DEPOSIT MANAGEMENT AND ACCOUNT OPERATION

Deposit management consists of acquitisions of stable and low cost depostit for the banking business. Banks are not only dealers in money but also manufacturers of credit money. It is in the sense of manufacturing that the concept of credit creation is used. Similarly deposit creation is an important function of commercial banks. Without deposit they cannot lend at all. When the banks receive cash from customers, deposit are created . Therse deposits may be current, saving or fixed. Depositors choose the types on the basis of their needs and requirements like; safety, convenience or earning. People deposit their income in commercial banks because bank vault are safer that home coffers. The bank attracts deposits from the people either by means of offering interests  or facilities. Business people want seek for facilities rather than interest. Non business people generelly select deposits having interests. The type and characteristics of deposits are constantly changing as banks are offering new product to attract new consumers. unlike the past, people are nowadays more aware and have confidence on banks on such the banking habit growing gradually. Deposit management involves the collection of adequate bank deposits required for the efficient and effective operation of banking business. Deposit management doesnot merely concern with the high volume but also with  low cost as well  and its stablility so as to produce competitive loans product.

TYPES OF DEPOSITS

General practice in the banking business shows that there are several deposit products in the market. These deposits can vary from one bank to other. Principally these can be categorized as;

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  CURRENT DEPOSIT:- It can be also knowned as Demand Deposit. These deposits are generally maintained by the traders and businessman who have to make a number of payments frequently and regularly.These deposits are withdrawable by the depositors at any time by means of cheque. Usually no interest is paid on them hence called non-interest bearing. Depositors may have to pay certain charges to the bank for the service rendered. Any amount of money may be deposited in this account.
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  SAVING DEPOSIT :- These Deposit stand midway between Current and Fixed deposits. Banks may impose certain restrictions on the depositors regarding the number of withdrawals and the amount to be deposited in a given period. Cheque facility is provided to the depositors. Rate of interest paid on these deposits is low as compared to that of fixed deposits. Saving account are offered by commercial banks and financial institutions.Obtaining funds in saving account may not be as profitable as demand deposit account because these deposits are generally paid interest. A bank may insist on receiving prior notice of a planned withdrawal from saving deposit. But this practice has been disappearing gradually due to the cut throat competition. However these deposits are less volatile and less concentrated in nature and are considered as the best type of depostits.
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  FIXED DEPOSIT :- A fixed deposit is a deposit at banking institution that cannot be withdrawn for a certain term or period time.  When the term is over it can be withdrawn or it can be held for another term. The longer the term the better the yield of interest on the deposit. In this type of deposit, a customer is required to keep fixed amount of money with the bank for a specific purpose and period of tme. Depositor is not allowed to withdrawl the amount before the maturity period. In case if depositor has to withdraw the amount the aggrement will be void and no/or less interest is paid.
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  CALL DEPOSIT :- Call deposit also known as hybrid deposit is a combination of current and fixed deposit invented for meeting customers financial needs in a flexible manner. Increasing competition has facilitated to introduce this deposit product. This deposit mainly serves the need of apprepriate asset liability mnagement of the banks and financial institutions. Generally the practice of inter-bank borrowing and lending activities conducted through this product.
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  MARGIN DEPOSIT :- This account is menat for holding margin money of the customers as deposit(non-interest bearing) to avail various facilities from the bank . Customers are not allowed to withdraw any amount from such accounts till the expiry of the  availed facilities. Margins are required for Guarantee, remittance and some other facilities.