Opening and Operation of Different types of Accounts: CD, SB, FDR, SNTD, Recurring, NFCD, RFCD, Convertible &

Non-Convertible and other Deposit A/Cs.

Presented bySk. Nazibul Islam Faculty Member, BIBM

Bank Deposits
Mostly the banks business is funded through deposits from retail and corporate customers as well as call money from local banks. Other sources of banks fund are paid-up capital, reserve & undistributed profit, Borrowings. The management of each bank is aware of the situation and it has already started diversifying sources of funds to reduce the dependency on funds from other banks.

 Every bank has already introduced several deposit scheme to attract deposits from various customers group. Many a banks are opening branches all across the country to reduce dependence on urban deposits. Meanwhile, a number of banks has built up its alternative channel infrastructure to offer the full suite of ATMs, POS, Internet Banking, Call center, SMS Banking for its customers.

Deposits: Current liabilities of a bank in the form of Current A/Cs , Savings A/Cs, Fixed Deposit A/Cs, Money at call, Short notice time deposits, Recurring Deposits, NFCD, RFCD etc.

Types of Deposit
1. Demand Deposit: a) Current Deposit b) A small portion of Saving Deposit An amount deposited with a bank which may be withdrawn on demand, i.e. without having to give any notice. Demand Deposits like deposits in current account and savings account are repayable on demand, subject to the terms and conditions of the deposits.

2. Time/Term Deposit a) Fixed Deposits b) Short term deposits c) Recurring Deposits d) Large portion of Saving Deposits e) NFCD f) RFCD etc.

 Time deposits like Fixed deposits or recurring deposits are repayable after an agreed period. The deposits which are held by bank and financial institutions for a fixed period plus a certain percentage of savings deposit which are withdrawable by notice only. The period of the deposit and rate of interest applicable to the deposit are matters to be agreed between the depositor and the bank under the terms of the deposit.

Current Deposit Account

A Current account is generally opened by business people for their convenience. Big customers as Individual business man, Group of persons, Joint Stock Companies, Public authorities , Non-trading Companies, Trustees, Banks, Corporations etc. generally open this account. Money can be deposited and withdrawn at any time without restriction. Money can be withdrawn only by means of cheques.

In fact, unlimited cheque facilities are its special features. Usually, a banker does not allow any interest on this deposit account. Even then people come forward to deposit money on current account because of two important privileges, which they can enjoy in a current account, namely1. Overdraft facility in some cases and 2. Other facilities like collection of cheques, transfer of money and general utility services.

 For this reason account holders do not mind a banker charging some commission for services rendered and incidental charges for maintaining the account. The bank charges interest on overdraft on a day to day basis. Current account holders are to keep a minimum balance in the account failing which they will have to pay bank incidental charges at the time of half and annual closing of accounts.

 Usually the bank sends a statement of account to the customers every month. As these deposits are repayable on demand, the banker required to keep a large cash reserve. This may be one of the reasons why a banker does not pay any interest on current deposit accounts.

Savings Deposit Account

This deposit is intended primarily for small scale savers. The main objective of this deposit account is to encourage savings habit among people. The number of withdrawals is generally restricted. Rules in this regard may vary from bank to bank. Heavy withdrawals are permitted only against prior notice. Generally withdrawal without notice is allowed twice in a week upto 25% of the balance in the account subject to maximum of Tk.10,000/-.

 Withdrawal beyond the maximum limit will require 7 days prior notice. Failure to which no interest is allowed for the month in which withdrawals occurs. A minimum balance is required to be maintained all times. Cheques, dividend warrants etc. allowed for collection. Interest generally allowed on this deposit account subject to fulfillment of the terms and conditions. Interest is payable on collected funds also.

 Interest is allowed at the rate specified by the bank on minimum monthly balances and on monthly product basis. Cheque book is issued to the account holder. Appointment of nominee is compulsory. Interest is credited to the account every six months (Generally in June and December).

