Why are the deposits in the banks called demand deposits? What are the benefits of the deposits with the banks?
PEOPLE hold money is as deposits with the banks. At a points of time people need only some currency for their day to day needs. They deposit their money with banks. Banks accept the deposits and also pay an amount as interest on the deposits.
Benefits:
- People have the provision to withdraw the money as and when they require. Since, the deposits in the bank accounts can be withdrawn on demand. Therefore, these deposits are called demand deposits.
- People’s money is safe with the banks.
- It earns certain amount as interest.
- There is the provision to withdraw the money as and when depositors require.
- There is an easy provision to take loan from the banks to the depositors.