A Project report On

TYPE OF BANK ACCOUNTS

IN THE NAWANSHAHR CENTRAL CO-OPERATIVE BANK LTD. (NAWANSHAHR)
SUBMITED FOR PARTIAL FULFILLMENT OF THE MASTER DEGREE OF COMMERCE FOR

G.N.D.U AMRITSAR
(SESSION 2011-2012)
SUBMITTED TO: PROF. S.B.JOHAR (HEAD OF COMMERCE DEPERTMENT) SUBMITTED BY: MANJEET KAUR ROLL NO.1566 M.COM ( 2nd YEAR)

R.K.

ARYA

COLLEGE

NAWANSHAHR

PREFACE
As a part to M.com, every student has to write the project report.Every student of this course has to undergo training in an industrial or commercial origination.By training,we know about the functioning of actual business and working condition under which we have to work in future. I underwent my training at Central Co-operative Bank Ltd.Nawanshahr for a period of 6 weeks.Central Co-operative Bank is an institution on co-operative basis and doing ordinary banking business.I too have learnt from this experience and so am writing about the Bank and finance department as I have understood it. The study has been written in a very simple language.Every effort has been made to avoid any type of bias or misunderstanding while writing the report.

ACKNOWLEDGEMENT
This project report would have not possible without the kind assistance and guidance of many persons who indeed were very helpful,co-operative,kind during the during the entire course of my assignment. I would like to take this opportunity to express my heart-felt appreciation for all those concerned. I am grateful to Mr.S.B Johar (Head of Department) and the official of GNDU Amritsar for giving me an opportunity to Work on this project report.I would like to express my sincere thanks to my worthy guide Mr.S.B.Johar (Lecturer in Commerce Department,R.K. Arya College,Nawanshahr) for the keen interest and guidance. On the same term I want to express my indebtedness and sincere gratitude to Mr.Nirmaljit Singh and K.K Gogana who provided the desired information and other technical facilities during the tenure of the project work.

THE NAWANSHAHR CENTRAL COOPERATIVE BANK LTD.

Content of report
Particular
Introduction Definition Objectives of Bank Principal of Co-Operative Bank Available Accounts in Banks Loans Available in Bank

Page No.
1-4 5 5 6 7 7

INDEX
Particular Page no.

Introduction to Bank Facilities of Bank Types of Bank Accounts

1. Fixed Deposits Accounts
Feature of Fixed Deposits A/c Advantages of Fixed Deposits A/c Drawback of Fixed Deposits A/c Precaution

13-15 17-18 20-22

24
25 26-27 28 29

2. Recurring Deposit Account

Feature of Recurring Deposit A/c Advantages Recurring Deposit A/c

31
32 33-34

3. Saving Account
Features of Saving A/c

36
39

Document Require for opening a Saving A/c 38

 Types of Saving A/c Advantages Saving A/c Disadvantages of Saving A/c

40-43 44-45 46

4. Current Bank Account

Features of Current Bank A/c Advantages of Current Bank A/c Advantages opening an A/c

48-49
50 51-52 53-55

Operation of bank account Closing a bank account Suggestion Bibliography

61-65 67-69 71-74 76

INTRODUCTION
In January 1934 devoted cooperates of the Nawanshahr Subdivision took a very wise and farsighted step by organizing this bank having a separate entity in Jalandhar district by amalgamation of two Cooperative Unions namely Dhaha and Jandiali with working capital of Rs.2.25 Lac.This bank is situated in a small rented room in local Gurudwara Sahib in Nawanshahr.On formation of Nawanshahr as district, Balachaur Sub-division was amalgamated in this bank w.e.f 01.10.1996.This bank is serving small, marginal,other framers and weaker sections of the society in rural as well as urban areas in Nawanshahr District with 47 branches.All the branches are successful.Per branch business exceed Rs.15 core and all B.Os are earning profit.Consequent of good results, RBI has granted Banking license to us in the year 1990. Our bank has won four out of six NABARD BEST PERFOMANCE AWARDS for the year 1995-96,1996-97,1998-99 and 1999-2000 being declared as best amongst the Central Co-operative banks of Punjab state and Second Prize for the 2000-2001 (1)

Owned Funds
This bank tops all Central Co-operative Banks in respect of own funds in the Punjab State.Our bank is on very sound footings,which is evident from the fact owned funds have touched a new height of Rs.118.21 core due to recurring profits in the successive years. Owned funds are cost free to the bank and are an sample proof of our good financial health.

(2)

Profits for the year

Year 1934 1940 1950 1960 1978 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Profit (in lacs) 0.04 0.04 0.09 0.39 34.08 815.90 960.89 984.07 1153.51 1322.82 1046.46 796.75 741.75 658.58 1203.74

Levying of Income Tax for the financial year 2006-07 has lowered our profit.Our financial margin is 3.68 and net margin being 1.64 per hundred

(3)

Meaning of co-operative Bank

Co-operative Bank is an institution on co-operative basis and doing ordinary banking business.These banks are funded by collecting funds through shares, deposits etc.They are concerned with rural credit and provide financial assistance to agricultural and rural activities.In India,huge co-operative institutions are operating. In our country,co-operative institutions are started to look after the needs of the agriculturists.In 1902,provision was made to start primary co-operative societies at Village level to grant short term loans.In 1912,Land Development banks are initiated. They granted long term loans to enable the farmer to buy farm equipments like tractors, o make permanent improvement and to repay past debts.In 1912,provision was made to establish District Co-operative Banks at the State level.

