Commercial banks in India has played a important role in supporting the economic growth process. Since the formation of State Bank of India (SBI) in 1955 and first bank nationalisation in 1969, banks have mobilised sizable share of savings of the household sector, the major surplus sector of economy.
An efficient financial intermediation process has two components: effective mobilization of savings and their allocation to the most productive uses. In this article we will discuss about the mobilization of saving by banks in the form of deposits. Deposits are an instrument of savings: money accepted by banks from customer to be held under stipulated terms and conditions.
Types of deposit accounts:
I) Demand Deposit: Those deposits which are payable on demand through cheque or otherwise. Demand deposits serve as a medium of exchange, for their ownership can be transferred from one person to another through cheques and clearing arrangements provided by banks.
Many demand deposits account offered by banks in India but following two are the main two types of demand deposit accounts.
- a) Current Account
- b) Saving Account
II) Time Deposit: These deposits are not payable on demand and on which cheques cant be drawn.
- a) Term Deposit Account