Fixed deposits
The term Fixed Deposit means deposits repayable after the expiry of a certain period, which ordinarily varies from 3 months to 1 year and above. They are also known as time liabilities or term deposits. The fixing of the period enables the banker -to invest money -employ it in his business without having to keep a reserve. These deposit are occupied against acknowledgement receipt which is popularly known as FDR. Longer the period, the higher the rate of interest.

Recurring Deposits

Deposit pension Scheme/Monthly Savings Scheme/Contributory Savings Scheme etc. are opened by the fixed income/salaried people intend to save money with a bank monthly so that they can get back their savings and interest/profit thereon after a few years. One can take benefit at a time on maturity or can take monthly pension amount.

 Depositors save and deposit regularly every month a fixed installment so that they are assured of the sizeable amount at a later period. This enable the depositors to meet contingent expenses. In such accounts, only deposits can be made and no withdrawal is allowed until the expiry period as per terms of contract. A recurring deposit holder can get a loan on the security of a recurring deposit up to a certain percentage.

 These accounts are transferable from one branch to another of the same bank as required. A recurring deposit holder is given the pass book/statement for verification. The rate of interest is almost similar to the rate offered on fixed deposit but it is compounded. Monthly benefit deposit scheme/Monthly income scheme, Education savings scheme, Hajj deposit scheme etc. are other special recurring deposit scheme.

Short Term Deposit

Generally, these accounts are opened who wants liquidity and some return simultaneously on their deposits. Withdrawable by short notice. No interest is payable if withdrawal is made without prior notice. Interest is payable on daily product basis. Interest is lower. Suitable for corporations. Cheque books issued (at present).

 Interest is payable- at the time of withdrawal of entire amount - at the time of annual and half-yearly closing - at the time of closing the account - at the time of transferring the account.

Foreign currency accounts

As per existing guidelines of Bangladesh bank the ADs may open following types of foreign currency accounts: 1. Private Foreign Currency Accounts. 2. Non-Resident Foreign Currency Deposit (NFCD) Accounts. 3. Resident Foreign Currency Deposit (RFCD) Accounts.

Private foreign currency accounts:

Private foreign currency accounts may be opened in the names ofi) Bangladesh Nationals residing abroad. ii) Foreign nationals residing abroad or in Bangladesh. iii) Foreign firms registered abroad and operating in Bangladesh or abroad. iv) Foreign missions and their expatriate employees.

v) Bangladeshi nationals working with the foreign / international organizations operating in Bangladesh provided their salary is paid in foreign currency.
vi) Diplomatic Bonded Warehouse (Duty free shops) licensed by the Custom Authorities.

 Credits to such foreign currency accounts may be made against inward remittance of foreign exchange in any form or transfer from another foreign currency account or non-resident Taka accounts of banks abroad. Payments may be made freely abroad from these foreign currency accounts to the extent of balances lying therein. Local disbursements may also be made freely in Taka from such foreign currency accounts.

Opening of FC Account by Bangladeshi nationals residing abroad (wage earners):

Account can be opened without initial deposit. Remains operative even if operation not made for a particular time. Both the account holder and the nominee can operate the account. Wage earners can remit fund from abroad. First transaction normally takes place when remittance deposited. Wage earners may also deposit currency notes, travelers cheques, drafts brought into Bangladesh. Entire remittance from abroad is free from income tax.

Documents required:

Account opening form duly filled in and signed. Photographs of the account holder. Photocopy of the employment contract. Photocopy of passport of the account holder (first 7 pages) and visa. Photographs of the nominee duly attested by the account holder. Letter of authority (for nominee). Specimen signature card, which is used both for the account holder and the nominee. Any other pertinent information / documents if required such as transaction profile.

Non-Resident Foreign Currency Deposit (NFCD) Account:

All non-resident Bangladesh nationals and persons of Bangladesh origin including those having dual nationality and ordinarily residing abroad, may maintain interest bearing time deposit accounts namely Non- Resident Foreign Currency Deposit (NFCD) Account with the authorized dealers.

 NFCD Account may be opened by Bangladesh nationals serving with Embassies/High Commissions of Bangladesh in foreign countries and the officer/staff of the government/semigovernment / autonomous / nationalized banks posted abroad or deputed with international and regional agencies like IMF, World Bank, ADB etc. during their assignment abroad may open such accounts.

