Definition and type of deposits

Definition of Deposits

Deposits are bank deposit products whose deposits or withdrawals can only be made at certain times. Unlike savings that can be withdrawn at any time, deposits have a specified time period that has been determined.

The available time period usually starts from 1 month, 3 months, 6 months, and so on, these deposits can only be disbursed when the time period expires, if you withdraw before the period usually will be subject to fines ranging from 0.5 % to 3 % of total deposits.

Deposits have a higher interest rate compared to savings interest. This is because the invested money will be locked for a certain period of time, so the bank will promise high interest compared to the savings account.

Types of Deposits

Currently there are four types of deposits known in Indonesia, namely time deposits, certificates of deposit, and the last is deposits on call. Here's the full review:

1. Time Deposits

Time deposits are savings products that have a term, withdrawals can only be made at a certain time according to the date promised between the depositor and the bank. The term of the deposit usually varies from 1 month, 3 months, 6 months, 12 months to 24 months.

Time deposits are issued in the name of both individuals and institutions. Withdrawals of time deposits can be made in cash or overbooking and each deposit interest is taxed from the amount of interest received.

2. Automatic Roll Over Deposit

Automatic roll over deposits are another form of time deposits, where public deposits (in the form of deposits) that have matured according to the agreed period of time, but the depositors have not taken it, then an extension of time will automatically be carried out without waiting for approval from the depositor.

3. Certificate of Deposits

Deposit certificates have similarities with time deposits in the application of the applicable time period. What distinguishes it is the deposit certificate issuing a certificate of information from the deposit itself and can be traded or transferred to another party.

the other difference is in terms of disbursing interest, certification of deposits can be made in advance.

4. On Call Deposits

Deposits On Call (DOC) is a deposit that is devoted to deposits in large quantities, at each bank of different sizes depending on the provisions of each bank concerned, at least 50 million, 70 million, or even 100 million.

Unlike other deposits, deposits on call have a short period of at least 7 days and a maximum of less than 1 month. The advantage is in determining the amount of interest, you do not have to follow the provisions of the bank, interest is determined by negotiations between the depositor and the bank concerned.

The amount of interest on deposits on call is generally calculated per month and to determine the amount of interest imposed, negotiations are conducted between the customer and the Bank. Disbursement of interest can be done by notifying the bank in advance of three days before, that the person concerned will withdraw the deposit.