(4)

Definition of Co-operative Bank

A cooperative bank is an autonomous association of persons united voluntarily to meet their common economic , social and culture needs and aspiration through a jointly owed and democratically controlled enterprise.

Objectives of the Banks

1.Commitment to quick services. 2.Achievement of customer satisfaction. 3.Qualitative Services. 4.Cordial relationship with public. 5.Service with smile.

(5)

Principles of Co-operative Bank

1.Voluntary and open membership: Co-operative banks
are voluntary organizations,open to all persons.

2.Democratic member control: Co-operative banks are

democratic organizations,controlled by their members,who actively participate in setting their polices and making decisions.

3.Member Economic participation: Members contribute

equality to and democratically control the capital of their cooperative banks.A small part of the capital is usually the common property of the co-operative banks.

4.Autonomy and independence: Co-operative banks are

autonomous,self help organizations controlled by their members.

5.Education,Training and Information: Co-operative

banks provide education and training for their members,

elected representatives,managers and employees so that they (6) can contribute effectively to the development of their cooperative banks.

Available Accounts in Bank

1.SAVING DEPOSIT ACCOUNT 2.FIXED DEPOSIT 1ACCOUNT 3.CURRENT DEPOSIT ACCOUNT 4.RECCURING DEPOSIT ACCOUNT

Loan available in Co-operaive bank

1.SALARY LOAN 2.NON SALARY LOAN 3.PERSONAL LOAN 4.TWO WHEELER LOAN 5.NON FARM SECTOR 6.HOUSE LOAN 7.URBAN HOUSE LOAN

8.HOUSE LOAN RURAL 9.LOAN AGAINST PROPERTY 10. CCT LOAN (7)

In The Distt, The Co-operative Bank Has 45 Branches

They are
BRANCH 1. ALLACHAUR 2. AUR 3. BACHHAURI 4. BALACHAUR 5. BANGA 6. BAJID PUR 7. BEHLOOR KALAN 8. BEHRAM 9. DOPALPUR 10. EV.BR.NSR PHONE NO. 01823-223647 01823-245023 01885- 273205 01885-220149 01885-260075 01823-257163 01823-238136 01823-270227 01823-244617 01823-263177

11. GARCHA 12. GHATARON 13. GHUMAN 14. GOBINDPUR 15. HAKIMPUR 16. JADLA 17. KAHMA 18. KARNANA 19. KATARIAN 20. KATHGARH 21. KHANKHANNA 22. KULTHAM 23. LADHANA JHIKKA 24. LANGROYA 25. MAHIL GAHALAN 26. MAIN BR, NSR 27. MAJARI

01823-234263 01823-255753 (8) 01823-272015 01823-281853 01823-276062 01823-253024 01823-278029 01823-279014 01823-230060 01885-250622 01823-275603 01823-283808 01823-263557 01823-250038 01823-273038 01823-509493 01885-238290

28. MEHLI 29. MUKANDPUR 30.PALLI JHIKKI 31. PATHLAWA 32. PHAMBRA 33. POJEWAL 34. R.P.DABBA 35. RAHON 36. RAKRAN DHAHAN 37. SAHIBA 38. SANDHAWAN 39. SARHAL QAZIAN 40. SAROYA 41. SUGAR MILL 42. SUJJON 43. TONSA 44. URAPAR

01823-283030 01823-276023 (9) 01823-273349 01823-281366 01823-245068 01885-244608 01823-279017 01823-240031 01885-238338 01823-232434 01823-270240 01823-247227 01823-230029 01823-222634 01823-273485 01881-273727 01823-248032

45. USMANPUR

01823-244011

(10 )

THE NAWANSHAHR CENTRAL CO-OPERATIVE BANK LTD.(S.B.S Nagar) PUNJAB

List of Board of Director
1. SUCHA SINGH ARK 2. CH. GURMAIL SINGH NAGRA 3. S. GURMINDER SINGH 4. S. DILDAAR SINGH 5. S. RAGHVIR SINGH MANAGING DIRECTOR CHAIRMAN VICE CHAIRMAN DIRECTOR DIRECTOR

6. S. JASKAMAL SINGH [TALWANDI FATTU] DIRECTOR 7. S. MOHAN SINGH BAJWA DIRECTOR

8. S. BALVIR SINGH DHILLON 9. S. SATVIR SINGH PALLI JHIKKI

DIRECTOR DIRECTOR (11)

INTRODUCTION TO TYPES OF BANK ACCOUNTS

INTRODUCTION:
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:

A central bank circulates money on behalf of a government and acts as its monetary authority by implementing monetary policy,which regulates the money supply.

A commercial bank accepts deposits and pools those funds to provide either directly by lending,or indirectly by investing through the capital markets. ithin the global financial markets, these institutions connect market participants with capital deficits (borrowers) to market participants with capital surpluses (investors and lenders) by transferring funds from those parties who have surplus funds to invest (financial assets) to those parties who borrow funds to invest in real assets.

(13 )

A savings bank (known as a "building society" in the United Kingdom) is similar to a savings and loan association (S&L).They can either be stockholder owned or mutually owned, in which case they are permitted to only borrow from members of the finance Italic textile cooperative.The asset structure of savings banks and savings and loan associations is similar,with residential mortgage loans providing the principal assets of the institution's portfolio.

