People save their money in banks by opening an account. The deposits in the bank accounts can be withdrawn on demand, so these deposits are called demand deposits. (i) 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. (ii) The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash. Since demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy. (iii) It is authorised by the government of the country. (iv) Its demand and supply can be controlled RBI. (v) In India, the law legalises the use of rupee as a medium of payment that cannot be refused in settling transaction in the country. No individual can legally refuse a payment made in rupees.