Table of contents

1. Deposit product overview — definitions & objectives

2. Savings accounts — variants, features, pricing, operations

3. Current accounts — business banking specifics

4. Fixed deposits / Term deposits — types, rates, premature withdrawal rules

5. Recurring deposits & Monthly Income Schemes

6. Special deposit products — senior citizen schemes, minor accounts, staff accounts, NRE/NRO considerations (if applicable), cooperative-specific schemes

7. Sweep & Auto-sweep / Cash-management facilities

8. Overdrafts, lien & hypothecation on deposits

9. Interest calculation, crediting, ROI review policy & rate change communication

10. Taxation, TDS, Form 15G/H, and customer communication

11. Charges, fees, service-levels & grievance redressal

12. Digital services, remittance & clearing operations

13. Operational controls, KYC, AML, and record keeping

14. Risk management & internal audit considerations

15. Customer journey: opening, operating, closing an account (step-by-step)

16. FAQs (common customer queries)

1. Deposit product overview — definitions & objectives

Deposits are liabilities for the bank and a primary funding source for lending and other assets. The purpose of offering multiple deposit products is to meet varied customer needs — safe-keeping, transactional convenience, savings with liquidity, predictable returns, monthly income, and business cash-management. Products should be designed considering regulatory constraints for cooperative banks, liquidity management, asset-liability matching and profitability.

Primary categories:

• Savings account (CASUAL): retail customers, salary accounts, basic banking services.

• Current account (TRANSACTIONAL): businesses, professionals, high frequency transactions; usually non-interest-bearing or interest at lower rates with higher fee income.

• Fixed deposit / Term deposit: fixed tenor, higher rates, stable funding.

• Recurring deposit: periodic deposits to build savings with interest.

• Other / specialized products: senior citizen FDs, minor accounts, staff deposits, Christmas/new-year schemes, sweep-in & sweep-out, flexi deposits.

Key bank objectives: liquidity, stable low-cost funds, cross-sell of loans and digital services, compliance with cooperative sector regulations.

2. Savings accounts — variants, features, pricing, operations

Typical variants

1. Regular Savings Account — for retail customers; debit card, passbook, netbanking, mobile banking.

2. Salary Account — zero minimum balance, payroll-based benefits.

3. Basic Banking / Small-balance Account — for financial inclusion, lower KYC requirements (as per circulars), limited transactions.

4. Senior Citizen Savings — may offer higher interest on small balances or special rate on FDs linked to the account.

5. Minor / Student Savings — parental/guardian operation up to a specified age.

6. Women-specific savings — promotional benefits (optional).

Key features

• Minimum balance: specify thresholds for metro/rural branches. Cooperative banks often set modest minimums.

• Interest: paid quarterly/annually; method (daily balance or monthly average) must be disclosed.

• Debit card & ATM: daily withdrawal limits, free transactions per month.

• E-banking: netbanking, mobile app, UPI integration, SMS alerts.

• Passbook / statement: periodic statements, e-statements available.

• Cheque book: typically available after account activation.

• Nomination: mandatory field; customers encouraged to nominate.

• Locker / value-added: cross-sell opportunities.

Operational rules & customer obligations

• Minimum KYC at opening (ID + address); enhanced KYC on periodic review.

• Inactive / dormant rules: inactivity periods (e.g., 12/24 months) require re-verification.

• Overdraft: usually not permitted on standard savings (unless explicitly offered as OD against FD / salary).

• Closure & balance payout: require presence of ID, updated signature; nominee payment rules apply on death.

Pricing (example structure)

• Monthly maintenance fee for balances below threshold.

• ATM withdrawal fees beyond free limit.

• Cheque issue charges, demand draft charges, SMS charges.
  (Actual numbers should be set by bank’s board and disclosed in schedule of charges.)

3. Current accounts — business banking specifics

Target customers

Traders, firms, professionals, NGOs, institutions requiring high-frequency transactions.

Core features

• No interest or nominal interest: most current accounts do not earn interest. Some cooperative banks may offer interest on credit balances per board policy.

• Overdraft facility: common; sanctioned as cash credit / OD with limits tied to working capital cycles.

• Cheque books & bulk payment handling: high-volume cheque clearing, ECS/NACH processing, RTGS/NEFT/IMPS.

