Different Types of Bank Accounts [AHSEC Class 11 Finance notes 2025 Exam]

1. Who is known as Banker and Customer?                         2018

Ans: Banker: A person or an institution or an firm or company which accepts the deposits of the public that are to repaid on demand to the owner and utilizes the deposits to make advances and investments in securities is known as a Banker.

A person or an institution which opens an account in a Bank and undertakes banking services with the Banker is known as a Customer or Bank’s Customer. Account to D. L. Hart, ‘a customer is one who has an account with a banker or for whom a banker habitually undertakes to act as such’. Thus, a person who deals with the banker is a customer of bank.

2. State the different types of Bank accounts that a customer can open with a bank?      2015, 2016, 2018

Ans: A banker provides various types of account to the customer to be opened in a bank. These accounts are:

Demand Deposit Accounts: The demand deposit accounts are those accounts in which the customer can deposit money many number of times and the amount is repayable on demand by means of cheque. These accounts are of two types: (i) Savings Deposit A/c and (ii) Current Deposit A/c.

Time Deposit Accounts: The time deposits accounts are those deposit accounts where the amount of deposit is repayable only after the expiry of the period. The depositors cannot withdraw the deposits by means of cheque. These accounts are of two types: (i) Fixed deposit A/c and (ii) Recurring Deposit A/c.

3. What is Saving Deposit Account? What are the features of Saving Deposit Account? 2019

Ans: Savings Deposit Account is a type of deposit account which is opened by the customer for depositing their small savings for their future benefits.

The features of Savings Deposits accounts are:

a)      Withdrawal is made through cheques.

b)      There are certain restrictions on withdrawal of money.

c)       Small amount of interest is given.

d)      This account is generally opened by small savers

e)      No overdraft facility is given in this type of account.

f)       This type of accounts can be held on long-term basis, i.e., more than a year. There is no limit.

4. What is Current Deposit Account? What are its features?

Ans: Current Deposit Account is one which the customer is allowed to deposit or withdraw money at number of times as and when he likes.  The features of Current Deposit Account are:

a)      Withdrawal is made through cheques.

b)      There is no restriction on withdrawal.

c)       No interest is given on this type of account

d)      This account is generally opened by businessmen.

e)      Overdraft facility is given to current account holders.

5. What is Fixed Deposit Account? What are the features of Fixed Deposit Account?

Ans: Fixed Deposit account is a deposit account where money is deposited for a specific period of time and cannot be withdraw before the expiry of the period. The general features of fixed deposit accounts are:

a)      No use of cheques.

b)      Withdrawal is not allowed before maturity

c)       High rate of interest is given.

d)      No overdraft facility is given.

e)      This accounts may be opened by an individual in his own name, two or more person jointly, corporate bodies.

f)       A fixed deposit of money should be deposited to the account only one time.

6. What is Recurring Deposit Account? What are its features?

Ans: Recurring Deposit Account is an account the depositor is required to deposit a fixed amount of money at regular intervals for a fixed period of time and the amount is repayable with interest at the end of the period.

The features of Recurring Deposit Accounts are:

a)      This account may be opened by individual, two or more person jointly, minor jointly with his guardian, etc.

b)      In such accounts, the account holder is required to deposit a fixed amount of money at regular intervals.

c)       In such accounts, the depositor is also provided loan facility.

d)      The rate of interest is such accounts are almost equal to the fixed accounts.

7. What do you mean by Operation of Bank Accounts? What are the various services or things with the help of which a person can operate a Bank Account?

Ans: The depositing and withdrawing of money by a customer from the bank account according to his usefulness and needs is known as Operation of Bank accounts. The various services or things by the use of which a person can operate his bank account are:  Pay-in-slip book, Cheque book, ATM card, Pass book.

8. What do you mean by E-Banking? What are its features?                        2015

Ans: E-Banking or Internet banking: Online banking also known as internet banking, e-banking, or virtual banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website. Internet banking is a term used to describe the process whereby a client executes banking transactions via electronic means. This type of banking uses the internet as the chief medium of delivery by which banking activities are executed. The activities clients are able to carry out are can be classified to as transactional and non transactional.

The features of E-Banking are:

a)      It is the fast, efficient and easy way of banking.

b)      It helps the customers to perform banking services easily.

c)       It is available to a customer all the time. There are no barriers to it.

d)      It has no geographical boundary.