Open bank account - the most common and first service of the banking sector.There are different types of bank account in Indian banking sector.The bank accounts are as follows:

Bank Savings Account - Bank Savings Account can be opened for eligible person / persons and certain organisations / agencies (as advised by Reserve Bank of India (RBI) from time to time)

(14)

Bank Current Account - Bank Current Account can be opened by individuals / partnership firms / Private and Public Limited Companies /HUFs / Specified Associates / Societies / Trusts, etc.

Bank Term Deposits Account - Bank Term Deposits Account can be opened by individuals/partnership firms /Private and Public Limited Companies/HUFs/ Specified Associates / Societies / Trusts, etc. Bank Account Online - With the advancement of technology, the major banks in the public and private sector has facilitated their customer to open bank account online.Bank account online is registered through a PC with an internet connection. \The advent of bank account online has saved both the cost of operation for banks as well as the time taken in opening an account.

(15 )

Facilitates of Bank Account

Facilitates of Banks Account

1.Bank account facilitates a safe custody of money

the bank is the custodian of cash.As and when the account holders needs the money can withdraw the same depending upon the type of account.

2.Bank account helps in making payments

The bank account holder can make payment to third parties through the savings and current account.The payment may be regarding electricity bills,insurance premium,etc.The bank also makes direct payment on the standing instructions of the customer.

3.Bank account helps in collection of money The bank can directly collect money of the customer in respect of dividend,salary pension or from debtors.The collected money is then deposited in customer's bank account. (17)

4.Bank account holders get advances and loans

The current account holder can obtain an overdraft facility from his bank. The recurring and fixed deposit account holders can get a loan upto 75% of the amount to their credit.The savings account holders can also obtain loans to purchase computers and such other equipments.

5.Bank account helps in smooth transactions

The bank account makes it possible for the businessmen to conduct their business operations smoothly not only in the domestic trade but also in the foreign markets.

6.Bank account holders get a safe deposit locker

The bank provides safe deposit locker facility to its account holders to keep their valuables like gold jewellery,share certificates,property documents,etc.

(18)

Types of Bank Accounts

TYPES OF BANK ACCOUNTS

A.Term Deposit Account.
1.Fixed Deposit Account 2.Recurring Deposit Account

B.Demand Deposit Account

1.Saving Deposit Account 2.Current Deposit Account A.Term Deposit Account: Deposit accepted by bank which is repayable only after a fixed period of time.In other words we can say the deposit which is not repayable on demand. Following can be term deposit: 1.Fixed account 2.Reccuring account

(20) B.Demand Deposit Account: It refers to deposit received by banker, repayable on demand i.e.customer can withdraw when they want. Following can be demand deposit: 1.Saving bank account 2.Current account Traditional Types of Bank Account Saving Accounts Current Accounts Fixed Deposit Accounts Recurring Deposit Accounts Modern Types of Bank Account Now a days banks have introduced new and innovative deposits plans as follows: Saving Account with Zero balance Saving Salary Account Student Deposit Scheme Janta Deposit Scheme Home Safe Deposit Account etc.

(21) All the above different kinds of bank account differs from each other mainly on the following grounds:\ 1. Minimum balance to be maintained. 2. Restriction on No. of withdrawals. 3. Length of notice required to be given for withdrawal.

(22)

Fixed Deposit Account

Fixed Deposit Account

The account which is opened for a particular fixed period (time) by depositing particular amount (money) is known as Fixed (Term) Deposit Account. The term 'fixed deposit' means that the deposit is fixed and is repayable only after a specific period is over. Under fixed deposit account, money is deposited for a fixed period say six months, one year,five years or even ten years.The money deposited in this account can not be withdrawn before the expiry of period. The rate of interest paid for fixed deposit vary (changes) according to amount, period and from bank to bank.

(24)

Features of Fixed Deposit Account

The main features of fixed deposit are: 1.The individuals to earn a higher rate of interest on their surplus funds (extra money). 2.The amount can be deposited only once. For further such deposits, separate accounts need to be opened. 3.The period of fixed deposits range between 15 days to 10 years. 5.A high interest rate is paid on fixed deposits.The rate of interest may vary as per amount, period and from bank to bank. 6.Withdrawals are not allowed.However,in case of emergency, banks allow to close the fixed account prior to maturity date. In such cases, the bank deducts 1% (deduction percentage may vary) from the interest payable as on that date. 7.The depositor is given a fixed deposit receipt,which depositor has to produce at the time of maturity.The deposit can be renewed for a further period.

(25)

Advantages of Fixed Deposit Account

The advantages of fixed deposit account are as follows:1.Fixed deposit encourages savings habit for a longer period of time. 2.Fixed deposit account enables the depositor to earn a high interest rate. 3.The depositor can get loan facility from the bank. 4.On maturity the amount can be used to make purchases of assets. 5.The bank can get the funds for a longer period of time. 6.The bank can lend such funds for short term loans to businessmen. 7.Fixed deposits indirectly boost economic development of the country. 8.The bank can also invest such funds in profitable areas. 9.Various banks offer higher rates of interest to senior citizens on their fixed deposits than to regular account

holders.This makes fixed deposits a popular investment for retirement. (26)

10.In most countries,tax departments allow deductions if one makes investments in fixed deposits. 11.A fixed deposit account yields higher returns than normal deposits, such as a savings account or a current account. A fixed deposit usually yields interest on a quarterly basis. 12.Fixed deposits are considered safer than mutual funds and investment in stocks. 13.Bank accounts in developed markets are insured.For example, the FDIC insures all deposits in US banks.

