Important Retail Liability Products
(CA, SB, FD, RD, 2-in-1, TDS, Nominations & Deceased Claims)
The BIBLE of deposit accounts! From opening a minor’s SB account to settling a deceased depositor’s claim — everything a banker needs to know about liability products!
Banky Opened a Current Account for a Salaried Person! 🤦
First week at the counter — customer wanted an account. Banky opened CURRENT instead of SAVINGS. Manager facepalmed.
Why Read This? — 6-8 Exam Questions!
Full Chapter Explained
💳 CASA = Current + Savings = Cheapest Money
Demand Deposits = withdraw anytime. Current A/c: 0% interest, unlimited transactions, OD facility, for business. SB A/c: 2-3% interest, for individuals, some withdrawal restrictions. CASA > 35% = good. Banks are ONLY institutions accepting demand deposits. Bank = Debtor, Depositor = Creditor.
CA opening with ₹5Cr+ exposure: Only with bank having ≥10% exposure. Non-lending banks = NOT allowed to open CA. Inoperative = 2 years no transactions.
🔐 Time Deposits — FD & RD Rules
FD: Min 7 days (₹15L+) / 15 days (<₹15L). Max 120 months (special: 20 yrs). Simple FD = interest paid quarterly. Cumulative FD = interest reinvested. FD receipt = NOT negotiable. Each FD = separate contract. Overdue FD = SB rate or contracted, whichever LOWER (RBI 2 July 2021). Premature: rate for actual period minus penalty (typically 1%). Death: no penal charge.
Loan against FD: 80-90% of value. Interest 1-2% above FD rate. Against other bank’s FD = strictly prohibited.
RD: Same interest rate as FD. Monthly savings. Penal for delayed installments. Variable/Flexible RD also available now.
💰 TDS on FD & Form 15G/15H
TDS threshold: ₹40,000/yr (below 60) / ₹50,000/yr (Senior Citizen 60+). Rate: 10% with PAN, 20% without PAN. Applies to paid AND reinvested interest.
Form 15G (below 60) / 15H (60+) for TDS exemption if income below taxable limit. Submit every financial year. Bank issues Form 16A. TDS deposit to IT dept by 7th of next month (March TDS by 30th April).
FD cash payment: If proceeds ≥ ₹20,000 → must be A/c Payee cheque/draft. NO CASH for ₹20K+.
🔄 2-in-1 Account & Special Accounts
2-in-1: Auto Sweep (excess → FD in ₹1K multiples, earns FD rate) + Reverse Sweep (shortfall → auto-break FD). Always LIFO (Last In First Out). Names: Super Savings, Money Multiplier, Super Saver.
Minor: 10+ = self-operate. <10 = guardian operates. <14 = max ₹1L balance. 14+ = no limit. No OD. Reconstitute on majority with fresh signatures.
Blind: ALL facilities (cheque, ATM, locker, cards, loans). 1/3 new ATMs = talking ATMs with Braille. Both signature + thumb impression.
Illiterate: No cheque book. Come personally for withdrawal. Joint only with close relatives (NOT cousins). Male = Left Hand thumb. Female = Right Hand thumb.
📜 Nomination & Deceased Claims
Nomination: 1 person only (locker: up to 2). Individual accounts only (+ sole proprietor CA). Can cancel/vary anytime. Minor can be nominee. Banking Companies (Nomination) Rules, 1985. Sections 45ZA-45ZF of BR Act.
Deceased settlement: With nomination → pay survivor/nominee within 15 days. Nominee = TRUSTEE of legal heirs (not owner). Without nomination → letter of indemnity below threshold. Premature FD on death = NO penal charge.
Pipeline flows: Open “Estate of deceased” account for incoming credits OR return to remitter with “Account holder deceased.”
Unclaimed deposits: SB/CA not operated 10 years OR FD unclaimed 10 years from maturity → transferred to DEA Fund (RBI). Still claimable later.
Exam Angle
🎯 Top Exam Facts
- CA min balance > SB because higher transaction cost (unlimited transactions). Answer (a).
- FD cash payment: ≥₹20K = no cash. Up to ₹20K only. Answer (b).
- Reverse Sweep = LIFO. NOT FIFO/FILO. Answer (d).
- RD interest = same as FD for same period. Answer (b).
- FD period: Min 7d (₹15L+)/15d. Max 120mo. NOT negotiable. Each = separate contract.
- Overdue FD: SB rate or contracted — whichever LOWER.
- TDS: ₹40K (<60)/₹50K (60+). 10% PAN/20% no-PAN. 15G/15H for exemption.
- Minor: 10+=self, <10=guardian, <14=max ₹1L. No OD.
- Blind: ALL facilities. 1/3 ATMs = talking. Illiterate: No cheque. Personal withdrawal only.
- Nomination: 1 person. Nominee = trustee. Deceased: 15 days settlement. No FD penal on death.
- Unclaimed: 10 yrs → DEA Fund. CA ≥₹5Cr = ≥10% exposure rule. Inoperative = 2 yrs.
📝 Practice Questions
Memory Tricks
Trick 1
Trick 2
Trick 3
Trick 4
Trick 5
Trick 6
Trick 7
Trick 8
Flash Revision Cards
⚡ Chapter 8 in 12 Lines:
- CASA: Current(0%)+Savings(2-3%). Cheapest funds. >35%=good. Bank=Debtor.
- CA: 0% interest, unlimited transactions, OD OK, business. Min bal>SB. Inoperative=2yrs.
- FD: Min 7d(₹15L+)/15d. Max 120mo. NOT negotiable. Each=separate contract.
- Overdue FD: SB or contracted rate—whichever LOWER. Other bank FD loan=prohibited.
- TDS: ₹40K(<60)/₹50K(60+). 10%PAN/20%no-PAN. 15G/15H. Cash≤₹20K. By 7th.
- 2-in-1: Auto Sweep(→FD)+Reverse Sweep(→break FD). LIFO basis always.
- RD: Same rate as FD. Monthly savings. Penal for delay.
- Minor: 10+=self. <10=guardian. <14=max₹1L. No OD.
- Blind: ALL facilities. 1/3 ATMs=talking. Illiterate: No cheque. Personal only. Close relatives.
- Nomination: 1 person. Nominee=trustee. Deceased: 15 days. No FD penal on death.
- Unclaimed: 10yrs→DEA Fund. Still claimable.
- CA ≥₹5Cr: Only ≥10% exposure bank. Non-lending=NOT allowed.
Banky says: “CASA=0%+2-3%! FD 7d-120mo NOT negotiable! TDS 40K/50K 10%/20%! 2-in-1=LIFO! Minor 10+=self! Blind=ALL! Illiterate=no cheque! Nominee=trustee! 15 days settlement! 10yrs→DEA! I know EVERY deposit rule!” 🏦📚🏆
Next: Chapter 9 — Important Retail Asset Products (Loans)! 🚀