Bank Deposit
Bank deposit is a mandatory part of banking. Bank receives different types of deposit from its customers as per requirement. Deposit is the heart of bank. Bank receives deposit from its customers and lend it to borrower for business. Below are some sort of deposit that most commonly used or maintain by banks. Many bank presently takes a remarkable amount and numbers of deposit like: Standard Chartered Bank, AB Bank Ltd. State-owned commercial banks, different specialized banks etc.
Special Notice Deposit (SND):
Generally these accounts are opened who wants liquidity and some return simultaneously on their deposits and withdrawal by short notice.
Features
• The deposits held in this type of accounts are payable on short notice.
• Special Notice Deposit Accounts are opened usually by sector corporations, limited companies, Firms,
NGOs, societies or financial institutions etc.
• These are interest bearing accounts. The rate of interest is fixed by Head Office and normally interest rate of SND is lower than savings rate.
• The interest is calculated on daily product basis.
• No overdraft is allowed against SND.
• Balance confirmation certificate of this type of account is to be dispatched on half-yearly basis or as may be requested by the customer or as prescribed by Bangladesh Bank from time to time.
• Charges, fees & commissions, VAT and Govt. levy as may be prescribed by Head Office time to time is to be realised.
Fixed Deposit Receipt (FDR):
Fixed Deposits are also known as time liabilities. The fixing of the period enables the banker to invest money and to employ it in his business without having to keep a reserve. Usually, longer the period the higher the rate of interest is paid.
Features
• the most purpose of fixed time deposit account is to enable the individuals to earn a better rate of interest on their surplus fund.
• The amount can be deposited only once. For further such deposits, separate accounts got to be opened.
• The depositor is given a hard and fast deposit receipt, which depositor has got to produce at the time of maturity.
The deposit are often renewed for an extra period.
• Such account can be opened in the name of individual, joint name , Firms and companies for different
tenure or maturity say 1 month, 3 months, 6 months, 1 year, 2 years and above.
• Auto renewal is also allowed in FDR as per instructions of the account holder.
• Rate of interest is always higher than any other interest bearing account.
• Premature encashment is allowed as per request of the customer.
• Loan against FDR is allowed.
Recurring Deposit
Depositors save and deposit regularly every month a fixed installment so that they are assured of the sizeable amount at a later period. This deposit works on the maxim “little drops of water make a mighty ocean”
Features
• the most objective of recurring time deposit account is to develop regular savings habit among the general public .
• Minimum amount that can be deposited monthly basis regularly.
• The period of the deposit depends on the instruction of the bank.
• The rate of interest is relatively higher than the normal savings account.
• No withdrawals are allowed. However, the bank may allow closing the account before the maturity period.
• The bank provides loan facility against this account.
Demand Deposit defined as deposits payable on demand through cheque or otherwise and serves as a medium of exchange. All current deposit are obviously demand deposit.
Time deposit are all other deposits which are not payable on demand and on which cheques cannot be drawn and have fixed term maturity. Fixed deposits are time deposit.
Financial Intermediation- The process performed by banks taking funds at lower interest rate from depositor and then lending them out to a borrower at relatively higher interest rate.
Financial Intermediaries a wide variety of financial institutions or firms, more popularly called FI known Bank and Non-bank financial intermediaries (NBFIs). FIs mediate or stand between ultimate lenders and ultimate borrowers or between those with budget surpluses and those who wish to run budget deficits.