(27)

Drawbacks of Fixed Deposit Accounts

The drawbacks of fixed deposit accounts are: 1.Money invested in a fixed deposit grows slower than in investments such as stocks.

2.The rate of interest offered by banks on fixed deposits is subject to change according to inflation.If inflation rises, the interest earnings from a fixed deposit will be significantly impacted.

3.The account holder is not allowed to withdraw the funds before the date of maturity.

(28)

Precautions While Investing in Fixed Deposit Accounts

Here are some precautions an investor must bear in mind while investing in fixed deposit accounts: 1.If one has invested in a companys fixed deposit account, chances are s/he will lose her or his money if the company goes bankrupt.It is important to read the fine print. The best option is to open a fixed deposit account in an established and reputed bank and to ensure this situation is covered by insurance. 2.The amount one earns on a fixed deposit depends on whether the bank compounds interest on a quarterly or monthly basis.A monthly scheme will yield more returns than a quarterly scheme.

3.One must find out what penalty is imposed if an account holder wishes to withdraw money from a fixed deposit before the maturity date. 4.Thus, while a fixed deposit account can be a safe option,it is not as lucrative as some of the exchange traded and OTCE investment options. (29)

Recurring Deposit Account

Recurring Deposit Account

Recurring deposit account is generally opened for a purpose to be served at a future date.Generally opened to finance pre-planned future purposes like,wedding expenses of daughter, purchase of costly items like land,luxury car, refrigerator or air conditioner,etc. Recurring deposit account is opened by those who want to save regularly for a certain period of time and earn a higher interest rate. In recurring deposit account certain fixed amount is accepted every month for a specified period and the total amount is repaid with interest at the end of the particular fixed period.

(31 )

Features of Recurring Deposit Account

The main features of recurring deposit account are as follows:1.The main objective of recurring deposit account is to develop regular savings habit among the public. 2.In India, minimum amount that can be deposited is Rs.10 at regular intervals. 3.The period of deposit is minimum six months and maximum ten years. 4.The rate of interest is higher. 5.No withdrawals are allowed.However, the bank may allow to close the account before the maturity period. 6.The bank provides the loan facility.The loan can be given upto 75% of the amount standing to the credit of the account holder.

(32)

Advantage of Recurring Deposit Account

Advantage of recurring Deposit is: 1. Fixed rate of interest The rate of interest offered on a recurring deposit is not floating it remains the same for the entire tenure of the recurring deposit. The rate of interest offered varies from bank to bank,and also depends on the tenure of the recurring deposit.But the interest rates offered typically range from around 4% to 10%. For example,State Bank of India (SBI) offers interest rates between 4.75% and 10%. Similarly,ICICI Bank offers interest rates between 3.75% and 9.5%. 2.Loan / Overdraft facility Many banks provide the facility of a loan or overdraft against the amount accumulated in your recurring deposit account.

(33) 3.Funds transfer facility Many banks also provide the facility of direct monthly transfer of funds from your savings account to your recurring deposit account. 4.Nomination facility Most banks offer nomination facility for recurring deposit accounts. 5.Income Tax (IT) Treatment and Benefits There is no income tax benefit available for a recurring deposit. The investment in a recurring deposit is not considered for deduction u/s 80C.The interest earned on a recurring deposit is also taxable.Usually, there is no tax deducted at source (TDS) for recurring deposits. 6.Recurring deposit encourages regular savings habit among the people. 7.Recurring deposit account holder can get a loan facility. 8.The bank can utilize such funds for lending to businessmen.

9.The bank may also invest such funds in profitable areas. (33)

What are the prevailing rates f or recurring deposits

Various banks give different interest rates for different schemes.There are Kids Specific Recurring Deposit Schemes too,offered by many banks. All these schemes offer Interest amount ranging from 7.5% Per Annum to 9.5% Per Annum, which depends on the Sum Assured,The tenure opted for, and also depending on various schemes.Many banks have separate interest schemes made available exclusive to the senior citizens.Generally an amount of 0.5% Interest is paid more in almost all of the senior citizens schemes,which includes Recurring Deposits.

(34)

Saving Account

Meaning of Saving Account

Commercial Banks, Co-operative Banks and Postal Departments accept deposits by way of opening saving bank account.The saving bank account is generally opened by salaried persons or by the persons who have fixed income. Saving accounts are opened to encourage the people to save and collect their savings.In India, saving account can be opened by depositing Rs.100 (US $2.19) to Rs.500 (US $11).The saving account holder is allowed to withdraw money from the account two times or three times in a week. The interest which is given on saving accounts is sometime attractive, but often nominal.At present the rate of interest is 3.50% p.a in India.The interest rates varies as per amount of money deposited and its maturity range.It is also subject to current trend of banking policies in a country.