• Collection services: merchant collection, CMS, POS terminals.

• Monthly statements & reconciliation support: detailed cheque images, daily balances.

• Bank guarantees: offered vs margins; separate sanctioning process.

Fees and transaction charges

• Higher transaction limits, but charges for cheque collection, DD issuance, stop payment, return cheques, and high-value transactions.

• Minimum balance requirements typically higher than savings.

Risk & control

• Enhanced KYC and beneficial ownership identification for firms.

• Sanctions screening for entities and signatories.

• Periodic reviews for large balances and frequent cash transactions.

4. Fixed deposits / Term deposits — types, rates, premature rules

Types

• Standard Fixed Deposit (FD): fixed tenor (7 days to 10 years common), single lump-sum.

• Senior citizen FD: higher ROI (e.g., additional 0.25%–0.75% over standard).

• Cumulative FD: interest compounded and paid at maturity.

• Non-cumulative FD: periodic interest payout (monthly/quarterly).

• Tax-saving FD: lock-in 5 years with tax benefits under Section 80C (if offered).

• Flexi/Sweep FD: linked to savings/current for liquidity.

Interest rate policy

• Rates set by the bank board within regulatory guidelines; communicated via website/branch notice. Rates can vary by tenor and deposit amount slabs.

• Senior citizen top-up must be clearly reflected on FD receipts.

Premature withdrawal

• Allowed as per board policy; penalty may apply (reduced interest rate or flat deduction). If deposit duration < certain period, bank may apply lower rate.

• Special rules for cumulative vs non-cumulative FDs.

Auto-renewal & nomination

• Auto-renewal if instruction given; banks issue maturity advice in advance.

• Nomination allowed; instructions for payout to nominee at maturity or on death.

Interest calculations & compounding

• Frequency (quarterly/monthly/annually) must be disclosed. Cumulative FDs compound per bank policy.

5. Recurring deposits & Monthly Income Schemes

Recurring Deposit (RD)

• Customer deposits a fixed sum monthly for a fixed tenor and earns interest similar to term deposit rates.

• Tenors: typically from 6 months to 10 years (per bank product design).

• Premature withdrawal: possible with penalty; interest recalculated accordingly.

Monthly Income Schemes / Monthly Income Plans (MIP)

• Designed for regular periodic payouts (interest paid monthly).

• Often structured as a series of short-term FDs or a specific MIP product; check board approval and regulatory compliance.

6. Special deposit products

Minor accounts

• Operated by guardian until minor attains the age of majority (18/21 as per bank policy).

• KYC document for guardian and birth proof for minor required.

Staff/stakeholder deposits

• Preferential rates for employees and cooperative members as per internal policy.

NRI deposits

• A cooperative urban bank may or may not offer NRE/NRO accounts — these are regulated; if offered, separate compliance, repatriation and documentation apply.

Cooperative sector-specific schemes

• Targeted deposit mobilization like “Sukanya” tie-ins, festival deposits, farmer fixed deposits, SHG-linked savings, etc. Tailor products to the local community and regulatory allowances.

7. Sweep & Auto-sweep / Cash-management facilities

• Sweep-in: surplus savings are swept into an FD to earn higher interest; liquidity maintained for withdrawals.

• Sweep-out: FD funds swept into current account when balance falls below threshold.

• Cash Management Services (CMS): for corporate/large customers — receivables management, pooling, centralized treasury services.

Operational considerations: mandate forms, limits, automated triggers, reconciliation procedures.

8. Overdrafts, lien & hypothecation on deposits

• OD against FD: loan granted using FD as collateral (up to a % of FD value).

• Lien: bank places lien on deposit for security against loans, guarantees or litigation holds.

• Hypothecation: for movable assets financed — separate documentation is required.

Clear documentation for charge creation, collateral valuation, and disco/ release procedures necessary.

9. Interest calculation, crediting & ROI review policy

Interest calculation

• Savings: commonly calculated on daily balances and credited quarterly.

• FDs: based on nominal rate and compounding frequency.

• Current: if interest paid, usually credited monthly/quarterly.

Rate review

• Rates should be periodically reviewed by the bank’s ALCO (Asset Liability Committee) and board.

