Types of Bank Accounts

A bank account is a record of the financial transactions between the customer and the banking institution. The banking institutions have provided several types of accounts to cater to the needs of all sorts of individuals. One of the most important functions of banks is accepting deposits, which is aimed towards generating savings for the purpose of utilizing them in profitable investments. People, on the other hand, also prefer to deposit their savings in the banks, as they can earn interest and also avoid the danger of theft.

Though, the types of accounts offered can vary from one bank to another, here are some of the common bank accounts offered by commercial banks.

Checking Account

A checking account is also known as a current account or a transactional account. Money deposited in this type of account can be withdrawn at any time, as there in no restriction on the number of withdrawals and the amount of money withdrawn. Customers are generally given paper checks to carry out day-to-day transactions, like paying bills, making purchases, or transferring money to another account. ATM (Automated Teller Machine) facility is also provided to the customers. However, no interest is paid on the deposited money, and sometimes, customers have to pay a charge to the banks for rendering this service. This type of account is generally maintained by businessmen or concerns, as they have to make a number of financial transactions each day. A transactional account is sometimes called a demand deposit account, as no notice is required to withdraw money, i.e., money is available on demand.

Savings Account

Savings accounts are aimed towards mobilizing small savings from the general public. There are certain restrictions regarding the number of withdrawals and the amount to be withdrawn in a particular time period. However, money deposited in this account, earns a fair rate of interest. Though the customers can’t withdraw their money with checks, they can avail the ATM facility for the same. A passbook is also provided, which keeps track of all the financial transactions.

Money Market Account

A money market account is a type of deposit account, in which money can be deposited to earn a higher rate of interest than the savings account. However, a minimum balance is required to be maintained to earn interest and avoid fees. There is also a limit on the number of transactions that can be carried out in a particular month. The customers are usually allowed to make 6 withdrawals per month.

Certificate of Deposit

A certificate of deposit is also known as a time deposit or fixed deposit account. This account requires the customers to deposit a certain sum of money for a fixed time period. The money deposited in this account can’t be withdrawn before the date of maturity. However, some banks allow customers to withdraw money before maturity, by charging a penalty. The rate of interest paid on time deposits is usually higher than the other bank accounts. In addition to this, the interest paid on this account depends on the maturity period, i.e. longer the maturity period, the higher is the rate of interest paid.

Banking institutions offer several different accounts to satisfy the individual needs of their customers. These bank accounts enable the public to deposit their money in banks and thereby earn a monetary return.

Basics of Investment Banking

An investment bank is a type of financial intermediary that performs a variety of functions such as underwriting, facilitating mergers and acquisitions, or brokerage services for institutions. The work of an investment bank begins right from the counseling before the underwriting sessions, and stretches right till the securities are properly handled and distributed. These institutions play a very crucial role in market transactions on behalf of, or for private and public investors, governments, and corporations. There are some that also provide highly professional services in assisting their clients with industrial know-how on various parameters.

Industries from diverse sectors like media and telecommunications, real estate, industry, finance, health care, consumer products, and various such segments are provided assistance by investment banking services. Along with these, they also deal in the securities trading services, credit counseling, financial engineering, and merchant banking. The primary source of income for investment bankers is the commissions, fees, and gain margins on transactions provided for the above mentioned institutions.

The role of an investment bank as a mediator is to directly familiarize the nature of the investment and the entity being invested in. In case of conventional banking, people deposit finances in the form of cash, assets, and so on with a bank. The bank in turn can lend to a borrower under some standard norms to utilize it in his own way. In the case of investment banking, there is a direct familiarization of both the investor and the borrower. This means that an individual or institutional investor has an option to choose his type or division of investment into any given entity looking out for funds.

Investment banks provide companies with expert guidance and formulate strategies on their behalf for disinvestment, and also to merge or acquire new entities. Good investment banking involves procedures to maintain and upgrade the quality of services and keep a close watch on the emerging trends in the market, where their customer’s money can be invested. It also incorporates risk management services in order to streamline the flow of capital, check its overuse, and come up with a detailed analysis of credit risks.

A big firm should ensure a number of parameters before tying up with an investment bank, in order to ensure sizable profits. The bank should have a long-standing reputation of providing quality and consistent service. It should be accountable for all the transactions done through it. You need to do a thorough market research, compare and contrast the functioning styles of different banks, the consistency of their workforce in staying with a particular deal, or the reputation of their previous clients.

The investment banking market was increasing leaps and bounds, until the recession struck. Banks all over the world are trying to recoup the losses. The US is the biggest market, followed by Europe, Middle East, Africa, and Asia. Its global hubs are a few economically sound centers like London, New York, and Tokyo. However, it is not restricted in its scope to a few regions of the world. It caters to a global community, which makes it highly sensitive to global ups and downs, along with innovative fluctuations. A career as an investment adviser is both a challenging and a highly rewarding career option.