GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What is the term used for a deposit with a bank that locks up money for a certain period but also provides an option of premature withdrawal which may attract a penalty?
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Term deposit
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Current deposit
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Recurring deposit
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Savings bank deposit
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Explanation:
Detailed explanation-1: -A term deposit is a type of deposit account held at a financial institution where money is locked up for some set period of time.
Detailed explanation-2: -In Term Deposits, the sum of money is kept for a fixed maturity and the depositor is not allowed to withdraw this sum till the end of the maturity period. That is why they are called as Term Deposits because they are kept up to a particular term.
Detailed explanation-3: -In other words, all the fixed deposits which allow premature withdrawals are called callable deposits. Banks may charge some amount of money as penalty for withdrawing the amount before maturity. However callable fixed deposits do not have any lock in period.
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