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In order to perform cash transactions through the bank, a business requires to operate an account n a commercial bank which is known as a ' Bank Account'. The following are the types of bank accounts in which amount can be deposited:

Types of bank account


Current Account 

A current account is one in which there is no restriction in respect of the number of withdrawals and the extent of the amount to be drawn. Mostly, it is operated by businessmen for the sake of convenience and safety in handling cash transactions. No interest is allowed by the bank on the deposit made in the current account. the trader is required to maintain a minimum balance in the current account all the time. The minimum balance may vary depending upon the policy of the individual bank. the business deposits cash and cheques in its current account and withdraws the amount from it as and when required. The bank does no give credit to the current account for the cheque deposited until it collects the amount from the drawee bank. The business is required to till in a pay-in-slip and submit to the bank at the time of depositing cash and cheques.

Saving Account

A saving account is one in which there is a restriction in respect of the number of withdrawals and the extent of the amount to be drawn. It is not suitable for business. Usually, it is opened by individuals. An individual prefers to open a savings account to earn moderate interest. The depositors or the account holder is required to maintain a minimum balance all the time. the amount of minimum balance is usually less than that of the current account. However, some banks of city area require to maintain a balance up to RS50,000 and allow to draw up to RS10,00,000 at a time. They do not restrict the number of withdrawals provided daily withdrawals do not exceed the maximum limit. They require-information to withdraw more than the limit specified. They provide the facility of debit card form which amount can be withdrawn at any time not exceeding the limit fixed by the bank without issuing a cheque. The ATM service provided by the bank has made all those possible. The account holder can draw the money by using a debit card from a branch bank where the ATM service is available.

Fixed Deposit account

A fixed deposit account is one in which a large sum is deposited for a fixed period of time , say, for 1 year or 2 years or more years. The account holder can not withdraw her/his deposit before the period expires. It the depositor does not require the amount before the expiry f a fixed period then she prefers to deposit his amount in the fixed deposit account. The rate of interest is the highest in such an account. The bank issues a fixed deposit account. His rate of interest is the highest in such an account. The bank issues a fixed deposit receipt against the deposit made. The account holder returns the fixed deposit receipt on maturity and gets his amount back. Usually, the interest is allowed by the bank on a half-yearly basis. The fixed deposit account is not suitable for a trader.

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