Bank account is a relation, which is established, when an individual, a group of people and a company deposit their money into the bank.
In this relation, the bank is a debtor and the customer is a creditor. Bank account is a facility provided by customers and clients.
Deposited amount of the customer is an asset for the customer and liability for the bank because this deposit can be withdrawn at any time through cheques and bank drafts.
Normally, a bank offers interest or profit on these accounts (deposits).
The account holder is called the depositor or customer of the bank. They provides many facilities to the account holder.
Bank account is necessary for all business persons to meet their financial transactions.
Bank accounts are classified as under:
- Need of opening bank account.
- Definitions.
- Types of bank account.
- Profit & loss sharing saving account.
- Profit & loss sharing term deposit.
- Current account.
- Foreign currency account.
- Basic banking account.
- Enhanced saving account.
- Asaan account.
- Conclusion.
- FAQ’s.
NEED OF OPENING ACCOUNT:
It is not safe for private individuals to keep their surplus money at home. They can keep their surplus money in a bank account. The businessmen conduct transactions for thousands of rupees daily in bank accounts.
It is insecure to keep so much cash in hand for taking on business transactions. The businessmen can keep their money with some bank by opening a bank account. The customers feel secure of their money after opening bank accounts.
The opening of bank accounts also relieves the customers of the difficulties and risk of error associated with the counting of currency.
Definition:
“Bank account is a facility to account holder who safe the amount in which account that provides the safe custody for submission of valuable and costly documents.”
Main Points of Definition
A sort of agreement.
Between bank and the account holder.
For the deposit of amount and other valuables into the bank.
TYPES OF BANK ACCOUNT
Source: Wikipedia
PROFIT & LOSS SHARING SAVING ACCOUNT
INTRODUCTION:
This account was introduced by the order of Government of Pakistan on January 01, 1981. Before, this account was reputed as Saving Account” and bank give interest on it. Interest is totally prohibited in Islam.
Introduction of this account is reasonable as the first step regarding Islamic Banking. Economical stability, Now the repay paid on this amount is called “Profit”. The minimum requirement for the opening of this account is Rs. 100.
[FEATURES]
PLS saving account has following features.
Suitability:
This account is suitable for those salaried or low-income persons who want to save a part of their income for future needs.
Initial Deposit:
Minimum initial deposit to open this account is Rs. 100.
Use of Cheques:
The account holder has to use cheques for the withdrawal of money.
Number of Cheques:
Only eight cheques can be drawn on this account in a month.
Withdrawal Rules:
A specific amount can only be withdrawn at any time, but if more amounts are needed then a prior notice of a week should be given to the bank.
Payment of Profit:
Bank pays profit on this account after every 6 months.
Rate of Profit:
Bank offers low rate of profit on this account.
Issuance of Documents:
Bank issues pass book (on demand) and cheque book on the opening of this account.
Zakat:
Zakat is deducted from the amount of this account on 1st Ramzan- ul-Mubarak.
PROFIT & LOSS SHARING TERM DEPOSIT
INTRODUCTION:
This account of commercial banks is suitable for those people who expect to have surplus money for a long time and they not only want to save this money but also want to make it a source of income.
A specific sum of money is deposited in this account for a fixed period and the bank pays profit to the account holder after every one or six months.
[FEATURES]
PLS term deposit has following features
Suitability:
This account is suitable for those who expect to have huge surplus amount for a long time.
Fixed Amount:
The amount deposited in this account remains fixed rill the expiry of fixed period.
Certain Period:
This account is always opened for a certain period, which is determined at the time of opening account.
Initial Deposit:
Minimum initial deposit for the opening of this account is Rs. 1,000.
Minimum Period:
Normally this account is opened for a-minimum period of six months.
Term or Fixed Deposit Receipt (TDR/FDR):
The bank issues a nontransferable TDR/FDR to the depositor. It contains the amount and terms of deposit.
Use of Cheque:
The drawing of the cheques is not allowed on this account. This deposit can be withdrawn only by the return of TDR.
Use of Pass Book:
As the depositor cannot make further deposits or withdrawals, so no passbook is used for this account.
Rate of Profit:
Bank offers high rate of profit on this deposit.
Withdrawal Rules:
The depositor cannot withdraw money before the expiry of the fixed period but in case of earlier withdrawal bank does not pay any profit.
Further Deposits:
No further deposits can be made during the fixed period of term deposit.
Maximum Amount:
No limit is fixed for depositing the maximum amount.
Issuance of Documents:
Bank does not issue passbook or cheque book for this account.
Security for Loan:
Bank accepts the amount of this account as a security for granting loan.
Closing:
This account is automatically closed on the withdrawal of deposited amount.
CURRENT ACCOUNT
INTRODUCTION:
Current account is opened in all commercial banks. It is also called running and active account. There is no restriction on deposits and withdrawals.
This account is usually operated by business-class companies, firms, public or private organizations. No profit is paid on this account; rather the bank recovers incidental charges for services rendered. In modern-day banking, some banks pay special profit on the specified amount of the account.
[FEATURES]
Current account has following features.
Suitability:
This account is appropriate for the business community, because it has to make usual receipts and payments to settle its business dealings.
Initial Deposit:
This account can be opened with a minimum cash of Rs. 500.
Use of Cheque:
The account holder uses cheques, debit and credit cards to withdraw money from this account.
