One of the fundamental jobs of every consumer-facing bank is to accept a deposit, credit it to the account holder’s account, and, based on the available credit, allow the account holder to withdraw the amount as and when required. Accordingly, this blog talks about various banking operations concerning consumers. It includes withdrawal methods, passbooks, demand drafts, cheque payee, bearer cheque, etc. So, let us get started then.
What is withdrawal?
As the name suggests, withdrawal refers to the action of withdrawing money from a particular account. Withdrawal methods have evolved over the years. Unlike a couple of decades ago, when automated teller machines (ATMs) weren’t available, people had to visit the bank, get a withdrawal coupon, and wait for their turn to withdraw money. This wasn’t just time-consuming but required the account holder to visit the bank whenever he needed cash.
However, the advent of ATMs in the early to mid-2000s simplified the withdrawal process. It allowed people to withdraw cash easily, anytime, and anywhere without visiting the bank or worrying about its working hours. Additionally, you can withdraw money through another process that requires an in-person bank visit, filling up a withdrawal slip, and submitting it to withdraw money. Let us glance through both these processes.
How to withdraw money through a withdrawal slip
- Visit the bank
- Take a withdrawal slip and fill the required information
- It includes the withdrawal amount, the withdrawal account number, signature, currency denomination, etc.
- Wait for your turn
- Submit the withdrawal slip to the teller.
- The teller gives the acknowledgment receipt to you
- He further counts the cash and gives it to you.
How to withdraw money from an ATM
- Visit the nearest ATM
- Insert your card in the card slot
- Select the language of your choice
- Type your four-digit ATM pin
- Click on the Cash Withdrawal option (either through a button or screen touch)
- Enter the required amount (depending on your account balance)
- Click on confirm
- Wait for the cash to come out
- Collect your money and your debit card from the machine
What is a passbook?
You must have heard of the term passbook. Although their use isn’t as common as it was a couple of decades ago, bank passbooks are still relevant and considered significant banking documents. A bank passbook is a booklet provided by the bank or the financial institution with which you open a bank account. The bank offers it in the welcome kit, or the banking kit, comprising your debit card and internet banking details as well.
The first page of the bank passbook comprises vital details such as your account number, customer ID, IFSC code of the branch, your name, address, etc. The passbook helps you get a brief statement of the transactions that have happened in your account. Although banks generate online statements these days, it is always good to update your passbook through an in-person visit to the bank, as it enables you to keep a physical backup of your transactions.
What do you mean by an account payee cheque?
An account payee cheque is considered a specific type of cheque payment, as the amount is deposited in the payee’s account and cannot be endorsed by the payee to anyone else. Let us see how to write an account payee cheque.
- At the outset, draw two cross lines on the cheque’s left hand side upper corner, and write ‘Account Payee’ between the lines.
- However, remember, if you only cross the cheque and do not write ‘Account Payee’, the bank will consider it as only crossed cheque and not an account payee one
What is a bearer cheque?
A bearer cheque is payable to the cheque bearer/ holder. It does not consist of any name designated as the payee but only the specified withdrawal amount. A bearer cheque is payable to the person who shows it at the bank for payment. You do not have to endorse a bearer cheque. You can transfer it through mere delivery. However, a bearer cheque isn’t a secure form of payment, as the chances of them being misused when lost remain high.
Is there a limit on bearer cheque withdrawal? The answer is no. If a company draws a bearer cheque to withdraw funds to employee salaries, the bank usually accepts a higher amount bearer cheque and disburses cash. However, if it is for an individual, restrictions may apply.
What are deposits?
The Indian banking environment offers four types of deposits. Let us look at each one in short.
Current Account:
A current account is also known as a demand deposit and is used by businesspersons. It does not impose any restrictions on the number of daily transactions. Additionally, it offers an overdraft facility to the account holders. However, banks do not offer any interest on the current account and charge a considerable fee to maintain it.
Savings Account:
A savings account is suitable for people with a limited income and who look forward to saving some money. On this account, account holders earn a specific amount of interest that varies from bank to bank. It allows them to deposit cash at a point in time. However, banks impose restrictions on the number of transactions done on a savings account.
Fixed Deposit:
A fixed deposit is a conventionally popular form of deposit. Here, you deposit your money for a specific period (from seven days to ten years) and earn assured returns, with an interest rate varying from five to nine percent. Some banks allow premature closure of FD, but with a penalty on it.
Recurring Deposit:
Recurring deposit is another traditional deposit type, wherein the depositor deposits a specific amount on a monthly or a quarterly basis in recurring form for a period of six to 120 months. Like FD, RD also offers a particular rate of interest. You can close an RD prematurely, but with a penalty.
What is a demand draft?
A demand draft is a prepaid negotiable payment instrument wherein the drawee bank accepts the payment’s responsibility when the payee presents the DD. To receive the payment, the DD must be provided by the concerned bank, or the instrument needs to be picked up through the clearing process. You can pay a demand draft through cash or cheque. However, cheque payment for DD is available only if the amount exceeds INR 50,000.
There’s a lot more on financial literacy-related awareness coming up on Arth Shikshan. Keep following our blog space to increase your financial literacy.
