The deposit is a credit for the party (individual or organization) who placed it, and it may be taken back (withdrawn) in accordance with the terms agreed at time of deposit, transferred to some other party, or used for a purchase at a later date.
Deposits are usually the main source of funding for banks.
A demand deposit is a deposit that can be withdrawn or otherwise debited on short notice. Transaction accounts
(known as "checking" or "current" accounts depending on the country) can be used to pay other parties, while savings accounts
are typically payable only to the depositor or another bank account, and may have limits on the frequency of withdrawal.
Deposits which are kept for any specific time period are called time deposit or often as term deposit.
- Term deposit (or time deposit), bear a fixed time and fixed interest rate
- Overnight lending occurs usually from noon to noon, using a special rate to give as security or in part payment.
Normally any money deposited to a bank becomes property of the bank, for which it is liable to return the same monetary value, but not the same money. This the foundation of fractional-reserve banking
, since the bank can lend out the money that it owns while owing an obligation to the depositor. A special deposit
is one made under an agreement to hold the deposit separately from the bank's assets, so that the same assets can be returned. Items placed in a safe deposit box
are examples of special deposits.
- ^ term deposit, Investopedia, accessed 2012-05-14.
- ^ , Deposit your trust in Fixed Deposits, siliconindia.com
Last edited on 27 March 2021, at 04:56
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