Demand deposit funds deposited in a bank account at a low or a zero interest rate, which allows depositors to directly withdraw their money and issue bank checks up to the limit of their account balance at any time.
- Banks accept the deposits and also pay an interest rate on the deposits.
- In this way, people’s money is safe with the banks and it earns an interest as well.
- People also have the provision to withdraw the money as and when they require.
- Since the deposits in the bank accounts can be withdrawn on demand, these deposits are called demand deposits.