Definitions and Types of Deposits in Banking

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As with profit-oriented business entities, banks also try to offer various products/services to the public as attractive as possible, among others in the form of various deposits.

The various standard definitions and various types of banking deposits are as follows:

Explanation Of Deposito

Definition of deposits according to Simorangkir argues that a Deposit is any amount of money that can be deposited by a debtor or lessee as an advance or down payment, whether it has been credited or will be credited to him in the name of a deposit or down payment, whether the amount will have been paid to the creditor or owner or someone else, or will have been paid through money payments or transfers or the delivery of goods or other means.

According to Law No. 10/1998, Article 1 paragraph 7 (1998: 7) which gives the meaning of deposits is as follows: Deposits are deposits whose withdrawals can only be made at a certain time based on the agreement of the depositing customer with the bank.

Meanwhile, according to Thomas Suyatno, the definition of deposits is Deposits of third parties in banks whose withdrawals can only be done within a certain time according to the agreement of a third party with the bank concerned.

TYPES OF DEPOSITO

In general, deposits can be classified according to the period to maturity. Some of the classifications of deposits are as follows:

A. Demand Deposit
Demand deposits (bank statements) at banks in the United States can be classified into five types, namely:
Interbank deposits (interbank deposits), namely deposits deposited, both with the depositing bank and for those who receive it.

United States government deposits for commercial banks are referred to by banks as tax and loan accounts (T & accounts) because taxation and lending processes arise.

State and regional deposits, deposits of various kinds of political elements including districts, schools and so on.

Government deposits held by individual firms and companies in the form of legal entities.

B. Time Deposits

Unlike current account deposits which are generally homogeneous in kind, time deposits and savings deposits are offered in various forms.

However, a common and common feature of these deposits is the bank's obligation to pay interest rates because the customer requires a certain period before the deposits are redeemed.

There are three basic forms of time deposits and savings deposits, namely:

1. Savings deposits and cash books (pas-book)

It is the best-known type of deposit among various types of deposit accounts and there is no specific maturity for these deposits, and in practice, the funds deposited in these accounts can be added and withdrawn at a time appropriate for the deposit.

Typical savings deposits, i.e. pay lower interest rates than time deposits.

2. Certificates of time deposits

It is proof that a person or a company in the form of a legal entity has deposited a certain amount of money in a bank.

The basic features of this deposit account are that the funds deposited cannot be withdrawn by the owner for at least 30 days (or more) and that certificates are sold by banks in fixed denominations, for example, $ 1000, $ 5000 and $ 100,000.

On the other hand, some define a certificate of deposit is a time deposit for a carrier or performance with the permission of the monetary authority and issued by the bank as proof of deposits that can be traded or transferred to third parties.

In this connection, interest is paid upfront in the sense of deducting from the nominal at the time the certificate of deposit was purchased.

For example, a nominal time deposit certificate of $ 1,000,000 is bought in cash with $ 940,000, after the certificate is due, a refund of $ 1,000,000 will be received.

Certificates of deposit can be traded for less than 1 month, 3 months, 6 months, 12 months.

The interest given by each bank that issues a certificate differs from one another. This difference depends on the ability and needs of the bank concerned for the funds desired to be withdrawn from the public.

From the explanation of the certificate of deposit above can be stated as follows:

Bank deposit certificates are proof of receipt of a sum of money issued by a bank.
Bound to a certain time.
Provided benefits that are usually paid upfront when buying certificates of deposit.
The bank that issues the certificate of deposit is responsible for all of its assets.
Issued for show.
It can be traded or transferred only by submission.
Issuance of certificates of deposit following the laws in force in the country concerned.
Tax-free of interest, dividends, and royalties.
It can be used as collateral for credit.
Becomes expired after 30 years from the period.

Also known as the term deposit certificate which is negotiated and the certificate of deposit that is not negotiated.

The basic difference between the two is that negotiable certificates of deposit can be sold before their maturity by the original (prime) buyer of deposits, whereas on non-negotiable certificates of deposit, only genuine buyers are the only people who can cash in.

3. Time deposits, open accounts

The word open in the term open account means that depositors can develop the number of goods on deposits as they wish. In the sense that the amount is not determined by the Bank.

But the development is following the principle of deposits, can not be withdrawn prematurely. This time deposit is issued in the name.

As stated above, these time deposits are issued in various forms by banks. Some other types include:

Deposit on Call, which is a deposit that is in the bank as long as the depositor needs it, is different from other time deposits if a person wants to withdraw his savings, he must first notify the bank, following the agreement between the depositor and the bank. Overseas deposits on call are preferred by many customers.

Automatic Roll-Over Deposit. If the deposits are past due, but the principal loan has not been cashed, it means that the depositors' idle money is without interest, but this is not the case with automatic rollover deposits that are automatically calculated with interest as well as deposits that are overdue and the depositor is delayed withdrawing their deposit money that has run out time.

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