Savings deposit account are account mainly used by small savers for transactions and savings, they keep money in banks on the basis that they will leave it with the bank for some time before they come to withdraw it. For availing the bank of the use of the money before they come to withdraw it, holders of such accounts expect banks to pay them interest. Legally, the period of notice is seven days. However, banks do not insist on such period of notice as part of the savings account contract. The effect is that in practice both savings and current accounts are withdraw-able on demand.
The difference is that any bank that so wishes can insist on the period of notice. However, no bank will insist on that because of the stiff competition among the banks, hence, they would not want to lose their customers as well as potential customers.
Customer’s Savings Deposit Account
Savings deposit account is primarily made for small savers. A scholar called Cox gave vivid explanation of savings deposit account, according to him; saving boxes were usually issued to the bank customers. It was more like a box with locks from the bank which the customer gets to take home, the customer deposits his money into the box and then returns it to the bank for the deposited fund to be placed into the customer’s credit account.
Although such saving boxes as it were encouraged regular small savings at customer’s convenience, they are cumbersome to operate. For this reason, bank no longer use such savings boxes.
What some banks now do, is to attach some benefits to regular savings or to encourage customers to save with some targets in mind by creating special types of savings account; such as the “Save for school scheme”, “bonus savings account”, “housing savings scheme” “Christmas savings scheme” and such accounts. A higher rate may be paid to those who are willing to save up to a particular amount each month.
References On These Banks Accounts
Another major reason that banks must insist on collecting references is to help them avoid being held liable for the tort of conversion if they collect forged or stolen cheques for their customers on a current account.
A customer can steal a cheque and use it to open an account with a fake name. If a bank opens account without proper references, the bank is considered to have been negligent, and to have failed to exercise reasonable care.
As such they have no defence when charged for conversion. Even when a bank agrees to open an account while still waiting for the references to be received, it is wise not to release a cheque book to the customer until such references are received. In a decided case in banking practice, it was held that one reference was enough but banks still insists on two references for their own safety.
A customer who is opening a current account is also expected to complete the standard mandate form provided by the bank. It is on this form that he or she supplies his or her particulars and specimen signatures. For companies, partnerships, joint-accounts holders and other business account holders, the mandate must also contain a statement as to who should be the signatories to the account, and how many of them must sign cheques and other instructions to the bank.
A statement of account is normally sent to holders of current account monthly, quarterly, or half a year, to keep them informed of the details of their deposits and withdrawals.
Opening Savings Account With A Commercial Bank
In opening a savings account with a commercial bank, the banks do not require references as in the case of opening a current account. This is not necessary because savings accounts are usually in credit, and cheques are not normally deposited into it. Savings account holders are also made to complete the standard mandate form provided by the bank in which they supply their names, address, occupation, employers data, age (date of birth), and specimen signature.
In case of joint account holders or business customers, the names of those who should act as signatories to the account and the number of people to sign are indicated. For personal customers they are also expected to state their next of kin. Next of kin is the nearest relation to the account holder.