Demand Deposits

1) Savings Account: This type of account is most popular and commonly used account by individuals. The main objective of saving account is to promote savings. This account provides cheque facility and money can be withdrawn from the account. This account also fetches nominal interest on the amount of money deposited. Saving account is of continuing nature and there is no maximum period of holding. At present, the rate of interest ranges between 4% to 6% per annum in India. The interest rates vary as per the amount of money deposited (lying) in the saving bank account, scheme opted, and its maturity range. It is also subject to current trend of banking policies in a country. Though banks can independently decide saving interest rate, banks have to follow RBI guidelines hence it is called that Saving bank interest is regulated by RBI.

Features of Saving Account

1. As depositors can claim/demand their deposits any time they want, Saving account is referred as "Demand Deposits" of banks
2. There is no restriction on the number and amount of deposits. However, in India, mandatory PAN (Permanent Account Number) details are required to be furnished for doing cash transactions exceeding र50,000.
3. Withdrawals are allowed subject to certain restrictions.
4. A minimum amount has to be kept on saving account to keep it functioning.
5. Loan against savings account cannot be provided.
6. As per RBI's manual of instructions, savings deposit account cannot be opened by banks among others in the name of government departments, municipal corporations/committees, political parties and any trading, business or professional concern (like firms of Chartered Accountants-and Lawyers) whether such a concern is a proprietary, partnership firm, company or association.

2) Current Account: This account is used mainly by business houses and is not for investment. The purpose of this account is to provide flexible liquidity and hence there is no limit on the amount of money that can be deposited/withdrawn on a single day or on the number of deposits/withdrawals within a certain period of time. No interest is paid on these accounts and bank actually levies service charges on such accounts.  It is also known as Demand Deposit Account.

Bank charges interest on the short-term funds borrowed (Over-draft facility) from the bank against current account.