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 bank is a debtor and customer is a creditor. Deposited amount of the customer is an asset for the customer and liability for the bank because this deposit can be withdrawn at any time through cheque and bank drafts. Normally, bank offers interest or profit on these accounts (deposits). The account holder is called the depositor or customer of the bank. Bank provides many facilities to the account-holder.
Causes of Opening a Bank Account
Following are the reasons, which lead a person to open an account with the bank.
Safety of Cash:
Cash is not considered safe in houses, so people deposit their surplus cash into the bank form safety point of view.
Source of Income:
Many people deposit their savings into the bank to make them a source of income.
To Avoid Extravagance:
An accountholder can save him from extravagance by depositing surplus money into the bank.
Low-income persons deposit their savings into the bank to secure their future planning’s.
Facility in Business:
Many businessmen keep the account with bank to make their receipts and payments easy.
Bank provide many facilities to make the dealing of foreign trade easy and secure, such as opening of L.C. etc.
Sometimes, it is necessary to have a bank account for obtaining loan.
People deposit their savings into the bank to meet their sudden needs in future.
Collection of Crossed Cheque:
The payee has to open an account into the bank for the collection of crossed cheque.
Many people deposit their money into the bank for investment purpose.