Bank Deposits and Deposit Accounts
This domain tests the types of deposit accounts, account-opening rules, nomination and joint-account operations, and the treatment of inactive accounts.
Demand and time deposits
Current accounts are meant for businesses, allow frequent withdrawals and earn no interest. Savings accounts earn interest and carry withdrawal restrictions. Fixed deposits are for a fixed term and attract a premature-withdrawal penalty. Recurring deposits are built from monthly instalments.
KYC and nomination
Know Your Customer due diligence is mandatory, normally using PAN and Aadhaar or other officially valid documents. Nomination for deposit accounts is provided under Section 45ZA of the Banking Regulation Act, 1949. It is not compulsory, but it avoids succession problems.
Joint accounts
Common modes are jointly, either or survivor, former or survivor, and latter or survivor. In an either-or-survivor account, either holder can operate during their joint lives and the survivor receives the balance.
Special situations
A minor above 10 years may operate a savings account independently; a guardian operates for younger minors. An account with no customer-induced transaction for two years is dormant. Balances unclaimed for ten years are transferred to the Depositor Education and Awareness Fund.
Worked example
A and B open an account marked either or survivor. A dies. B can continue operating the account and claim the balance by submitting a death certificate and completing the bank’s formalities. If the mode were former or survivor, B could operate only after A’s death, not before.
Traps
Current accounts do not earn interest. Savings-bank interest is calculated on the daily balance and credited quarterly. Dormancy does not confiscate the deposit. Nomination is not the same as a joint account.