Unit 20 M2
The main features of saving account are as follows: - The main objective of saving account is to promote savings. There is no restriction on the number and amount of deposits. Withdrawals are allowed subject to certain restrictions, the money can be withdrawn either by cheque or withdrawal slip of the respective bank. The rate of interest payable is very nominal on savings account, saving account is of continuing nature. There is no maximum period of holding, a minimum amount has to be kept on savings account to keep it functioning. No loan facility is provided against savings account, Electronic Clearing System (ECS) or E-Banking are available to pay electricity bill, telephone bill and other routine household expenses. Generally, equated monthly instalments (EMI) for housing loan, personal loan, car loan, etc, are paid (routed) through savings bank account.
The main features of current account are as follows: - Current bank accounts are operated to run a business it is a non-interest bearing bank account. It needs a higher minimum balance to be maintained as compared to the savings account. Penalty is charged if minimum balance is not maintained in the current account, it charges interest on the short-term funds borrowed from the bank. It is of a continuing nature as there is no fixed period to hold a current account, it does not promote saving habits with its account holders. Banker requires KYC (Know your Customers) norms to be completed before opening a current account. The main objective of current bank account is to enable the businessmen to conduct their business transactions smoothly. There is no restriction on the number of amount of deposits, there is also no restriction on the number and amount of withdrawals made, as long the current account holder has funds in his bank account. Generally, bank does not pay any interest on current account.