Bank Fixed Deposits

• Fixed deposits with the banks are nearly 100% safe as all the banks operating in the country, irrespective of whether they are nationalised, private, or foreign, are governed by the RBI's rules and regulations, and give due weightage to the interest of the investor. Till recently, all bank deposits were insured under the Deposit Insurance & Credit Guarantee Scheme of India, which has now been made optional. Nonetheless, bank deposits are among the safest modes of investment.
• One can get loans up to 75- 90% of the deposit amount from banks against fixed deposit receipts. Though the interest charged will be slightly more than the interest earned by the deposit.

• The amount invested in fixed deposits with a maturity period of 5 years in a Scheduled bank is eligible for tax deduction under section 80C. However, the interest earned on the deposit is taxable.
• Tax will be deducted at the source, if the interest income on a fixed deposit per annum exceeds Rs.10000.

Current Account

• An individual who has attained majority.
• Two or more individuals in their joint names.
• Sole proprietorship concerns.
• Partnership concerns.
• Hindu Undivided Family (HUF).
• Limited Companies.
• Clubs, Societies.
• Trusts, Executors and Administrators.
• Others - Govt. and semi Govt. bodies, local authorities etc.

• Two passport size photographs
• Proof of residence i.e. Passport/driving license/Gas / Telephone / Electricity Bill/ Ration card/voters identity card
• An introduction of the person from an existing account holder.
• PAN number / Declaration in form no.60 or 61 as per the Income Tax Act 1961

Recurring Bank Deposits

Under a Recurring Deposit account (RD account), a specific amount is invested in bank on monthly basis for a fixed rate of return. The deposit has a fixed tenure, at the end of which the principal sum as well as the interest earned during that period is returned to the investor. Recurring Bank Account provides the element of compulsion to save at high rates of interest applicable to Term Deposits along with liquidity to access those savings any time. Since a recurring deposit offers a fixed rate of return, it does not provide protection against inflation.

There is great flexibility in period of deposit with maturity ranging from 6 months to 120 months. The minimum monthly deposit varies from bank to bank. In most of the public sector banks, one can start a Recurring Deposit Account with a monthly installment of Rs. 100/- only. There is no upper limit on investing. The rate of interest varies between 7 and 11 percent depending on the maturity period. Loan/overdraft facility is also available against Recurring Bank Deposits.

The deposit for RD account is paid in monthly installments and each subsequent monthly installment has to be made before the end of the calendar month and is equal to the first deposit. In case of default in payment, penalty is levied for delayed deposit at the rate of Rs. 1.50/- for every Rs. 100/- per month for deposits up to 5 years and Rs. 2/- per Rs. 100/- in case of longer maturities.

In case of Recurring Deposit being closed before completing the original term of the deposit, interest will be paid at the rate applicable on the date of deposit, for the period for which the deposit has remained with the Bank. Premature withdrawal is also permissible but penalty is levied. TDS is not applicable on Recurring Deposits.

How to open a RD Account
A Recurring Bank Deposit account can be opened at any bank that offers this facility. However, some banks insist that you open a savings bank account with them to operate a Recurring Deposit account.

• Reserve Bank of India is the main monetary authority of the country. It formulates, implements and monitors the monetary policy and thereby plays a key role in maintaining price stability and ensuring adequate flow of credit to productive sectors.
• RBI is the regulator and supervisor of the financial system in the country. It prescribes broad parameters of banking operations within which the country's banking and financial system functions.
• It manages the foreign exchange of the country.
• Performs merchant banking function for the central and the state governments; also acts as their banker.
• Maintains banking accounts of all scheduled banks.
• Issues and exchanges or destroys currency and coins not fit for circulation.

Senior Citizen Saving Scheme 2004

The Senior Citizen Saving Scheme 2004 had been introduced by the Government of India for the benefit of senior citizens who have crossed the age of 60 years. However, under some circumstances the people above 55 years of age are also eligible to enjoy the benefits of this scheme. These prerequisites include voluntary retirement of the beneficiary before making the investment, a maximum time limit of three months to make the investment after the retirement and a certificate from the employer stating the details about the employment and retirement of the beneficiary. The scheme is not allowed for Non Resident Indians (NRIs) and Hindu Undivided Families.

