Highlights:
- Demand deposits are funds kept in bank accounts that you can access at any time without any prior notice.
- These deposits are accepted as a mode of payment and fulfill all key functions of money.
- Because they’re liquid, secure, and bank-backed, they serve as a digital extension of physical cash.
Ever wondered how money has changed over time?
There was a time when we handed over physical cash to make purchases. Today, it’s just a swipe, a QR scan, or a digital transfer. Yet, we’re still using “money.” The difference? It’s now mostly in the form of demand deposits—the digital twin of your wallet.
What Are Demand Deposits?
In simple terms, demand deposits are bank balances you can withdraw or use anytime, with no lock-in or notice period.
This includes:
- Your monthly salary in a savings account
- The money you receive via digital transfer
- Any funds that sit in your current or savings account
These are called “demand” deposits because they’re available on demand via ATM withdrawals, cheque usage, or online payments.
Why Are Demand Deposits Considered as Money?
Now here’s the key: even though they’re not like currency notes, demand deposits fulfill every function of money in today’s digital world.
- Medium of Exchange
From card swipes at stores to UPI payments at tea stalls, your bank balance enables you to buy and sell. That’s the core role of money.
- Store of Value
Just like you store cash in a wallet, your deposits sit safely in your bank and earn interest, too.
- Unit of Account
All deposits are measured in rupees. Whether it's ₹500 in your pocket or ₹500 in your bank, its value doesn’t change.
- Transferable & Trackable
They can be moved instantly to another account or person while also maintaining a digital trail. That’s why they’re more secure than physical cash.
Demand Deposits vs Physical Currency
| Demand Deposits | Physical Money (Cash) |
| Physical Money (Cash) | Available if carried physically |
| Bank-protected & password-secured | Can be lost, stolen, or damaged |
| Interest on savings deposits | No earnings |
| Fully trackable digital history | No history unless manually tracked |
| Widely accepted, even remotely | Only for in-person payments |
| Very low | Higher |
How Demand Deposits Power Everyday Business Transactions?
Take Meena, a boutique owner in Pune. She receives ₹15,000 via UPI from a customer. That amount was instantly reflected in her current account (a demand deposit). She uses the same funds to pay her fabric supplier through net banking. Neither party touched cash, but both made real money transactions smoothly and securely.
That’s the beauty of demand deposits. They keep money moving in the background with no need for physical cash.
Final Thought,
We often think of money as something we can touch. But the truth is, the most powerful money today is invisible. It sits in our accounts, ready to be used, transferred, or saved. Demand deposits have redefined what money looks like, but they haven’t changed what money does.
Looking for instant funds in your account during hard times? If you ever need quick access to cash without long approval times, a trusted loan app like Viva Money can help. Get a credit line or short-term loan directly to your account with no paperwork, no waiting. Stay prepared for anything, anytime.
