of withdrawal is 50 for 6 months Minimum withdrawal amount through, (i)cheque =Rs.5 (ii)Form =Rs.1

Restriction on deposit: Cheques and other instruments payable to 3rd parties

cannot be used

Minimum balance: banks prescribe their limit Usually,Rs.500-Rs.1000

Payment of interest:• Calculated quarterly or longer rest on the minimum

balance• Calculated between 10th and 30th/31st of every month• Interest is credited twice in a year

NO FRILLS BANK ACCOUNT:o Recently introducedo Accounts are opened with nil balanceo Provide banking facility to all sections of society

AADHAR ENABLED BANK ACCOUNTS:

o Accounts opened under Mahatma Gandhi National Rural Employment Guarantee Act

Also known as cumulative deposit Fixed amount of money is deposited every

month(in multiples of Rs.100) Rate of interest is similar to FD Monthly instalments to be made before the last

working day of the month Maturity period of the deposit=6-120months

3.RECURRING DEPOSIT

Default: If depositor closes a/c before maturity,bank: pays no interest for deposit less than 3 months 1.5% for 6 months 4% for 12 months

Accumulated amount with interest is paid after a month of payment of last instalment

Introduced for business purpose No restriction on number/amount of withdrawal Deposits to be paid on demand(demand liability of the

banker) No interest is given

4.CURRENT ACCOUNT DEPOSITS

Previliges:† 3rd party/endorsement cheques can be deposited for

collection† Overdraft facility† Loans and advances are given

Characteristics: No cash handling by the customer Bankers collect cheques etc. Regional Rural Banks(RRB) may pay 0.5% interest

below borrowing rate fixed for RRB From May 1983,interest is paid at savings a/c rate for

deceased depositor from date of death till payment to legal hiers

SAVINGS PLUS AUTO SWEEP FACILITY A/C:

Surplus amount in savings a/c is converted to term deposits

Earns interest at a high rate Provides liquidity Minimum balance of savings a/c=Rs.5000 Auto sweep may be weekly or monthly Reverse sweep facility =withdrawal is made in

multiples of Rs.1000 through cheques,ATMs etc.

PREMIUM SAVINGS ACCOUNT:‡ Similar to savings a/c‡ offers additional facilities like SMS alert,RTGS/NEFT free

internet banking‡ Minimum bal.=Rs.25000

MULTI OPTION DEPOSIT SCHEME(MODS):

Combination of FD and saving or current a/c Minimum deposit amount=Rs.10000 Minimum subsequent deposit amount=Rs.5000 Period of deposit=12-60months Overdraft facility

KNOW YOUR CUSTOMER(KYC)

KYCTo protect the interest of the customers,RBI

advised banks to exercise diligence in understanding the customer and nature of

his business.Guidelines are given by RBI

Objectives:I. Preventing money launderingII. Improve financial dealingsIII. Manage risks

Key Elements:1.Customer acceptance policy-

No account to be opened in anonymous name Risks to be clearly defined Documents to be collected and verifications to be

done Banker cannot close/open an account if they are

unable to apply customer due diligence Circumstances in which customer can act on behalf of

other person to be specified

2.Customer identification procedure- Customer verification through documents and

photographs For legal entites,bankers should verify: Legal status Any person acting on behalf of legal entity Understanding control structure & ownership of customer

3.Monitoring transaction- Special attention given to complex transactions Intensified monitoring for high risk a/c Record of all transactions Illegal transaction to be reported easy monitoring through customer understanding

4.Risk Management- Apply various anti-money laundering measures

Other Aspects- Employee training Customer education Credit/debit/smart/gift cards Existing accountsProcedure in compliance with KYC guidelines-• Identification of depositors• Control of financial frauds• Identification of money laundering• Monitoring of large value cash transaction

Unique Customer Identification Code(UCIC):

Came into existence from June 2012Benefits: Identify a customer Track facilities availed Monitor financial transaction Improve risk profiling Smoothen banking operation Holistic view of CR profile

THANK YOU!