Investment
The investment under the Senior Citizens Savings Scheme can be made in any Post Office, although the beneficiary has to open an account for making the investment. Also, one account can hold only one deposit from a beneficiary, which indicates multiple accounts are mandatory to be opened for making multiple deposits under the scheme. The deposits can be made only in the multiples of Rs. 1,000 and the maximum limit for a deposit has been restricted to Rs. 15,00,000. One important condition is that if a person opens multiple accounts for making more than one deposits, the total amount of all the deposits should not cross the maximum limit of Rs. 15,00,000. Also, a beneficiary can't open two or more accounts in a single Post Office during the same month.

Interest and Nomination
The Senior Citizen Saving Scheme 2004 offers an interest rate of 9 percent per annum, which will be payable on a quarterly basis on the 31st of March, 30th of June, 30th of September and 31st of December of every year. The interest earned upon the savings is fully taxable, and the tax is deducted at the source itself. The scheme offers nomination facility so that in case of death of the beneficiary, the funds might be paid to the nominee of the beneficiary.

Maturity and Withdrawals
The tenure of Senior Citizen Saving Scheme 2004 is 5 years, which can be further extended for a period of 3 years by making an application to that effect. After a period of 1 year, the beneficiary can withdraw his or her amount with some conditions, but a penalty between 1% and 1.5% of the deposit is deducted before the withdrawal is made.

Foreign banks have brought latest technology and latest banking practices in India. They have helped made Indian Banking system more competitive and efficient. Government has come up with a road map for expansion of foreign banks in India.

The road map has two phases. During the first phase between March 2005 and March 2009, foreign banks may establish a presence by way of setting up a wholly owned subsidiary (WOS) or conversion of existing branches into a WOS. The second phase will commence in April 2009 after a review of the experience gained after due consultation with all the stake holders in the banking sector. The review would examine issues concerning extension of national treatment to WOS, dilution of stake and permitting mergers/acquisitions of any private sector banks in India by a foreign bank.

Major foreign banks in India are:

ABN AMRO BANK

The history of ABN Amro Bank dates back to the year 1924, when King Williem – I issued a Royal Decree declaring the establishment of the Nederlandsche Handel-Maatschappij (Netherlands Trading Society, NTS). The NTS had been established with an aim to promote the trade between the Netherlands and the Dutch East Indies.

 ABUDHABI COMMERCIAL BANK LTD
Abu Dhabi Commercial Bank (ADCB) is one of the most prominent nationalized banks of the United Arab Emirates (UAE). Three different banks viz. the Khalij Commercial Bank, the Emirates Commercial Bank and the Federal Commercial Bank merged in the month of July 1985, leading to the incorporation of the Abu Dhabi Commercial Bank.

AMERICAN EXPRESS BANK LTD
With its headquarters located in New York, U.S., American Express company is a global financial services provider, also known as “AmEx” in short. American Express had been established in the year 1850, and is well known all around the world for its dedicated Credit Card, Traveller’s Cheque and Charge Card services.

BNP PARIBAS

BNP Paribas is one of the oldest banks in the continent of Europe, and the largest bank in the Eurozone (consortium of countries having adopted Euro as their primary currency), as reported by The Banker magazine. The bank is present in 87 countries with a 162,700-strong workforce offering its services to the bank.

CITI BANK

Citibank is one of the largest banks in the U.S., and is a part of the financial services company Citigroup. Citibank had been founded in the year 1812. Initially its name was City Bank of New York, which was later changed to First National City Bank of New York.

DBS BANK LTD

DBS Bank is a Singapore-based bank, and is known to be one of the largest banks to exist in South East Asian region by asset value. The government of Singapore established the DBS Bank in the year 1968, and it was primarily aimed at providing development oriented financial services.

DEUTSCHE BANK
Deutsche Bank, headquartered at Frankfurt in Germany, ranks among the global leaders in corporate banking and securities, transaction banking, asset management, and private wealth management. It is one the world's leading international financial service providers with roughly EURO 2.2 trillion in assets and approximately 80,000 employees.

