Definition (1):
Primary deposits are those deposits that the bank collects from different surplus stakeholders in the economy by different accounts. These consist of cash deposited by the people with the banks in different deposit account such as savings deposits, time or fixed deposits, current or demand deposits & other deposits. The depositors themselves take the initiative of the creation of these deposits.
Definition (2):
“When a customer is the direct creator of deposit it is called a primary deposit." Sometimes, primary deposits are called the passive deposits because the bank's role for creating the account is passive.
Primary deposits are of two types:
- Demand Deposits: The bank is responsible for allowing the depositors for withdrawing money when they require for demand deposits. The amount to be withdrawn depends on the account’s terms and conditions. Nowadays banks allow the people to open 3 forms of deposits:
a) Saving account,
b) Current account,
c) Special notice deposit account. (Only existing in Bangladesh)
- Term Deposits: Banks return a fixed amount of money on a definite time. It is also known as the fixed deposit. In the western world, it is called the certificate of deposit or CD account.