Current account is normally operated by businessman/organization for commercial purpose. The interest is charged by the bank on its operation. Bank overdraft is possible.
Savings account is an account for deposit of savings of an individual. The interest is given by the bank on the balance in the account to the account holder. Bank overdraft facility is not available. The rate of interest provided by the bank for saving account is lesser than the rate of interest charged by it on the current account.
It is a running account and remains continuously in operation. The current deposits can be withdrawn without giving any notice before time. The bank has to honour the cheques if these are within limits. Those people maintain liquid asset who are in need of a liquid balance. Overdraft facility can be provided through the agreement with the bank. On the current account usually interest is not paid. The bank acts as a custodian only. The bank can not employ these funds and keep higher reserve ratio. The Current account is opened by the traders, business companies, industries and public service bodies. Current account holder keeps the working capital in his hand. He keeps his money liquid and safe.
Current A/C holder makes the payment through cheques. Current account holder uses the agency services of the bank. Overdraft facility may be enjoyed by the Current Account holder. Loans and advances facility can be provided at the current A/C holder by the bank.
Those people who have money to save but can not invest profitably, because the amount is too small. They can open Savings Account. The bank pays the interest on it.
The employees, firms and children usually open this account.An account holder can
withdraw a limited amount of money only twice a week. In case of a big amount he has to give seven to fifteen days prior notice in writing to the bank. The bank lends the maximum portion of savings deposits because it knows that small portion of this amount is withdrawn.