HSBC LTD
HSBC Bank is a subsidiary of HSBC Holdings plc, a London based banking giant which, according to the Forbes magazine, is the largest banking group in the world, and the 6th largest company in the world as of April 2009.

 SCB
Standard Chartered Bank is a London based bank, currently operational within over 70 nations with more than 1,700 branches and 73,000 strong workforce as of April 2009. Although the bank is located in Britain, still a huge chunk of its revenues originate from the continents of Asia, Africa and Middle East.

BARCLAYS BANK
Barclays GRCB India is led by Samir Bhatia as its Managing Director. In a short period of just two and a half years, Barclays GRCB India has placed itself amongst the most respected foreign banks in the country that is serving more than 830,000 clients.

Nationalised Banks in India

Nationalised banks dominate the banking system in India. The history of nationalised banks in India dates back to mid-20th century, when Imperial Bank of India was nationalised (under the SBI Act of 1955) and re-christened as State Bank of India (SBI) in July 1955. Then on 19th July 1960, its seven subsidiaries were also nationalised with deposits over 200 crores. These subsidiaries of SBI were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Indore (SBIR), State Bank of Mysore (SBM), State Bank of Patiala (SBP), State Bank of Saurashtra (SBS), and State Bank of Travancore (SBT).

However, the major nationalisation of banks happened in 1969 by the then-Prime Minister Indira Gandhi. The major objective behind nationalisation was to spread banking infrastructure in rural areas and make cheap finance available to Indian farmers. The nationalised 14 major commercial banks were Allahabad Bank, Andhra Bank, Bank of Baroda, Bank of India, Bank of Maharashtra, Canara Bank, Central Bank of India, Corporation Bank, Dena Bank, Indian Bank, Indian Overseas Bank, Oriental Bank of Commerce (OBC), Punjab and Sind Bank, Punjab National Bank (PNB), Syndicate Bank, UCO Bank, Union Bank of India, United Bank of India (UBI), and Vijaya Bank.

In the year 1980, the second phase of nationalisation of Indian banks took place, in which 7 more banks were nationalised with deposits over 200 crores. With this, the Government of India held a control over 91% of the banking industry in India. After the nationalisation of banks there was a huge jump in the deposits and advances with the banks. At present, the State Bank of India is the largest commercial bank of India and is ranked one of the top five banks worldwide. It serves 90 million customers through a network of 9,000 branches.

Private Banks in India

nitially all the banks in India were private banks, which were founded in the pre-independence era to cater to the banking needs of the people. In 1921, three major banks i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form Imperial Bank of India. In 1935, the Reserve Bank of India (RBI) was established and it took over the central banking responsibilities from the Imperial Bank of India, transferring commercial banking functions completely to IBI. In 1955, after the declaration of first-five year plan, Imperial Bank of India was subsequently transformed into State Bank of India (SBI).

Following this, occurred the nationalization of major banks in India on 19 July 1969. The Government of India issued an ordinance and nationalized the 14 largest commercial banks of India, including Punjab National Bank (PNB), Allahabad Bank, Canara Bank, Central Bank of India, etc. Thus, public sector banks revived to take up leading role in the banking structure. In 1980, the GOI nationalized 6 more commercial banks, with control over 91% of banking business of India.

In 1994, the Reserve Bank Of India issued a policy of liberalization to license limited number of private banks, which came to be known as New Generation tech-savvy banks. Global Trust Bank was, thus, the first private bank after liberalization; it was later amalgamated with Oriental Bank of Commerce (OBC). Then Housing Development Finance Corporation Limited (HDFC) became the first (still existing) to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector.

At present, Private Banks in India include leading banks like ICICI Banks, ING Vysya Bank, Jammu & Kashmir Bank, Karnataka Bank, Kotak Mahindra Bank, SBI Commercial and International Bank, etc. Undoubtedly, being tech-savvy and full of expertise, private banks have played a major role in the development of Indian banking industry. They have made banking more efficient and customer friendly. In the process they have jolted public sector banks out of complacency and forced them to become more competitive.