√ Definition of Deposits, Functions, Characteristics, Types & Benefits
Definition of Deposits, Functions, Characteristics, Types & Benefits – In this discussion, we will explain about deposits. Which includes the definition of deposits, deposit functions, deposit characteristics, types of deposits, deposit advantages with complete and easy-to-understand discussion. For more details, please see the review below carefully.
Definition of Deposits, Functions, Characteristics, Types & Benefits
Let's discuss the definition of deposits first carefully.
Definition of Deposits
Deposits are a bank product similar to savings services offered to the public. Deposit is a money deposit product in a bank with a deposit system where withdrawals can only be made after a certain time has passed. Funds in deposits are guaranteed by the government through the Deposit Insurance Agency which has certain conditions.
Often deposits have a certain time in which the money in it cannot be withdrawn by the customer. Deposits can only be disbursed according to their maturity date, deposits usually have a maturity of 1, 3, 6 or 12 months. If the deposit is disbursed before the maturity date, a penalty will be imposed according to the relevant bank policy.
Deposits can be extended automatically using the Automatic Roll Over (ARO) system. Deposits can be renewed automatically after maturity until the owner withdraws the deposit.
Definition of Deposits According to Experts
The following is the definition of deposits according to experts.
1. Cashmere (2012)
The definition of deposits, according to Cashmere, is the third type issued by a bank.
2. Habib Nazir and Muhammad Hassanudin (2004)
The definition of deposits or time deposits according to Habib Nazir and Muhammad Hassanudi are third party deposits at the bank which can only be withdrawn according to the time period determined according to the agreement by third parties and parties bank.
3. Banking Law No. 10 of 1998 article 1
Definition of deposits according to Banking Law No. 10 of 1998 article 1 is a deposit that withdrawals can only be made at certain times based on the depository customer agreement with Good.
4. Lukman Dendawijaya
The definition of a deposit according to Lukman Dendawijaya is a deposit from a third party to a bank with a withdrawal system can only be done within a certain period of time based on an agreement between a third party and a bank concerned.
Deposit Function
The function of the deposit has two functions, namely:
Internal Function
The internal function is a strategic function in assisting the operational activities of the bank within the specific scope of the bank itself. This type of deposit is one of the main sources of bank capital which is easy to use because it has a time limit.
This deposit for a bank functions to fulfill the bank's capital needs, and on the other hand it also helps maintain the bank's liquidity position. The need for working capital of a bank must always be met at all times in connection with one of the functions the main one is as an institution that distributes funds from the public in the form of credit or as a giving institution credit.
External Function
This external function is related to functions that are outside the bank company, namely as an institution whose movement is in the service sector that facilitates the flow of money payments.
In an effort to achieve national development goals, it is hoped that banking institutions can play a role in encouraging increased economic growth and stability towards increasing the development of the national or international economy which always moves fast and is also followed by increasing challenges wide.
This deposit is a way of raising funds in large numbers, thus the government really expects initiative from the community to invest these extra funds through deposits in order to support development which always requires very large funds big.
Deposit Characteristics
The characteristics or characteristics of deposits are as follows:
-
Minimum Deposit
Minial deposit deposits are different from opening a savings account, which is opened with a small amount. Money placed to open a deposit requires a larger amount than savings. The amount of deposit opening at each bank is not the same. -
Time period
Placement of deposits requires funds to be deposited within a certain period of time which can be determined or chosen by the customer, namely 1, 3, 6 or 12 months. -
If You Need Money And Want To Disburse Deposit Funds
The existence of a time period for placing deposits means that deposits cannot be taken in cash at any time but can only be made at maturity. -
If Forced to Disburse Deposits
If one day the customer has to withdraw the deposit, the bank will give a penalty fee for each withdrawal of deposit funds that are not yet due. The amount of the fine varies or depends on the policies of each bank. -
Deposit Interest
The deposit interest earned is often higher than the interest on savings, so that the funds you have will automatically grow faster. These fast growing funds can be used as a vehicle for investment rather than being used for savings. -
Low Risk
In fact, high interest rates do not make deposits a high-risk deposit, but deposits are included in a low-risk deposit product. The reason is that deposits are still the same as savings products.
Types of Deposits
There are three types of deposits, namely Time Deposits, Certificates of Deposit and On-Call Deposits.
Time deposit
Time deposits are a type of time savings where withdrawals can only be made at a certain time. Time deposits can be issued in the name of an individual or an institution. The money saved, can only be taken when it is due by the party stated on the bill. This type of deposit is a type of deposit that is often known to the public.
Deposit Certificate
This is a deposit issued upon in the form of a certificate. The certificate does not point to the name of a particular person or institution, so it can be transferred and is very likely to be traded.
Deposit On Call
Deposits on call are term savings with a very short storage time, a minimum of 7 days and a maximum of less than 1 month. This deposit is only for large amounts.
Deposit Advantages
The advantages of deposits are as follows:
- Deposit interest rates are higher than other savings products
- Relatively safe because it is guaranteed by the Deposit Insurance Corporation (LPS) to have low risk
- Ease of access
- Can be used as collateral for credit
- The requirements for obtaining a deposit are very easy.
Thus has been explained about Definition of Deposits, Functions, Characteristics, Types & Benefits, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read other articles.
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