What are the different types of deposit accounts that can be opened in a commercial bank? Briefly explain them.

A commercial bank offers four main types of deposit accounts to suit the needs of different customers:

1. Fixed Deposit Account — A fixed deposit (also known as time deposit or long-term deposit) is a lumpsum investment for a fixed tenure. The money cannot be withdrawn before the maturity date. A higher rate of interest is paid on fixed deposits. No pass book or cheque book is issued — only a Fixed Deposit Receipt (FDR). The depositor receives the deposit along with interest on the maturity date.

2. Savings Deposit Account — Any individual can open a savings account with a minimum specified balance. It is meant for middle and low-income people to deposit small savings. Deposits can be made any number of times in a week, but there is a restriction on the number of withdrawals. Interest is allowed on the minimum balance during a month (low rate). Both pass book and cheque book are issued. The main purpose is to develop the habit of saving among the public.

3. Recurring Deposit Account — Under a recurring deposit, the account holder is required to deposit a specific amount every month for a fixed period (12 to 72 months). On maturity, the depositor receives the entire amount with interest. The interest rate is moderate (between savings and FD rates). A pass book is issued but no cheque book. This account encourages regular saving.

4. Current Account — Generally opened by business firms, this account allows depositing and withdrawing money any number of times. Pass book, cheque book and overdraft facility are all available. No interest is paid, and the bank charges a small fee. It is suitable for business operations that require frequent transactions.