(36)

Things to Consider While Opening a Savings Account

It is advisable to seek the following information from bank before opening the account: 1.Minimum balance requirements. 2.Penal provisions in case the balance falls below the minimum stipulated amount 3.Penalty in case of return of cheques issued or instruments sent on collection. 4.Collection facilities etc.offered and charges applicable. 5.Details of charges,if any for issue of cheque books and limits fixed on number of withdrawals,cash drawings, etc.

(37)

Document Required For Opening a Savings Account

Following are Document required for opening a saving account: 1.Two passport size photographs 2.Proof of residence i.e.Passport/driving license/Gas / Telephone / Electricity Bill/ Ration card/voters identity card 3.An introduction of the person from an existing account holder. 4.PAN number / Declaration in form no.60 or 61 as per the Income Tax Act 1961. 5.Specimen signature.

(38)

Features of Saving Account

The main features of saving account are as follows:1.The main objective of saving account is to promote savings. 2.There is no restriction on the number and amount of deposits. 3.Withdrawals are allowed subject to certain restrictions. 4.The money can be withdrawn either by cheque or withdrawal slip. 5.The rate of interest payable is very nominal on saving accounts.At present it is about 3.50% p.a in India. 6.Saving account is of continuing nature.There is no maximum period. 7.A minimum amount has to be kept on saving account. 8.No loan facility is provided against saving account.

(39)

Types of savings account explained

With so many different types of savings accounts now available,it is difficult to know which one to choose.The sort of account which is best for you is dependent upon several factors - for example,whether you need instant access to your money,how long you can tie your cash up for and whether or not you pay tax. Savings accounts most commonly fall into one of the five types of accounts detailed below: Easy Access/ No Notice Accounts Notice Accounts Bonds or Term Accounts

Regular Saving Accounts ISAs and Tax-Free Accounts

(40)

Instant Access or Easy Access Accounts

1Notice Account Notice accounts generally earn a better rate of interest but require you to give a certain amount of notice before withdrawing funds to avoid any penalty.The amount of notice that needs to be given depends on which account you choose. These accounts are becoming less attractive as instant access accounts have become more competitive and allow you to withdraw your money immediately. 2.Bonds or term account For many savers, the most important aspect of any investment knows that their money is safe and secure.If this applies to you,then bonds or term accounts could be what you are looking for.Bonds or term accounts are high interest savings accounts which offer the most competitive interest rates but which require your money to be tied up for a specific period of time.The interest rate on most accounts is

fixed from opening the account until the maturity date.

(41)

The money in the account is tied up for a specific length of time, usually between 1 to 5 years and you are not usually allowed to add further funds to your initial deposit once a bond has been opened. Most providers do not permit any type of withdrawal before the maturity date and if withdrawals are allowed then a penalty will normally be incurred. 3. Regular Savings Accounts this type of account is aimed at people who can commit to making regular savings and deposit money into the account each month.A certain number of monthly payments have to be made into these accounts each year to prevent loss of interest or closure. They often pay superior annual rates of interest by giving savers an annual bonus payable as interest on top of their interest rate. However, with some accounts,if you fail to make the required deposits you will lose the annual bonus. Some accounts limit the amount you can put in each month and most accounts limit the number of withdrawals you can make each year,so they aren't much good if you

need access to your money quickly. 4. ISAs

(42)

Any individual aged 16 and over who is resident in the UK for tax purposes is eligible to open to an Individual Savings Account (ISA).You can choose to save in cash ISA or invest in equity ISA (stocks and shares) or a combination of both. The returns from these accounts are free of income tax and capital gains tax,but the maximum cash investment permitted per tax year (April 6th - April 5th) is 3,000.Equity ISA,also known as a maxi ISA,allows you to invest up to 7,000 allowance in stocks and shares or to combine your stocks and shares investment with cash.You cannot have both a maxi and mini ISA in the same tax year. Withdrawals may be made from the account,but once the maximum amount has been deposited in any year,no further deposits will be permitted that year,regardless of how much is withdrawn. While cash ISAs do not always offer the highest interest rates in the savings account market,after tax you will find the best ones easily beat the higher-paying ordinary savings accounts. (43)

Advantages of Saving Account

The advantages of saving account are as follows:1.Protection Most banks and credit unions are insured,which means that the money deposited into a savings account is safe and secure.No matter what happens,you will get your money back. 2.Saving The entire point of a savings account is to save money. You can purposefully open a savings account that does not have an ATM card linked to it to make withdrawing the funds less convenient. 3.Automatic Deposits and Payments Automatic payments and deposits can be set up to manage the account,and your employer can directly deposit money into the account.This gives you less to worry about throughout the month.

(44)

4.Saving account encourages savings habit among salary earners and others who have fixed income. 5.Saving account enables the depositor to earn income by way of interest. 6.Saving account helps the depositor to make payment by way of cheques / checks. 7.The bank offers number of services to the saving account holders.

(45)

Disadvantage of saving accounts

1.Minimum Balance Many banks require you to maintain a minimum balance in order to avoid fees on your savings account.For some banks this is only Rs.500 but others requires as much as Rs.1000 minimum.It may take some shopping around to find a savings account to suit your needs. 2.Interest Rates Savings accounts have the lowest interest returns of any place you can keep your money,other than a checking account.If you are looking to make money on interest, a savings account is not for you.

