Banking matters you should know

Deposit insurance

Deposits with banks up to Rs 1 lakh are insured with the Deposit Insurance and Credit Guarantee Corporation (DICGC). This amount covers all deposits in the "same name and capacity."

This means you don't stand to benefit if you break up your wealth into many deposits of Rs 1 lakh each, in your own name. But deposits under different names are valid to receive payment.

Also, be aware that the process of claiming deposit insurance is a cumbersome one, handled by the bank itself. There is little you can do to speed up the process.

It is the bank which enters into an insurance contract with the DICGC, and the latter will only pay the claim amount to the bank. So, the insurance cover is not something that you can bank on immediately after a bank goes bust.

Opening questions

When opening a savings account, ask the bank officials about minimum balance requirements., penal provisions if the balance falls below the minimum stipulated amounts or return of cheques issued or instruments sent on collection, collection facilities etc. offered and charges applicable, and details of charges, if any, for issue of cheque books and limits fixed on number of withdrawals, cash drawings, etc.

Interest rate on savings account

Interest on savings account is offered at 3.5% p.a. with effect from March 1, 2003 . The interest will be calculated for each calendar month on the lowest balance in credit of any account between the close of the tenth day and the last day of each month. Most banks pay interest on a half-yearly basis.

Pan number transactions

Every person shall quote his Permanent Account Number (PAN) or General Index Registration Number (GIRN) in all documents pertaining to the transactions specified below and subject to the provisions thereunder
"" Sale or purchase of any immovable property valued at Rs 5 lakh or more;
"" Sale or purchase of motor vehicles or vehicle.
"" A time deposit exceeding Rs 50,000 made in cash with a bank ;
""A deposit, exceeding Rs 50,000, in any account with Post Office saving bank.
"" A contract of a value exceeding Rs 10 lakh for sale or purchase of securities.