Author Topic: Accounts & Deposits  (Read 999 times)

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Offline jamthoms

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Accounts & Deposits
« on: June 23, 2009, 07:41:45 AM »
Accounts and Deposits are two most important entities that are associated with every transaction that you make in a financial institute. Your money, investments, savings and all financial regulations are defined by these entities. When you open an account you deposit money to start of things and then gradually precede allocating your finances into different channels like a fixed/ term deposit etc. But it is the savings account that you create helps to start of things. Savings lays the foundation for your future financial security. Deposits ensure that the amount you fixed up is secured for that tenure after which you are rewarded with an interest.

Savings Accounts are offered by commercial banks, savings and loan associations, credit unions, building societies and mutual savings banks. Earlier when you opened a savings account you were provided with a pass book and cheque book as accessories that enabled you to access your account. With the gradual make over of Retail Banking, ATM cum debit card, credit cards and other accessories creped in allowing you to do the same without paying the bank or branch a visit. All savings accounts offer itemized lists of all financial transactions, traditionally through a passbook, but also through a bank statement. The other account that one can access is a current account. Current accounts allow you a no-transaction limit, which isn’t the case with a savings account. With a savings account, the account holders are allowed to make three transactions with a withdrawal limit of Rs 50,000/ maximum (approx figures). Current accounts are mostly used by businessmen, mostly due to the high amount of transactions that they need to make.

Withdrawals from a savings account are occasionally costly and are sometimes much higher and more time-consuming than the same financial transaction being performed on a current account. Ideally interest is paid on a savings account on nature of minimum balance held on a quarterly basis. Hence if frequency of withdrawals is more the amount keeps decreasing and so does the interest. The term deposit is used by the banking industry in financial statements to describe the liability owed by the bank to its depositor, and not the funds (whether cash or checks) themselves, which are shown an asset of the bank. Nature of deposits varies depending on the tenure. The most commonly opted for deposit scheme is the fixed deposit scheme where an individual is required to keep an amount locked in for a period of a year or more. Term deposits are where the deposit is kept on a monthly/ daywise basis (100-180) days. NRI Term deposit accounts are the mostly sought after scheme as it helps improve financial regulations due to differences (mostly high) in currency rates.

The economic bloom that India experienced in the last decade ensured that the common man laid more emphasis on the savings front. A Savings Account not only helps you save for hard times but there are a lot of benefits that is associated with it. For example having a good savings enables you have a certain amount kept aside in a fixed deposit or a term deposit that helps you garner good interest. Also through your savings account you could invest in stocks, equities, shares etc. ATM cum Debit Cards & Credit cards provided against your savings account help you shop to a limit (depending on net income). Various forms of savings accounts have ensured smooth transactions. For eg: a zero balance savings account is used as a salary account wherein salaried individuals have their monthly salary deposited automatically.  All in all your Savings help you to determine your deposits which in the process help you total sum of money that you can save, and as the saying goes “Money Saved is Money earned”.

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