(46)

Current Bank Account

Meaning of Current Bank Account

Current bank account is opened by businessmen who have a number of regular transactions with the bank, both deposits and withdrawals.It is also known as Demand Deposit. Current account can be opened in co-operative bank and commercial bank.Incurrent account, amount can be deposited and withdrawn at any time without giving any notice.It is also suitable for making payments to creditors by using cheques.Cheques received from customers can be deposited in this account for collection. In India,current account can be opened by depositing Rs.500 (US $ 11) to Rs.1,000 (US $ 22). The customers are allowed to withdraw the amount with cheques and they generally do not get any interest.In India Co-operative bank may allow interest upto 1%. Current account holder gets one important advantage of overdraft facility. (48)

Current Account
Current Account is one of the most basic and flexible deposit options for all the business needs.These cheque operated account is primarily meant for businessmen,firms,companies, public enterprises etc who need banking facility more frequently.unlike saving bank account,no limits are fixed by banks on the number of transactions permitted in the account. Most of the banks usually insist for a higher minimum balance as compared to savings account to be maintained in Current account.Now Current accounts are available with debit card and online banking facilities which make the transactions more easier.Certain service charges are also imposed for operating current account.However this account cannot be considered as a saving account since the banks are not allowed to pay any interest to current account balance.Incase of death of the account holder his legal heirs are paid interest at the rates applicable to Savings bank deposit from the date of death till the date of settlement.

(49)

Features of Current Bank Account

The main features of current account are as follows:1.No Minimum Balance Requirement Small businesses face no greater constraint than cash flow, which is why ADCB Business Choice customers can enjoy the freedom of no minimum balance for a nominal monthly fee.And those who prefer to maintain a higher balance can unlock a range of attractive waivers on dayto-day banking transactions,adding up to great annual savings. 2.The main objective of current bank account is to enable the businessmen to conduct their business transactions smoothly. 3.There is no restriction on the number and amount of deposits. There is also no restriction on the withdrawals. 4.Generally bank does not pay any interest on current account.Nowadays,some banks do pay interest on current accounts.

5.Current account is of continuing nature and as such there is no fixed period. (50)

Advantage of Current Bank Account

The advantages of current account are as follows:1.Current account enables businessmen to conduct his business transactions smoothly. 2.The businessmen can withdraw any amount at any time from their current accounts.There are also no restrictions on withdrawals. 3.The businessmen can make direct payment to their creditors with the help of cheques. 4.The bank collects money on behalf of its customers and credits the same to their accounts. 5.Current account enables the account holder to obtain overdraft facility. 6.The creditors of the account holder can get creditworthiness information of the account holder through inter bank connection.

7.Current account facilitates the industrial progress of the country.Without the help of this account,businessmen would have difficulties in running their business. (51) 8.Overdraft facility is available. 9.Speedy fund transactions can be done by this account. 10.Unlimited depositing and withdrawing facility 11.Nomination facility is available under this current account. 12.Third party cheque will be collected by the depositor if they are endorsed.

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The large majority of current accounts will include these basic features:
Cash or Debit Card This handy card can be used to withdraw money or check the balance on your account through a large cash machine network throughout the UK.Since cash machines never close,the cash card offers you the ability to withdraw funds any time of the day or night.Debit cards can also be used to make purchases from retailers. Direct Debits Direct debits offer the ultimate convenience for those regular payments with which you have to grapple.Instead of dealing with late fees because you forgot to pay your mobile phone bill (again!), you can set up payments so the money I automatically taken out of your account at the same time each month.

 Checkbook In addition to a cash or debit card,most current accounts come with a checkbook.However, account holders must be at least 18 years of age to enjoy this feature.The checkbook allows you even more option for making purchases and paying bills. Additional Features: In addition to the basics,many banks offer a variety of additional options so that their current accounts can effectively compete with other financial institutions.These features may include: Online or Telephone Banking Most bank customers today dont want to have to limit their bank business to standard office hours.Internet banking can be done at a time that is convenient for you,right from the comfort of home.Many companies also offer 24-hour phone service, so you can talk to a live person about your account if you prefer. Overdraft Facility This addition to your current account protects you from accidental overdrafts.When you write a check for more than you have in your account,the overdraft kicks in to cover your debit.You (53)

can pay the overdraft back in full or in minimum monthly payments.The specific limit and terms of the overdraft will vary from bank to bank.

(54) Interest Some current accounts actually pay you interest on your money,even though this is not technically classified as a savings account.Interest rates vary greatly,so if this is an important feature for you, shop around for the best rate possible. Post Office Branches Some banks offer branches within post offices, adding to the convenience of your banking experience.If the bank or building society you choose doesnt have a brick and mortar branch near your home,find out if they have post office branches that might offer more convenient locationsThere are many features available on current accounts today.By knowing your options and shopping around for the best deal,you can find the current account that will best meet your specific financial needs.

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How to open?
Opening a Current Account will vary depending up on the bank type.Current Account can be opened in the name of an individual or in joint names of the depositors by filling up the appropriate forms.Normally the applicant has to visit the bank himself for opening a new account.Most of the procedures are same as opening a saving account.Any of the address proofs such as Passport,Driving License, Voters ID etc along with two passport size photos are required for opening an account.PAN Number and Declaration in Form 60 and 61 as per the Income Tax Act,1961 is also necessary. An existing account holder or a respectable citizen,well known to the bank should introduce the applicant at the time of opening the account For business accounts,copy of the Business Registration to be submitted by the account holder.Copy of the Memorandum of Association and Article of Association duly certified to be

submitted for opening a current account for company or a firm. Opening current account for a society,constitution together with a list of current office bearers to besubmitted.