Use of Pass Book:
Bank issues passbook to the account-holder (on demand) for keeping the record of all receipts and payments.
Withdrawals:
There are no restrictions of withdrawals from this account.
Payment of Profit:
Bank pays no profit on the current account rather recovers incidental charges for the services rendered.
Facility of Overdraft:
Bank provides the facility of overdraft to the account holder and charges interest.
Determination of Period:
Determination of period is not necessary for this account.
Zakat:
Zakat is not deducted from this account.
Continuity of Account:
Even in case of full withdrawal, this account continues its operation.
FOREIGN CURRENCY ACCOUNT
INTRODUCTION:
This account is opened in foreign currency in the place of local currency. In Pakistan, this account can only be opened in designated branches of commercial banks. Foreign currency account can be opened in the form of rescuing and economic development, Fixed and Current accounts. This account is exempt from Zakat & Tax.
[FEATURES]
Foreign currency account has following features.
Foreign Currency:
In Pakistan, this account can be opened in a few foreign currencies. For example, American Dollars, Japanese Yen, German Mark, or Britain pound etc.
Free from Tax:
This account is exempt from income and wealth tax.
Zakat Deduction:
Zakat is not deducted from this account.
Nature of Account:
This account can be opened in form of saving, fixed and current account.
Profit:
Profit on this account is determined according to the instructions of State Bank of Pakistan.
Period of Account:
In case of fixed deposit, foreign currency account can be opened for a period of seven days to three years.
Transfer of Money:
Amount of this account can be easily transferred to any other foreign currency account.
Withdrawals:
Bank returns the amount of deposit in the same currency in which the account is opened.
No Restrictions:
There are no restrictions on this account like any other account.
Pre-Mature Withdrawals:
Account holder can withdraw his money before the expiry of certain period at the time of need.
Payment of Profit:
Profit is paid in the same currency in which the account is opened.
BASIC BANKING ACCOUNT (B.B.A)
In compliance with the directives of State Bank of Pakistan via Circular No. 30, issued on November 29, 2005, the Basic Banking Account has been initiating with the result from February 27, 2006.
This product has been establish to promote but the low-income group as well as the existing account-holders. So who wish to convert their ordinary saving or current account into Basic Banking Account.
[FEATURES]
Initial Amount:
The Basic Banking Account can be opened with a minimum initial deposit of Rs. 1000/- only.
Deposit & Withdrawal:
Account-holders will be authorized 2 deposit transactions (either cash or through clearing) and 2 withdrawals (cash or clearing) each month. All customer-initiated transactions over and more than this restriction will be charged a transaction fee.
Minimum Balance:
There will be lowest balance repairs requirement, and therefore no monthly account maintenance charges will apply.
Closing:
In cases where the balance in BBA go on ‘zero’ for a continuous 6 months period, the account will be shut down automatically, without any notice to the account-holder.
ENHANCED SAVING ACCOUNT (ESA)
Under the supervision of Pakistan Banks Association (PBA), all the scheduled banks offer Enhanced Saving Account to PLS saving account-holders if their accounts maintain an average balance of Rs. 20,000. On this account, the account-holders can earn profit up to 4% per annum.
[FEATURES]
Profit:
Profit shall be credited in the account quarterly.
Charges:
There are no hidden balance of Rs. 20,000).
Withdrawal of Money:
Facility of 4 withdrawals in a month is available (other than ATM’s). Rs. 50 per month will be charged if the minimum balance is less than Rs. 5,000.
Access:
Access to all banks for ESA account-holders.
ASAAN ACCOUNT
In June 2015, State Bank of Pakistan (SBP) directed all commercial banks to simplify account opening requirements/procedures and introduced a new account category namely “Asaan Account” for low-risk customers which can be opened against the minimum deposit Rs. 100 as with no minimum balance requirement.
Individuals can open the Asaan Account with a simple and on-page account opening form (paper-based electronic form) in Pakistan.
[FEATURES]
Type of Account:
Facility to open whether current or saving account.
Minimum Balance:
Requirement does not of minimum balance for Asaan account.
Fee:
No fee for issuance of debit card.
Service Charges:
No service charges are applicable for opening or closing the Asaan account.
Less Paper Work:
Very small paperwork is a demand to open Asaan account. Particular person should have to attest the copy of their NIC and recognize publicly their source of income as proof, to open UBL Asaan Bank Account.
They should have to visit the nearest branch of UBL with these documents and Rs.100, and after filling the form their bank account would be open in the particular branch.
Conclusion:
All important types of bank account is discussed in the above section, so the conclusion is bank accounts is mandatory for all persons, therefore who deals with goods and services in daily life and routine wise.
FAQ’s
Bank account is a relation, which is established, when an individual, a group of people and a company deposit their money into the bank.
In this relation, the bank is a debtor and the customer is a creditor. Bank account is a facility provided by customers and clients.
It is not safe for private individuals to keep their surplus money at home. They can keep their surplus money in a bank account. The businessmen conduct transactions for thousands of rupees daily in bank accounts.
Different bank accounts are there we can discuss in below:
1. Profit & loss sharing saving account.
2. Profit & loss sharing term deposit.
3. Current account.
4. Foreign currency account.
5. Basic banking account.
6. Enhanced saving account.
7. Asaan account.