9. What are the various E-Banking services provided by Banks?      2016, 2017

Ans: The various E-Banking services of a Bank are: Electronic Clearing Services (ECS), Electronic Payments, Automated Teller Machine (ATM), Credit Card, Debit Card, Smart Card, Virtual Card, and Electronic Fund Transfer (EFT).

10. What are the various types of E-Banking or Electronic Banking?

Ans: The different types of E-Banking are as follows: Corporate Banking, Personal Banking, Tele-Banking, Mobile Banking, Card Based Banking, and Internet Banking.

11. What are the objectives of E-Banking?

Ans: The functions or objectives of E-Banking are:-

a)      To enable the customer to operate their bank account from anywhere in the world.

b)      To help the customers to avail banking services round the clock i.e., 24 hours in a day and 365 days in a year.

c)       To provide fast, efficient hassle free and fast fund transfer services to the customers.

d)      To provide on-line purchase and payment of goods and services to the customers.

e)      To provide general information to the customers about the products and services of a bank, new bank branches, bank schemes, etc.

12. What are the advantages and disadvantages of E-Banking?                  2019

Ans: Advantages of E-banking or Internet banking

1)      Convenience: Banks that offer internet banking are open for business transactions anywhere and anytime.

2)      Low cost banking service: E-banking helps in reducing the operational costs of banking services.

3)      Higher interest rate: Lower operating cost results in higher interest rates on savings and lower rates on mortgages and loans offers from the banks.

4)      Ease of transaction: The speed of transaction is faster relative to use of ATM’s or customary banking.

5)      Discounts: The credit cards and debit cards enables the Customers to obtain discounts from retail outlets.

The disadvantages of E-Banking are:

a)      E-Banking is an Electrical based banking.

b)      E-Banking can only be operated by a technically skilled person as it requires technical knowledge.

c)       Existence of well-developed infrastructure is an essential element for the introduction and effective functioning of E-Banking.

d)      In E-Banking, there is a fear and risk of sudden loss or damage of data.

 13. What is ATM? When and where it was first introduced? What are the advantages of ATM?                06, 08, 10

Ans: ATM (Automated Teller Machine) is an electronic device that allows the customer to perform banking activities without interacting with a human teller. It is first introduced in 1939 at New York by City Bank of the USA.

The advantages of ATM are:

a)      It provides the facility to the customer to withdraw or deposit cash quickly.

b)      It enables the customers to avail the various other facilities provided by a bank quickly.

c)       It is available to a customer round the clock, i.e., 24 hours in a day and 365 days in a year.

d)      It enables the bank to advertise their products on the ATM screen.

e)      It saves time of the customers to travel to a bank branch for operating of their account.

14. Write the procedure of use of ATM Card.           2019

Ans: Procedure to use ATM Card:

a) Step 1: First of all go ATM of any bank and insert you ATM Card.

b) Step 2: Select your preferred language.

c) Step 3: Enter Four digit pin number.

d) Step 4: Now choose the transaction type: Withdrawal, mini statement, Balance enquiry etc.

e) Step 5: Then select the account type – Current or savings.

f) Step 6: Collect the cash and count or see balance on the screen or collect mini statement.

g) Step 7: End the session by pressing cancel or cross button.

15. What is Credit Card? When was the first credit card issued and by whom? Who are the three parties of a credit card?                2018

Ans: A Credit Card is a small plastic card which enables the customers to purchase goods and services on credit and make payments later on. The first credit card was issued by Diner’s Club in USA in 1950. The name of the card was Diner’s Card. The three parties of a credit card are :

a)      The issuer: The organization which issues such cards like bank.

b)      The cardholders: The individuals, corporate bodies other organizations that holds the cards.

c)       The member establishments:  The organizations or firms who accepts such cards.

16. What are the advantages and disadvantages of Credit Cards?

Ans: The advantages of Credit Cards are:

a)      It enables us to buy goods and services and make payments anytime and anywhere.

b)      It is universally acceptable. It can be used anywhere in the world.

The disadvantages of Credit Cards are:

a)      Every card has a particular limit of payments for a particular period.

b)      The cost of operating a credit card is very high.

