THE DEPOSIT FUNCTION

Deposits are represented by money or representative money entrusted to banks for

safekeeping. To bank, however, deposits are money borrowed and makes the bank a debtor.
Another definition is contained in Section 58 of the New Central Bank Law of 2000 (R.A. 7653)
which states that the term “demand deposits” means “all those liabilities of the Bangko Sentral
and of other banks which are denominated in Philippine Currency and are subject to payment
in legal tender upon demand by the presentation of checks
Time Deposits are those which can only be withdrawn after a certain period of time or at a
designated maturity. The following are the types:
Time Certificate of Deposit. This is evidenced by a certificate to the effect that the
deposit can only be withdrawn at maturity or after due notice of withdrawal, usually 30 days,
and upon presentation and surrender of the instrument.
Special Time Deposits. This type is evidenced by a written contract to the effect that
either all nor part may be withdrawn before the maturity date or at least upon due notice of at
least 30 days.
Savings Deposit. Savings deposit are evidenced by a passbook and can be withdrawn
only upon due notice of at least 30 days or depending upon the individual bank’s policy.
Direct or Primary Deposits are those which were made “over the counter” when the depositor
himself brings his/her money and/or checks and other near cash items to the bank and hands
them to the teller.
Derivative Deposits on the other hand are created from the proceeds of loans. In this instance,
the borrower inters into an arrangement that the bank places the loan proceeds under a
current account from which he can draw checks eventually.
Kinds of Depositors: Individuals, businesses, and government and its instrumentalities and
political subdivisions.
Motives of Depositors
1. Safety
2. Convenience
3. Earnings or income
4. Accommodation
Significance of Deposits to a Bank
When a bank can attract depositors at all levels, it will build up available loanable funds
on which it could earn interest. If the bank loans increase because of more deposits, then the
stockholders will likewise be assured of safe returns on their investment. So, increase in the
earnings or income of stockholders by way of dividends from current profit will also encourage
them to increase their investments. Increased investment will accrue to the benefit of the
customers and the general public through improved banking facilities and services. The bank
management will see to it that it does not only retain the good depositors but also attract new
ones.
The Receiving Teller
The receiving teller receives and verifies deposit items and deposit slip, gives proper
receipt for the deposit made, distributes the items deposited, and finally checks and proves the
day’s work. The teller is responsible for:
1. Errors in counting the money deposited. In order to be sure of his count, the receiving
teller does it twice and sees to it that the amount on the deposit ticket tallies with the
actual count of the currency.
2. Presence of mutilated or counterfeit money. By experience, a teller can say which is
counterfeit money or not, simply the “feel” of the paper currency or the tingling of the
metal money.
3. Postdated checks. Checks which are dated after the date deposit are known as post-
dated checks. The teller should not receive such checks for deposit he cannot be sure
whether they shall be honored.
4. Stale checks. Stale checks are those which are dated very much earlier, say about a
month, from the date of deposit.
5. Material Alterations. Material alterations may be on the date, the amount, and the
payee.
6. Wrongly endorsed instruments. There are proper ways of making endorsements so that
no questions as to liability may arise.
7. Carelessness in adding deposit slips. This refers to the proof sheets rather than the
individual deposit slips. It may be that the teller is not very careful in adding so that the
amount of deposits may not tally with the actual currency or credit instrument.
8. Carelessness in designating the account to be credited. It may happen that there are
several depositors with identical names.
Deposit Slips (Tickets) and Deposit Items
1. Deposit Slips. These are forms filled in by the depositor when he makes a deposit.
2. Deposit Items. Deposit items comprise of cash and credit instruments or other items
and are distributed as follows:
a. The currency composed of notes and coins will be sent to the cashier.
b. Checks drawn on other banks are sent to the distributing section or transit
department for proper disposal.
c. Checks drawn on the bank where the teller is employed are sent to the bookkeeper.
d. Drafts and other items to be acted upon are sent to the corresponding departments.
The Paying Teller
The paying teller is sometimes alluded to as the first teller. He is the one who pays out
cash in exchange for checks and other instruments necessitating encashment. In order that he
may be relieved of the responsibilities attached to his duties, he examines the items exchanged
for cash in relation to:
a. The date of the check
b. Wrong endorsement
c. Material Alteration
d. Forgery
e. Crossed Checks
f. Stop-payment order
g. Insufficient funds
h. Erroneous payment
i. Supply of cash
Guide Questions:
1. How important is the deposit function of a bank?
2. What are the responsibilities of a receiving and paying teller?
3. Can you differentiate a receiving and paying teller?
4. What are deposits?
5. How important are deposits in a bank?