What is a deposit?
- Deposit is amount taken from the customer/amount deposited by the customer.
- Accepting deposit is the primary function of the bank.
- Different accounts (saving, current, fixed, margin call account) are used to collect the amount.
- The deposit can be interest-bearing and non-interest bearing.
- Deposit is the primary source of lending.
- Deposit is dominant liabilities of the bank.
- Deposit is assets of the customer and bank have to repay back to the customer whenever the customers demand.
Types of Deposit
The deposit can be categorized into different categories based on the currency, collection, time, interest-bearing and nature as follows.
|On the Basis of Currency||1) Local Currency Deposit
2) Foreign Currency Deposit
|On the basis of Interest Bearing||1) Interest Bearing Deposit
2) Non-interest Bearing Deposit
|On the basis of Tenure/Time||1) Demand Deposit
2) Term Deposit (Time Deposit)
|On the basis of Collection||1) Recurring Deposit
2) Non-recurring Deposit
|On the basis of Nature||1) Current Account Deposit
2) Saving Account Deposit
3) Fixed Account Deposit
4) Margin Account Deposit
5) Call Account Desposit
1. Current Account Deposit – The depositors of such deposits can withdraw and deposit money whenever they want any number of times. It is non- interest bearing deposit mainly used by big business firms and business people because they have to make payments and accept payments many times in a day.
Features of Current Deposit
- There is no restriction on a number of the transaction during any period of time.
- Bank does not provide interest in the current deposit.
- The account holder of the current account can be given the overdraft facilities [see the meaning below] after a special or specific agreement between bank and account holder.
2. Saving Deposit – Saving account is interest-bearing [low interest-bearing] account suitable for low and fixed income and salaried people. There are restrictions on the number of withdrawals that can be made through a saving account and hence this type of account is not suitable for businessmen. No overdraft facility is offered on a savings account. Saving account holders are given a cheque book facility.
Features of Saving Deposit
- The bank pays low interest in saving a deposit.
- There is a restriction in the number of the transaction during a state period of time.
- The main purpose of such account is to save money of customer for a short period.
3. Fixed Deposit – This deposit is also called long term deposit because the duration of the deposit is normally more than one year. The bank pays high interest for the account holder. The account holder can not withdraw money before the maturity period [see the meaning below]. One-time lump-sum deposit is made by the customer for a fixed period of time.
Features of Fixed Deposit
- The amount cannot be withdrawn before it’s maturity period.
- Bank provides the high-interest rate in fixed deposit.
- Mostly used by senior retired and pension holder citizen.
4. Call Deposit – Call deposit is a hybrid of current deposit and saving a deposit. It is an interest-bearing deposit wherein the rate of the interest depends upon the amount.
5. Margin Deposit – Margin deposit is a non-interest bearing deposit. No cheque is issued in margin deposit.
Different among the Current Deposit, Saving Deposit and Fixed Deposit
|Current Deposit||Saving Deposit||Fixed Deposit|
|It is non-interest bearing deposit||Low interest bearing deposit||High interest-bearing deposit|
|No cost deposit||low cost deposit||High cost deposit|
|No restriction in deposit and withdrawal||Restriction in withdrawal of the amount||Once fixed amount is deposited, withdrawal can be done only after predefined time period|
|Overdraft facility||No overdraft facility||No overdraft facility but loan facility can be availed|
|Generally open by big business firms and business people||Suitable for general people with low, fixed income||Generally senior psansionaire citizen open this type of account|
|Minimum balance of the account is greater than saving amount||The main purpose of such account is to save money of customer for a short period.||Payment of principle and interest after maturity period|
Factors Affecting Deposit (निक्षेपलाई प्रभाव पार्ने कारक तत्वहरु )
- Level of income and consumption pattern of the people
- Saving pattern and banking facility
- Inflation pattern and size of the economy
- Interest Rate and Tax rate
- The flow of remittance and investment opportunities
- Banking access, literacy, and baking habit
- Product of the bank and marketing
- Customer behavior
- The policy of the government (i.e. fiscal policy, monetary policy)
Meaning of the Words
Overdraft facility- Overdraft is a temporary loan given to the customer to clear/honor cheques already issued by him (in case of insufficient balance in the current account of the customer)
Maturity Period – Maturity period is the final payment date of a loan or other financial instrument, at which point the principal (and all remaining interest) is due to be paid.