Write a note on the 1. Current account 2. Saving account 3. Fixed account or Give the procedure of opening PLS, Current and Fixed account
It is a running account and remains continuously in operation. The current deposits can be withdrawn without giving any notice before time. The bank has to honour the cheques if these are within limits. Those people maintain liquid asset who are in need of liquid balance. Overdraft facility be provided through the agreement with the bank. On the current account usually interest is not paid. The bank acts as a custodian only. The bank cannot employ these funds and keep higher reserve ration.
The current account is opened by the traders, business companies industrialists and public service bodies.
ADVANTAGES OF CURRENT ACCOUNT :-
1. Current account holder keeps the working capital in his hand.
2. He keeps his money liquid and safe.
3. Current account holder makes the payments through cheques..
4. receive the payments through cheques.
5. Uses the agency services of the bank.
6. Overdraft facility may be enjoyed by the current account holder.
7. Loans and advances facility can be provided at the current A/C holder by the bank.
SAVING ACCOUNT :-
Those people who have money to save but can not invest profitably, because the amount is too small. They can open savings account. The bank pays the interest on it. The employees, firms and children usually open this account. An account holder can withdraw a limited amount of money only twice a week. In case of a big amount he has to give 7 to 15 days prior notice in writing to the bank.
The bank lends the maximum portion of savings deposits because it knows that small portion of this amount is withdrawn. Note Bank pays the interest on this account according the prescribed rate of the state bank.
PLS ACCOUNT :-
Profit and Loss sharing account is opened at least with 10000 Rs. This amount is eligible for sharing profit and loss . For withdrawal of large amount, 7 days notice is required. For withdrawal, only cheques will be used.
OPENING OF ACCOUNT :-
A prescribed form is filled by the applicant in which various informations like name, address, occupation, signature, introductory reference and declaration is given.
FIXED DEPOSITS :-
These deposits are kept with a bank for a certain period. These are not payable on demand. These can be withdrawn after a specified period which varies from 3 months to 5 years. The rate of interest on fixed deposits is higher than that of savings accounts. The bank issues the fixed deposits receipt. On this receipt "Not Negotiable" words are written. The bank can advance, loan against the security of time deposits. In this case the cash reserve ratio of the bank is quiet small.
OPENING OF SAVING OR CURRENT ACCOUNT :-
Following are the main formalities of opening saving or current account :
1. Application :-
Account opening form is filled by the customer. It is a formal request to the bank to allow him to open and operate the account.
2. Introduction :-
Before opening an account a bank introduction of the customer from a responsible person or any account holder.
3. Specimen Signature :-
When banker is satisfied about the identity of the customer than he obtains the specimen signature on the card.
4. Initial Deposit :-
The current account can be opened with a minimum 1000 Rs. and Profit and Loss account with a minimum Rs. 10000.
5. Issuance Of Cheque Book :-
The banker gives a cheque books pay in slip book and pass book.
6. Pass Book Entries :-
The banker should prepare the pass book very carefully. The customer should also check the entries carefully. He should keep proper record while drawing the cheque.
OPENING AND OPERATION OF FIXED ACCOUNT :-
While opening an account following procedure is adopted :
1. Application :-
Name Address and other information required in the form will be provided by the customers. He will sign the form and submit to the bankers.
2. Fixed Deposit Receipt (FDR ) :-
Fixed deposit receipt is issued by the banker when he accepts the application and money. All the terms and conditions about the rate of interest and amount are written on it.
3. Payment Of Interest :-
Normally, it is paid after expiry of fixed date. If depositor desires the interest can be paid, on quarterly or yearly.
PAYMENT BEFORE MATURITY :-
In this case depositor cancel the payment provided, he forgoes the interest for the period of the loan.
1. Fixed deposit receipt is not transferable.
2. No cheque book is issued in this case.
3. Loan facility can be availed against the FDR.
4. In case of FDR loss it can be reissued. It is exempted from stamp duty.
5. In case of death, the amount is paid to his personal representative.
6. The account can be opened jointly.