Opening An Account With A Bank:

Opening An Account With A Bank

Usually all concerns except a few small ones,open an account with a bank. Opening an account with a bank means that a sum of money is kept deposited with a bank and that money can be withdraw by a cheque at any time as and when required. There are three types of accounts that may be opened with a bank :

1. PLS Saving Account 

2. Current Account 

3. Fixed Deposit Account 

     Most of the concerns open current account with the bank , because there is no restriction as to the number and amount of withdrawals of money like PLS saving account. In other words, if current account is kept with a bank, the depositor (account holder) can withdraw the money at his will up to the limits of his deposits with the bank. Generally no interest is allowed with the bank under current account.

How an Account is Opened with a Bank?

To open an account the depositor will have to apply to the bank in the prescribed form and a sum of money. Immediately the bank will open an account in the name of the depositor in his Ledger and credit it with the amount of deposit. Thereafter. the bank will give the depositor the following three books.

Pass Book:

Pass Book is copy of the depositor's account in the bank's ledger which is provided to the depositor. This book is written by the bank, but kept with the depositors. On different dates, the depositor submit the pass book to the bank and the bank in turn return it to the depositor after recording the transactions in it from its Ledger. The depositors can ascertain his bank balance at a glance at any time from his book

Paying-In-Skip Book:

The money is deposited by the account holder into the bank with the help of this book.

Cheque Book:

Whenever the depositor want to draw money from the bank, he signs the cheque and hands it over to the bank. This is known as 'Drawing a Cheque' . The bank pays the sum of money mentioned in the cheque to the depositor or to his nominee and immediately debits the account of the depositor.

 

Thus money can be deposited into the bank by means of paying-in-slip and withdraw by means of a cheque. A cheque may be issued to a creditor instead of paying him cash. On the other hand, we may also receive cheque from our debtors instead of cash.

Advantages of opening An Account with Bank 

The following advantages are obtained by opening a bank account:

1. Money is kept safe-- there is no risk of theft or dacoity.

2. Transaction through a cheque is very convenient and the risk is       reduced to a greater extent.

3. Loan may be taken from the bank on case of need.

4. Money can be remitted from one place to another place very             quickly and at reduced cost.

5. Bank enables its customers to buy goods on credit through letter     of credit.