• Communication: major changes to be published on website, branch notice, and communicated to customers holding term deposits with future maturities (as applicable).

10. Taxation, TDS & customer communication

• Interest income from deposits is taxable in the hands of the depositor.

• TDS: Section 194A — banks deduct TDS on interest above threshold if PAN not furnished and income qualifies. Cooperative banks follow central government rules; thresholds and rates must align with Income Tax provisions for the financial year.

• Form 15G / 15H: for eligible customers to avoid TDS — must be collected annually, with declaration acceptance procedures.

• Form 16A / TDS certificates: issued to customers where TDS was deducted.

• Reporting: interest paid to customers may be reported to tax authorities per prevailing rules (e.g., AIS, 26AS).

11. Charges, fees, service-levels & grievance redressal

• Publish Schedule of Charges: account opening fees, maintenance, cheque clearing, NACH returns, cheque bounce charges, stop payment fees, cash handling fees, ATM charges, NEFT/RTGS charges beyond free slabs etc.

• Service level commitments: cash withdrawal timelines, cheque clearing time (local/metro/CTS timelines), RTGS/NEFT processing, locker service turnaround.

• Grievance redressal: escalation matrix — branch, nodal officer, grievance officer, Banking Ombudsman. Provide timelines for resolution and a simple complaint form.

• Compensation policy: for delayed services (e.g., cheque clearing delays) per regulator guidelines.

12. Digital services, remittance & clearing operations

• UPI, IMPS, NEFT, RTGS: 24x7 availability where possible.

• Netbanking & Mobile app: fund transfer limits, beneficiary management, two-factor authentication.

• E-statements & e-receipts: for sustainability and customer convenience.

• ACH/NACH: bulk payments like payroll and utility collections.

• Security: multi-factor authentication, device registration, fraud monitoring.

• E-KYC & video KYC: where permitted by regulator, follow digital onboarding guidelines.

13. Operational controls, KYC, AML, and record keeping

• KYC & AML: maintain KYC, perform periodic CKYC verification, sanction screening, PEP checks and suspicious transaction monitoring (STR filings).

• Record retention: maintain records (account opening forms, transaction records, audit trails) per regulatory timelines.

• Periodic CTR & reporting: as per guidelines for large cash transactions or suspicious activities.

14. Risk management & internal audit considerations

• Liquidity risk: maintain SLR & HQLA as mandated.

• Interest rate risk: manage with ALM and gap analysis.

• Operational risk: segregation of duties for account opening, authorisations for large transactions, dual controls for cheque books and FD releases.

• Internal audit: periodic audits covering deposit account processes, compliance, IT controls, and reconciliation.

15. Customer journey: account opening → operation → closure (step-by-step)

Opening

1. Customer fills account opening form (AOA), provides KYC documents.

2. Branch verifies identity and address, takes specimen signature and photographs.

3. For firms/companies/partnerships: collect incorporation documents, resolution, authorised signatories list, PAN and TAN.

4. Initial deposit as per minimum balance norms.

5. Issue welcome kit: passbook, cheque book, debit card, terms & conditions and schedule of charges.

6. Activate e-banking after proper security setup.

Operating

• Deposits accepted via cash/cheques/electronic credit.

• Cheque clearing through clearing house; RTGS/NEFT processed as per cutoffs.

• Provide periodic statements; handle stop payments, chargebacks and returns per rules.

Closure

• Customer submits closure request, returns unused cheques and debit cards.

• Branch verifies signatory and settles any standing instructions, lien releases or charges.

• Pay-out to customer or nominee after KYC and due diligence; provide closure acknowledgement.

16. Frequently asked questions (short)

Q: How is interest on savings calculated?
A: Generally on daily balance and credited quarterly — check your account terms.

Q: Can I get overdraft on my savings?
A: Not standard — OD can be offered against FD or as a separate sanctioned facility.

Q: What if I want to break FD early?
A: Premature withdrawal allowed with a penalty; exact terms on FD receipt.

Q: How long before FD maturity will you notify me?
A: Bank issues maturity advice (e.g., 7–15 days before) and provides auto-renewal options if authorized.

Q: How to stop TDS on interest?
A: Submit valid Form 15G/15H and ensure eligibility.