LIABILITY PRODUCTS

Bank liabilities are the debts incurred by a

bank, what a bank owes.
During 1960s, banking in the USA was
said to operate according to the 3-6-3 rule.
The most important liability category of
most bank is checkable deposits, which is
part of the economy's M1 money supply.
The largest liability category includes other
types of deposits (especially savings
deposits, certificates of deposit, and
money market deposits) that enter into the
M2 and M3 monetary aggregates.

SAVINGS ACCOUNT
Allows a customer of the bank to save a
small amount of money
Money can both be deposited and withdrawn
from the account
Withdrawal is done through cheque books or
withdrawal forms
ATMs have reduced the dependence on
traditional withdrawal systems
Savings money is invested in different
avenues and the bank pays an interest on it
Specially designed savings accounts for
children, women etc are a new innovation by
the banks


NO- FRILLS ACCOUNT
A type of savings account with zero-
balance or low minimum balance facility
In 2005, the RBI instructed the bank to
introduce such accounts so as to include
the poor sections of the society in the
financial system as well
Allahabad Bank and UCO Bank have been
providing such account facility for quite
some time now

CURRENT ACCOUNT
Helps the customer to perform multiple
transactions in a day
No interest on the amount deposited in the
account
Include cheque book facility, internet banking
etc
Used to pay rents, utility bills, insurance
premiums etc
FIXED DEPOSITS/TERM DEPOSITS
Type of a time deposit
Deposits a fixed amount for a fixed period of
time
Interest is paid on the money deposited at
pre fixed time intervals
The money can be withdrawn at maturity, but
if its withdrawn before that the bank pays less
interest
FDs many a times also linked with safe
deposit locker facility

RECURRING DEPOSITS
A type of time deposit which allows the
customer to save small amounts of money
with bank every month
Aimed at people with high expenditure in a
month
Modest interest paid for the amount saved,
quarterly, half yearly or annually

PRICING OF LIABILITY PRODUCTS
Banks free to price their liability products.
Can decide on the penalties to be charged.
Eg- in 2005, when there was liquidity crunch
in India.
Banks increased their deposit rates. Thus the
net interest margins decreased.
CHALLENGES

Loan Defaulters.
Regulatory Compulsion.
Rural markets.
Post 2008:Loss in faith.
THANK YOU

Siddiqui Zeeshan Ahmed
Nitin Kumar
Shivendu
Jamal