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ADAVANTAGE OF OPENING AN ACCOUNT

Following are the advantages of opening an account with the banker: 1.No burden of handling cash: when someone is dealing with cash a number of risk are attached i.e. there can be risk of loss by theft, fire and mis-appropriation by employee. Therefore safeguarding while dealing the cash is a very tough job.But all these risk come to an end when some has account. 2.Safety of money: Normally people deposit money in the bank to avoid fear of loss.So the basic purpose is the security of the money and they feel more safe when there money is with the bank instead of keeping money at their home. 3.Return on money deposit: Another main motive of depositing money is to fetch interest thereon.By opening an

account with the bank one can ensure liquidity and earnings. It will give nothing if it is kept at home. (57)

4.To cultivate the habit of saving: Another major advantage is that it encourages the people to save more. People would like to cut their expenses and extravagance.It will give them a purpose to save and get returns. 5.Facility of loans and advance/overdraft facility: Overdraft facility is given by bank to account holders to honour cheque in case there is no balance in customer account. \So whenever customer needs money he can even withdrawal more money then the balance in this account. 6.Collection of cheques: bank collects on the behalf of the customer the amount of cheques,drafts etc.and credit it the amount in their account.Bank also provides discounting facilities in case of bills of exchange. 7.Facility of making payment: Whenever a customer open an account he will get a cherub book and it is always convenient to make payment through bank accounts payment are greatly facilitated by means of cheques.There is no need to count money,which reduces risk attached to

physical currency notes.Cheque also serves as an evidence of payment in cash of payment. (58)

8.Safe custody of making payment : If a person has account in then bank the locker facilty will be available for nominal charges where valuable articles, deeds, securities etc. can be kept without any fear i.e. safe deposit vault are provided by the bank for storing these valuables. 9.Profitable investment of idle money: The idle money lying with the people can be deposited in the banks as fixed deposits.Which will prove a profitable investment in long run. 10.Provide credit informations: Banks provide information relating to the credit worthiness of their customers in case demanded by other banks or official authorities but not at the risk of discloser of secrecy. 11. Issuing letter of credit, traveler cheque, gift cheque etc. 12. Banks also acts as trustee, referee for their customers. 13. Bank can also be guarantor which helps customer in execution of trade.

(59) 14. Customers can also leave standing instruction with the bank to make regular payments such as income Insurance premium, purchase and sale of securities etc.

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OPERATION OF BANK ACCOUNTS

By operation of bank account we mean by deposit and withdrawal of money, cheques, draft etc.whatever the case may be.The above activities and payment through cheque is known as operating the account which is possible only by the use of certain slips or documents.To keep a record of all the transactions these documents are also required. So operating an account involves the following: 1. Pay-in-slip: For deposit of money into bank. 2. Cheque Book/withdrawal slips: Withdrawal of money from the bank. 3. Pass book: To keep record of deposit and withdrawal. 4. E-cheque book: ATM and other smart card.

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Pay-in slip book

It contains a number of printed slips with perforated counter foils.This slip is to be filled in by the depositor or by his agent at the time of depositing cash or cheque etc.Usually,banks provide separate pay-in-slip for cash and cheques. These are provide few of cost.Pay-in slip of one bank may differ from that of other in size or color but standard informations relating to amount deposited are similar in all types of banks. These contents are:

Date of deposit The Name of depositor The amount to be deposited Account No. to be credited Details of currency notes in case if cash is to be deposited.

Cheque No. and name of drawee if cheque is deposited.

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Check book/withdrawal slip

Every bank has its own printed cheque forms which are supplied to customer at the time of opening account and subsequently at the request as and when required by customer.A cheque book contains serially numbered blank forms. The cheque book generally contains from 10 to 100 blank forms.When a customer wants,to withdraw money or make payments,he has to fill in the cheque and sign it.So cheque is an unconditional order to specified banker to pay a certain amount of money to directed person.A cheque book also contains a requisition slip which is to be duly filled in and prested by customer for obtaining another cheque book from the bank. In case of saving deposit account cheque book is provided only to those who undertake to maintain minimum balance in their accounts.If they do not want to maintain minimum balance in the account, then they can withdraw money through withdrawal slips.

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Pass Book
This is a book issued by the bank to the customer in which all transaction b/w them are recorded.In fact, it is a copy of customers account in the books of a bank.The transactions in the pass book are recorded in the bank. The purpose of issuing a pass book to the customer is to acquaint him periodically with state affairs of his account with the bank. This book contains the details as to the amount withdrawn with date of withdrawal,and the balance of account on a particular date.Now-a-days some banks do not issue a pass book to the depositors of current accounts but the bank sends to them at the end of each month a bank return which is a copy of the customers account with bank for the relate month.

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E-CHEQUE BOOK
E-Cheque books are the combination of hardware and software devices that provide the basic e-cheque signing and endorsing functions and contain the private keys of the drawer.The e-cheque books are smart cards which are temper-resistant and which contain the digital signature of the drawer. A cheque book also contains a requisition slip which is to be duly filled in and presented by customer for obtaining another cheque book from the bank.