17. Write about the operating system of credit card.     2019

Ans: Credit card transactions are processed through a variety of platforms such as e-commerce sites, mobile devices etc. The entire cycle form card slide to receipt production is passed through various process which are stated below:

1. Authorization: In the authorization stage, the merchant must obtain approval for payment from the issuing bank. The acquiring bank the credit card details to the credit card network and card network clears the payment and requests payment authorization from the issuing bank. The authorization request includes the following: Credit card number, Card expiration date, Billing address — for Address Verification System (AVS) validation, Card security code — CVV, for instance and Payment amount.

2. Authentication: In the authentication stage, the issuing bank verifies the validity of the customer’s credit card using fraud protection tools such as the Address Verification Service (AVS) and card security codes such as CVV, CVV2, CVC2 and CID.

3. Clearing  & Settlement: In the clearing stage, the transaction is posted to both the cardholder’s monthly credit card billing statement and the merchant’s statement. It occurs simultaneously with the settlement stage.

18. Explain the procedure of opening any account.                          2016

Ans: Following are the main steps in opening a bank account:

1. Selection of type of account: The first step is to select the type of account to be opened . An account may have several types such as current, saving fixed account. An account can be opened jointly or singly.

2. Selection of bank and branch: The prospective accountholder should now select the bank .

3. Obtaining the account opening form: An account opening form is obtained from the bank . It should be read carefully and filled in with utmost care.

4. Obtaining the reference: One or two reference are obtained by the prospective account holder. The people who give references sign the form and give their account no. and name and address.

5. Submission of the form: Now the form should be submitted along with the required documents. These documents vary from account to account.

6. Giving specimen signature: Now, the account holder signs on a card called specimen signature card. These signatures are matched with the cheques of the account holder.

7. Making initial deposit: The applicant is allotted an account and asked to make initial deposit in his account through a deposit slip.

8. Account is opened: As soon as the initial deposit is made, the account is opened.

9. Receiving of cheque book/term deposit certificate: Finally, a cheque book is issued which bears the applicant’s account no. The money can be withdrawn with the help of these cheques.

19. Define Cheque. Mention its features.

Ans: A ‘Cheque’ is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”. Features of cheque are given below:

a)      A cheque is an order, not a request.

b)      It is an unconditional order

c)       It is always drawn on a banker and

d)      It is always payable on demand.

e)      It must be in writing.

f)       It must be signed by the account holder.

g)      It must state a certain sum of money.

20. Explain Insurance of bank deposit and Deposit Insurance Corporation (DIC) of India.

Ans: The term insurance of bank deposit means protecting the interest of depositors from the risk of loss arising from bank failures. For the purpose of insurance of bank deposit, DIC was set up India in 1962. The DIC was merged with credit guarantee corporation of India in 1978 and was renamed as Deposit Insurance and Credit Guarantee Corporation on India. In India the scheme of deposit insurance covers deposits to the extent of Rs.1 lakh for each deposits account.

21. Write a note on Debit Card, Virtual Card, EFT, ECS, Pay-in-slip, cheque book, ATM card, Pass Book.

Ans: Debit Card is an instrument or a card with the help of which we can buy goods and services and pay directly the amount through the bank account. In such cards, the customer is required to have a bank account containing some amount of deposit.

A Virtual Card is a plastic card which is offered to an existing cardholders free of cost whose name is registered in the Bank’s website.

Electronic Fund Transfer is a system which is used to make fast movements of funds through electronic media. It is a medium of making fast funds transfer.

Electronic clearing service (ECS) is a service provided by Bank to make fast and safe payments and receipts. It is generally used by big companies and Govt. to make payment or receive payments from customers.

Pay-in-slip book is a book contains some slip issued by a bank to his customer to deposit cash, cheque, drafts, bills, etc. to his account. These books are issued to the customer having a savings, current or recurring deposit account.

A cheque book is a book issued by a banker containing some blank cheque forms to the savings and current account holders to enable them to withdraw money. The current account holders are required to withdraw money be cheque but a saving account holder can withdraw money either by cheque or withdrawal forms available at the bank’s counter.

ATM Card is a plastic card provided by a bank to its customer which enables the account holder to withdraw money through a machine called ATM which is installed outside the bank.

Pass book is a small handy booklet issued by the banker to record the transactions between the banker and the customer. It contains an authenticated copy of the customer’s account in the bank’s ledger.