How to Protect Your Hard Earned Money?

Banks play a greater role in the nation’s economy. A few years back, banks were performing the following kinds of activities viz., accepting deposits from public called the depositors and lending money to the public called the borrowers. While banks were paying a reasonable interest for the deposits accepted by them, they were collecting interest slightly higher than the deposit rates from the borrowers.

The difference in income after meeting all their overheads was their profit. Today the entire scenario has changed. Banks apart from accepting deposits and lending money started entering into various kinds of activities like selling of insurance products, selling of gold coins and undertaking merchant banking activities.

Everybody earns for their livelihood. However, they should not spend the entire amount earned and save a portion of the earnings or invested for use in future. Savings is mainly for future use. The following is always quoted: “One rupee saved is equivalent to one rupee earned”. Each penny saved will play a greater
role in safeguarding the interests of the investors at any point of time in future.

Money can be saved by investing in bank deposits, insurance products, gold coins, shares and debentures, real estate like houses, shops and lands etc. Of the above, savings in banks often have more liquidity compared to any other kind of investments. The depositor can withdraw his amount from the bank within a short notice; however, withdrawal from other kinds of investments takes a little more time.

There are different kinds of savings schemes available in banks. The following are some of the schemes presently in force in many banks in India and throughout the world:

Savings Bank: Banks are accepting deposits under savings scheme. The depositor can deposit any amount in savings bank account and likewise he can withdraw any amount from his account. For withdrawal from his account he is provided with a check book and ATM card. He can issue checks favoring third parties. He is eligible for a reasonable rate of interest for the deposits placed in his savings bank account.

Current account: Current accounts are normally called “business accounts”. Current accounts are opened by corporate, government departments, partnership concerns, proprietorship concerns, trusts, associations etc., this deposit scheme is akin to savings bank deposit scheme and no interest is paid for the deposits held in current accounts.

For withdrawal purposes, the depositors are issued with check books and ATM cards. Depositors can issue checks favoring third parties towards payment of their dues to them. Recurring deposit: This scheme is more suitable for pensioners and salary earners. At periodical levels, say, each month a fixed amount is
deposited into the account and after completion of the contracted period, the depositor can withdraw the entire amount deposited along with the interest earned.

Fixed deposit: Under fixed deposit, customers can deposit a lump sum amount for a definite period and after completion of the contracted period, they can withdraw the entire amount along with eligible interest.

Gauri Sankar