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Closing a Bank Account

CLOSING A BANK A/C

Banker customer relation continues as long as both of them so desire.Willingness on the part of both parties is essential. This relationship can be terminated by the act of any of the party.In both the cases the party wants to terminate the relationship has to give formal notice of his intention of the party is under any obligation to other except one that is on the party of banker to maintain secrecy in regard to the customer accounts. Accounts of customer can be closed by any of the following ways:

1. Closing of Account by customer

Whenever a customer desire to close operations of his account, he can terminate the relationship of banker and customer but only after satisfying the banker that the closer is genuine. The following are the reasons when account is closed by the customer: (a) The change in terms and conditions regarding,rate of interest,to commission,incidental charges etc. may not acceptable to customer. (67)

(b) If customer is not satisfied with the services being provided by the banker. (c) When customer has transferred to any other place due to occupational compulsion. (d) When an account is opened for business transactions and business is being closed. (e) When there is quarrel between banker and customer due to any misunderstanding.

2. Closing of an account by Banker

The banker can close the accounts of a customer due to any of the following reasons: (a) If customer issues cheques those usually dishonored. (b) If customer becomes a nuisance to banker by overdrawing issuing postdated cheques,and by any other such act. (c) If customer is not traced,then account is closed by transferring the balance to an unclaimed Deposit accounts. (d) If customer has not operated his account for an unduly a long period (this period differ from bank to (68)

bank,in some bank it is three year),then it is treated as dormant account.The banker can close this account but only after giving notice to account holder.

3.Closing of account under compulsion of

law
Sometime banker has to close to account of customer under legal compulsion due to following reasons: (i) (ii) When customer is traced to be indulged in illegal activities. His working is not in the interest of nation. /instantaneity of customer. There are some cases in which operation of accounts are closed until the text next instruction received.This stopping is temporary in nature. These cases are: Death of customer Insolvency of customer Voluntary liquidation of a limited co. Attachment of garnishee order (69) (iii) The account may be closed due to death/insolvency

Suggestions

Suggestions
Enhancing the growth rate in agriculture to 4.1 per cent, as envisaged in the Approach Paper to the Eleventh Five Year Plan, and improving its robustness would require substantial investment in irrigation and water management technologies, diversification and boosting productivity of different crops through improved seeds and plant-care practices. Banks would need to adopt an innovative,customerfriendlyeffective reach so that the share of organised finance increases.In the near future customer-friendly products,delivery channels,relationship banking, dependency on IT systems and competitive pricing would be the driving forces.Banks will to move to high-tech banking.The Internet would be the engine of the banking revolution in the decades to come and e-commerce would be its fuel. Therefore,the key to survival of banks in future will be the retention of customer loyalty by providing value-added services tailored to their needs. First, traditionally banks have viewed rural areas as a segment purely in need of upliftment.As banking services are in the nature of public utility service,it is essential that

(71) banking and payment services are provided to the entire population without discrimination.The harsh reality is that the spread of banking facilities in India is uneven, with a substantial portion of the households,especially in the rural areas, still outside the coverage of the formal banking system.It is important to mention that the Union Bank has launched a new initiative called Village Knowledge Centres. Here,technology is used to help the farmer improve his productivity Secondly,commercial banks should change their marketing concept.Under the new concept of marketing,the task of management should not so much be skill in making the customer do what suits the rest of the business,as to be skilful in conceiving and making business do what suits the interest of the customers. Thirdly, stress should be laid on deposit mobilisation from the agricultural sector itself to finance its own credit requirements.Such a move will entail two stepscurtailment of unproductive expenditure and deposit of savings by the agriculturists in banks. It is common knowledge that villagers

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spend huge sums on unproductive social ceremonies, drinking,litigation, etc.Their outlook needs to be changed with the help of banking staff and utilizing the services of the mass media. Fourthly, the more important aspect of the whole drive is the deposit of savings by the agriculturist in the banks.Vast sums of money are lying idle even today in rural areas.We think that,in spite of different agencies engaged in providing agricultural finance,the village moneylender continues to be a necessary evil.These moneylenders have great influence on the villagers.To mobilise the savings of the villagers, the services of these moneylenders bothprofessionaland agriculturalcan be utilised.The nationalized banks may appoint them as their agents.The banks may give them a sort of del credere commission,depending upon the quantum of business done by them.Such a step would help in mobilising savings.The appointment of moneylenders as agents has an added advantage.

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Fifthly,one problem experienced by banks is that, many a time,villagers divert the loans from productive to unproductive uses.This needs to be stopped and it needs to be ensured that the credit is used for the purposes for which it is meant.Banks may think in terms of advancing credit to agriculturists in the form of agricultural inputs.While giving credit to farmers in the form of agricultural inputs,it should be ensured that inputs are supplied in adequate quantities and intime and complementary and supplementar y facilities are also available Finally, it needs to be remembered that stray attempts would not solve the problem of agricultural credit.The credit system as a wholegovernment, commercial and cooperative must be so knit together that it does not suffer either from a gap or an overlap.It is only then that the real fruits of credit facilities will be enjoyed by the country at large in the form of

agricultural development which still the key to Indias prosperity in future.

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BIBLIOGRAPHY

BIBLIOGRAPHY
Banking theory and practice: Archna garg A.V.Rangandhachary Parmod Sharma

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