Transactions in a Bank
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Bank:
It is an institution where you deposit money for security, withdraw when you need it, and can borrow money at low interest rates.

Transaction:
Transaction means depositing or withdrawing money, or transferring money from one place to another.

Deposit:

The term 'deposit' means to keep something in the safe custody of someone.

Types of bank accounts:

  1. Savings Bank Account
  2. Current Account
  3. Fixed Deposit or Term Deposit Account
  4. Recurring Deposit Account
  5. Credit Card Account

Savings Bank Account:

A savings bank account is meant for encouraging the habit of saving money.

Middle-class people can easily open an account for just Rs 500, and deposit money into it and withdraw when needed.

The bank pays interest at a rate of 3.5% per annum on the balance, calculated monthly or half yearly.


Current Account:

A current account is meant for huge frequent transactions. Deposits and withdrawals can be made at any point of time.

Businessmen, companies and institutions open this type of account. They can deposit and withdraw money to and from the account any number of times.

The bank does not pay any interest on a current account. On the contrary, it collects charges for maintaining the account.


Fixed Deposit or Term Deposit Account:

In a fixed deposit or term deposit account, once deposit money for a specified period, cannot withdraw it until that period is over.

However, if need money before the period is over, can take a loan of up to 90% of the amount deposited at an interest rate 1% more than what the fixed deposit earns.

The rate of interest on this account is more than that on a savings account, and is computed quarterly, half-yearly or annually.


Recurring Deposit Account:

An account into which a specific amount is paid every month, for a fixed period of time, usually in multiples of 3 months but up to a maximum of 10 years. The amount is paid back along with the accumulated interest at the end of the period. Thus

  1. Deposit occurs every month.
  2. Withdrawal is not possible until the period ends.


Credit Card Account:

Banks provide a credit card to a person with a regular income above a certain minimum. The card holder can use it as and when he wants for making purchases at shops and for online payments, subject to a limit. They can also withdraw money from an ATM, subject to a limit.

The different ways to deposit money into an account.

Money is deposit in the following ways

  1. By a pay-in slip in cash
  2. By an account payee cheque or crossed cheque


Deposit by pay-in slip:

The details to be filled in on a pay-in slip to deposit money in a bank in cash.

  1. Date
  2. Account number
  3. Account holder’s name
  4. Branch
  5. Amount in figures and words
  6. Description of the currency notes – their denominations and number
  7. Depositor’s signature


Deposit by account payee cheque or crossed cheque :

An account payee cheque or crossed cheque is a cheque that has to be deposited into the account of the person whose name is on the cheque.

The cheque, along with a pay-in slip bearing details like date, account number, branch, amount, description of the cheque and depositor’s signature, is to be handed over at the branch where the person holds the account. Description of the cheque includes cheque number, bank and branch drawn on, and amount.


Different ways to withdraw money from an account.

Withdrawal:

Taking out some amount from what you have deposited is known as a withdrawal.

Money can withdraw  from bank account in the following ways.

  1. By withdrawal form
  2. By self cheque
  3. By ATM card


Withdrawal by withdrawal form:

The details that you have to fill in on a withdrawal form to withdraw money from your account:

  1. Date
  2. Account number
  3. Account holder’s name
  4. Amount in words and figures
  5. Your signature

Note that you have to go personally to the bank to withdraw money by a withdrawal form, and have to give the pass book along with the withdrawal form.


Withdrawal by self cheque:

You can withdraw money from your account with a cheque. For this, you have to write “Self” after “Pay” in the cheque, write the amount in words and figures, and sign the cheque.

Note that a self cheque can be encashed by anybody, so be careful not to lose a signed self cheque.


Withdrawal by ATM card:

It’s a card provided by a bank with which you can withdraw money from your account from an ATM centre.

ATM stands for automatic teller machine. It is a machine that automatically dispenses cash.

What are the different ways to transfer money from one place to another?

You can transfer money in the following ways:

  1. Demand draft
  2. Posting a cheque
  3. Online transfer


Transfer of money through demand draft:

This is the safest method to transfer money. It’s a cheque issued by a bank after receiving in cash the amount mentioned on it. It is an order of a branch of a bank to another branch of the same bank to pay the amount mentioned.

A bank draft can be deposited in an account in any bank.

NOTE: Nowadays, most examination and application fees are paid by demand drafts.

Transfer of money by posting cheques:

You can transfer money by sending an account payee cheque through courier or post. The person receiving the money can deposit the cheque in their account.

Transfer of money by online transfer:

This can be done three ways:

  1. Through bank
  2. Through NEFT/RTGS
  3. Over the Internet


Through bank:

You can transfer money through a branch of a bank to any other branch of the same bank, by paying the amount in cash. You have to fill up a slip mentioning the name, account number, branch name and branch code of the person to whom you want to transfer the money.

NOTE: By this method of transfer, you cannot transfer money from one bank to another.

Through NEFT/RTGS:

You can transfer money from one bank to any account in any other bank through NEFT or RTGS. NEFT stands for National Electronic Funds Transfer, and RTGS stands for Real Time Gross Settlement. The difference is that in NEFT, money is transferred every hour, while in RTGS, it is transferred immediately. While there is no minimum or maximum limit for NEFT, it is Rupees two lakh for RTGS.

Through the Internet:

If you have a username and password for Internet banking facility, you can check all your account details, and transfer money from your account to any account in any branch of any bank.

Services provided by a bank:

Depositing money and provide security and interest.

Providing loans for different purposes at low interest rates, against collateral like property or gold.

Transferring money from one place to another through drafts, cheques or online transfer.

Facilitating commerce by receiving payments against bills for utility services such as electricity, water supply and telephone.

