Deposits and Its Importance in Banks

Significant source of a banks overall liabilities. Influences on the magnitude of loan and investment activities. Trying to collect and mix different types of deposits for reducing costs.

Objectives of Bank Deposit

Collecting scattered savings of masses.

Ensuring productive investment. Collection of bank fund. Creating scope for loan. Maintaining social responsibility.

Factors for Collecting Deposits : Internal -1

Competitive interest rate. Suitable location and physical features of bank office. Use of modern and electronic technology. Skilled bank executives.

Factors for Collecting Deposits : Internal -2

Innovating newer services. Inclusion of respectable person in the board of directors. Attractive loan and investment schemes policy.

Factors for Collecting Deposits : External

Financial inclusion State of the national economy. World economy Role of government Demography .

Managing Liability
Control over the volume, mix, cost of liabilities Effective co-ordination between assets and liabilities. Reducing costs Minimizing volatility/risks Considering upcoming movement of funds.

Insurance policy

Insurance policy is taken to avoid risk for the deposited amount. Risk is involved with every business. in banking business, for the deposited amount. The intention is if banks will fail or bankrupt, most of the small depositors will be able to get their money back under deposit insurance scheme.

Borrowing

Sources 1.Capital 2. Deposit Current

Duration Unlimited

Sources of Funds
Relative advantage *Unlimited maturity *Act as loss absorber

Cost of funds Dividend

Very short

*Provide immediateOnly account liquidity maintaining cost. *No interest expenses Interest paid at minimum level.

Savings

Higher than*Higher maturity current account*Low liquidity risk but lower than term deposit.

Term deposit

Longest among all*Long-term maturity Interest paid at the deposit*Long-term investmentrelatively higher accounts. facility rate.

3. Borrowed Ranging from 1*Tax deductible Interest paid at fund day to 20 years *Provide both immediatedifferent rates based and long term liquidity on maturity.

Structuring New Deposit Products

Name of Products Target Group Features: Price/Interest Rate Variation of Interest Rates Linked with Insurance Deposit Insurance Extra Service Flexibility Non-Monetary Services Special Award

Probable Deposit Products -1

Name of Deposit Products Target Group Special Features

Current Deposits / Saving / Fixed Deposits/ Special Deposit Products/Deposit Pension Scheme, etc.

Individuals, Businessmen, Professionals, Minors, Trusts, ny branch banking. Clubs, Societies, Corporates, Educational Institutions, and ariation interest payments Voluntary Organization ,Charitable institutions, (interest on daily balance and religious organizations, NGOs, employees unions, voluntary and sport organizations. pays out interest monthly). acking by insurance cover. einvestment of interest

Institutional

Corporate, Voluntary

Probable Deposit Products -2

Name of Deposit Products Rural People Saving Deposits Pensioners /Senior citizen savings deposit Deposit Products for NRB / Bangladeshi In Foreign Countries Target Group Special Features

Rural Agrarian and professional people Pensioners /Senior citizens

Passbook saving account Festival saving account Variation interest payments Total waiver of all Fees / Charges. Additional Interest. Total Personalized services at all branches. Allotment of Lockers at concessional rate Tailor made products Rapid fund transfer Investment services Value added services Information based internet banking Help to submit tax return

NRB Bangladeshi Live in Outside.

Probable Liability Products -3

Types Bond 1. Coupon and Zero Coupon Bond

Inflationary protection Reasonably high rate of interest Partial Convertible in to Share Inflationary protection Based on Sharia Principles Partial Convertible in to Share

2. Sukuk Bond