Which type of bank account pays no interest to the holder but allows an overdraft facility and an unlimited number of transactions?
- A.Savings deposit account
- B.Current account
- C.Recurring deposit account
- D.Fixed deposit account
Correct answer
Explanation
The correct answer is B, current account. A current account is meant for traders, firms and companies that need to receive and pay money many times a day. Because the bank must keep the whole amount ready at all times, it pays no interest on the balance; in return the customer gets an unlimited number of transactions, cheque facility and, where the bank agrees, an overdraft that allows withdrawal beyond the credit balance.
Option A, the savings account, is an interest bearing account meant to encourage thrift by individuals, so it is not the answer. Option C, a recurring deposit, needs a fixed instalment every month and pays interest like a term deposit. Option D, a fixed deposit, keeps a lump sum for a set period at the highest rate the bank offers and cannot be operated like a running account. Only the current account combines no interest with an overdraft.
Read the full article: Bank Accounts, Deposits and KYC Rules for Exams
Practice Questions
View allThe KYC norms that banks in India follow are framed mainly under which law?
- A.Banking Regulation Act, 1949
- B.Prevention of Money Laundering Act, 2002
- C.Negotiable Instruments Act, 1881
- D.Foreign Exchange Management Act, 1999
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Know Your Customer rules exist to stop the banking system being used to launder the proceeds of crime or to finance terrorism.
Read the full explanation →Which of the following is NOT an officially valid document for completing KYC at a bank?
- A.Passport
- B.PAN card
- C.Voter identity card issued by the Election Commission
- D.Driving licence
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The list of officially valid documents in the KYC rules is closed and contains the passport, the driving licence, proof of possession of an Aadhaar number, the voter identity card issued by the Election Commission, a job card issued under MGNREGA and signed by an officer of the state government…
Read the full explanation →What is the chief feature of a Basic Savings Bank Deposit Account?
- A.It pays a higher rate of interest than other savings accounts
- B.It requires no minimum balance to be kept
- C.It can be opened only by senior citizens
- D.It allows an unlimited overdraft
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The Basic Savings Bank Deposit Account replaced the earlier no-frills account as the vehicle of financial inclusion.
Read the full explanation →How often must KYC records of a high risk customer be updated under the Reserve Bank's KYC Direction?
- A.Once in two years
- B.Once in five years
- C.Once in eight years
- D.Once in ten years
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Banks classify customers as low, medium or high risk when the account is opened, on the basis of identity, social and financial standing and the nature of the expected business.
Read the full explanation →Deposits in a bank in India are insured by the DICGC up to what amount for each depositor in each bank?
- A.Rupees one lakh
- B.Rupees two lakh
- C.Rupees five lakh
- D.Rupees ten lakh
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The Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the Reserve Bank of India set up in 1978, insures deposits in commercial banks, regional rural banks, local area banks, payments and small finance banks and cooperative banks.
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