Summary

Bank:
It is an institution where you deposit money for security, withdraw when you need it, and can borrow money at low interest rates.

Transaction:
Transaction means depositing or withdrawing money, or transferring money from one place to another.

Deposit:

The term 'deposit' means to keep something in the safe custody of someone.

Types of bank accounts:

  1. Savings Bank Account
  2. Current Account
  3. Fixed Deposit or Term Deposit Account
  4. Recurring Deposit Account
  5. Credit Card Account

Savings Bank Account:

A savings bank account is meant for encouraging the habit of saving money.

Middle-class people can easily open an account for just Rs 500, and deposit money into it and withdraw when needed.

The bank pays interest at a rate of 3.5% per annum on the balance, calculated monthly or half yearly.


Current Account:

A current account is meant for huge frequent transactions. Deposits and withdrawals can be made at any point of time.

Businessmen, companies and institutions open this type of account. They can deposit and withdraw money to and from the account any number of times.

The bank does not pay any interest on a current account. On the contrary, it collects charges for maintaining the account.


Fixed Deposit or Term Deposit Account:

In a fixed deposit or term deposit account, once deposit money for a specified period, cannot withdraw it until that period is over.

However, if need money before the period is over, can take a loan of up to 90% of the amount deposited at an interest rate 1% more than what the fixed deposit earns.

The rate of interest on this account is more than that on a savings account, and is computed quarterly, half-yearly or annually.


Recurring Deposit Account:

An account into which a specific amount is paid every month, for a fixed period of time, usually in multiples of 3 months but up to a maximum of 10 years. The amount is paid back along with the accumulated interest at the end of the period. Thus

  1. Deposit occurs every month.
  2. Withdrawal is not possible until the period ends.


Credit Card Account:

Banks provide a credit card to a person with a regular income above a certain minimum. The card holder can use it as and when he wants for making purchases at shops and for online payments, subject to a limit. They can also withdraw money from an ATM, subject to a limit.

The different ways to deposit money into an account.

Money is deposit in the following ways

  1. By a pay-in slip in cash
  2. By an account payee cheque or crossed cheque


Deposit by pay-in slip:

The details to be filled in on a pay-in slip to deposit money in a bank in cash.

  1. Date
  2. Account number
  3. Account holder’s name
  4. Branch
  5. Amount in figures and words
  6. Description of the currency notes – their denominations and number
  7. Depositor’s signature


Deposit by account payee cheque or crossed cheque :

An account payee cheque or crossed cheque is a cheque that has to be deposited into the account of the person whose name is on the cheque.

The cheque, along with a pay-in slip bearing details like date, account number, branch, amount, description of the cheque and depositor’s signature, is to be handed over at the branch where the person holds the account. Description of the cheque includes cheque number, bank and branch drawn on, and amount.


Different ways to withdraw money from an account.

Withdrawal:

Taking out some amount from what you have deposited is known as a withdrawal.

Money can withdraw  from bank account in the following ways.

  1. By withdrawal form
  2. By self cheque
  3. By ATM card


Withdrawal by withdrawal form:

The details that you have to fill in on a withdrawal form to withdraw money from your account:

  1. Date
  2. Account number
  3. Account holder’s name
  4. Amount in words and figures
  5. Your signature

Note that you have to go personally to the bank to withdraw money by a withdrawal form, and have to give the pass book along with the withdrawal form.


Withdrawal by self cheque:

You can withdraw money from your account with a cheque. For this, you have to write “Self” after “Pay” in the cheque, write the amount in words and figures, and sign the cheque.

Note that a self cheque can be encashed by anybody, so be careful not to lose a signed self cheque.


Withdrawal by ATM card:

It’s a card provided by a bank with which you can withdraw money from your account from an ATM centre.

ATM stands for automatic teller machine. It is a machine that automatically dispenses cash.

What are the different ways to transfer money from one place to another?

You can transfer money in the following ways:

  1. Demand draft
  2. Posting a cheque
  3. Online transfer


Transfer of money through demand draft:

This is the safest method to transfer money. It’s a cheque issued by a bank after receiving in cash the amount mentioned on it. It is an order of a branch of a bank to another branch of the same bank to pay the amount mentioned.

A bank draft can be deposited in an account in any bank.

NOTE: Nowadays, most examination and application fees are paid by demand drafts.

Transfer of money by posting cheques:

You can transfer money by sending an account payee cheque through courier or post. The person receiving the money can deposit the cheque in their account.

Transfer of money by online transfer:

This can be done three ways:

  1. Through bank
  2. Through NEFT/RTGS
  3. Over the Internet


Through bank:

You can transfer money through a branch of a bank to any other branch of the same bank, by paying the amount in cash. You have to fill up a slip mentioning the name, account number, branch name and branch code of the person to whom you want to transfer the money.

NOTE: By this method of transfer, you cannot transfer money from one bank to another.

Through NEFT/RTGS:

You can transfer money from one bank to any account in any other bank through NEFT or RTGS. NEFT stands for National Electronic Funds Transfer, and RTGS stands for Real Time Gross Settlement. The difference is that in NEFT, money is transferred every hour, while in RTGS, it is transferred immediately. While there is no minimum or maximum limit for NEFT, it is Rupees two lakh for RTGS.

Through the Internet:

If you have a username and password for Internet banking facility, you can check all your account details, and transfer money from your account to any account in any branch of any bank.

Services provided by a bank:

Depositing money and provide security and interest.

Providing loans for different purposes at low interest rates, against collateral like property or gold.

Transferring money from one place to another through drafts, cheques or online transfer.

Facilitating commerce by receiving payments against bills for utility services such as electricity, water supply and telephone.

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