 NFCD Accounts can also be opened with funds transferred from existing foreign currency accounts maintained by the wage earners with the authorized dealers in Bangladesh. NFCD Accounts are in the nature of term deposits maturing after one month, three months, six months and one year.

These accounts may be maintained in US Dollar, Pound Sterling, Deutsche Mark, Japanese Yen and Euro with minimum amount of USD 1000 or Pound Sterling 500 or equivalent. Accounts may be opened against remittances of other convertible currencies after conversion of those into above currencies. Application in prescribed form may be sent by the eligible Bangladesh nationals along with a set of specimen signatures of the opener duly verified by Bangladesh mission abroad or authorized dealers foreign correspondent.

- These accounts may be maintained as long as the account holders desire. Eligible persons are also allowed to open such accounts within six months of their return to Bangladesh. - The account holder can freely repatriate the balance and the interest accrued thereon, in foreign exchange to the country of his residence or anywhere in the world.

 The ADs in Bangladesh may at their option sell foreign exchange deposits (in US dollars only) to the Bangladesh Bank without any lower limit at the Bangladesh banks buying rate and repurchase the principal and interest at the Bangladesh bank selling rate prevailing on the day of repurchase. The ADs may also invest abroad the amounts deposited with them and pay interest to the depositors out of earnings from such investments.

Resident Foreign Currency Accounts:

Persons ordinarily resident in Bangladesh may open and maintain Resident Foreign Currency Deposit (RFCD) Accounts with foreign exchange brought in at the time of their return from travel abroad. These accounts may be opened by any amount of foreign exchange brought in with declaration to customs authorities in form FMJ and up to USD 5000 brought in without any declaration.

RFCD Accounts may be opened in US Dollar, Pound Sterling, Deutsche Mark and Japanese Yen and may be maintained as long as the account holder desires. While depositing foreign exchange for credit to such account the depositor shall furnish written declaration, mentioning the date of return from abroad and the amount of foreign exchange brought in, that the foreign exchange (i) is not a receipt against export of goods or services from Bangladesh, (ii) is not a commission due from abroad arising from business deal in Bangladesh.

 The ADs will credit the foreign exchange presented by the depositor to the RFCD account only after examining the passport of the depositor and the FMJ form (if the amount exceed the equivalent of USD 5000) and after being satisfied about the correctness of the declaration.

 Interest in foreign exchange shall be payable on balances on such accounts if the deposits are for a term of not less than one month and the balance is not less than SD 1000 or pound Sterling 500 or equivalent. The rate of interest shall be onequarter percent less than the rate at which interest is paid on balances of banks in their foreign currency clearing accounts maintained with the Bangladesh Bank.

Convertible and Non-Convertible Taka Accounts

ADs may open convertible Taka accounts in the names of foreign organizations/nationals viz., diplomatic missions, UN organizations, non-profit international bodies, foreign contractors and consultants engaged for specific projects under the Govt. semi Govt. agencies and the expatriate employees of such missions / organizations who are resident in Bangladesh.

 These accounts may be credited with foreign currency brought in or remitted from abroad or transferred from a foreign currency account or another convertible Taka account. For transfer from another convertible Taka account, the taka amount from the transferors account would be converted into foreign currency for transfer and credit to the recipient account by conversion into Taka.

 No money emanating from a business originating in Bangladesh and otherwise repatriable to Bangladesh can be credited to these accounts. A convertible Taka account may be debited for payments in foreign currency abroad, for local expenses, for transfers to foreign currency accounts or other convertible Taka accounts or for credits to a non-convertible Taka account.

 Foreign organizations/their expatriate personnel may maintain non-convertible Taka accounts with Ads without prior BB approval. These accounts may be credited with funds from convertible Taka accounts, with remittances from abroad, and with Taka received from authorized sources including interests from STD accounts. These accounts may freely be debited for local expenses. No remittance abroad or transfer to an foreign currency account/Convertible Taka account may be made by debit to a non-convertible Taka account.

Thank You