Chapter 2

Banking Operations Chapter 2
CHAPTER 2
DEPOSITS IN BANKS
PhD. Nguyen Thi Thu Trang
Main content
 Deposit mobilization
1. Concepts and meanings
2. Types of Deposits
3. Factors affecting the source of deposits
4. Methods of deposit mobilization
 Payment Service
1. Bank account
2. Means of payment via bank
3. Organize payments between banks
References
 Decision 1160/2004/QD-NHNN “Regulations on
savings deposits” (Decision 47/2006/QD-NHNN
amended and supplemented)
 Decision 30/2006/QD- NHNN “Regulations on
supply and use of checks”Decree 89/1999/ND-CP
(Decree 109/2005/ND-CP amending and
supplementing “deposit insurance”)
 Decision 20/2007/QD-NHNN “Regulations on
issuance, payment, use and provision of support
services for bank card operations”
 Law on Credit Institutions 2010
PhD. Nguyen Thi Thu Trang_HUB 1

DEPOSITS
“Deposit is the amount of money deposited by
an organization or individual at a credit
institution or other organizations having
banking activities in the form of demand
deposits, time deposits, savings deposits and
other forms of deposit. other consciousness.
Deposits are interest-bearing or non-interest-
bearing and must be returned to the payer.
(Article 20 of the Law on Credit Institutions)
The 4th Quarter 2009's Financial Statements
Accepting deposits
 Demand deposit
 Term Deposit
 Saved money
 Issuance of certificate of deposit
 Promissory notes, bills and other forms
 According to the principle of full repayment of
principal and interest to the depositor

Significance
For the bank
 Resources to operate even if not directly profitable
 Measuring customer trust in the bank
For customers
 Saving and profitable channel, creating
opportunities to increase consumption in the future
 Helping customers increase their chances of
accessing banking services (payment, credit, ...)
Types of Deposits
Based on term
o Demand deposit (payment deposit, check
account deposit)
o Term Deposit
Demand deposit
 It is a type of deposit that its owner can
withdraw and use at any time without
having to notify in advance about the term
and the amount of money to be withdrawn.
 Customers deposit this kind of money not
for profit.

Term deposit
 A type of deposit whose owner can only
withdraw and enjoy full interest according
to a pre-specified time limit.
 As a stable source of credit capital,
commercial banks can actively use it to
lend.
Types of Deposits
According to the sender
 Personal deposits
 Institutional deposits
According to sending range

 Domestic deposits are deposits of domestic
individuals and legal entities deposited in the bank.
 Overseas deposits are deposits of foreign individuals
and legal entities deposited in Vietnamese banks.
Types of Deposits
Based on currency
 Deposit in local currency
 Deposits in foreign currencies and gold
=>exchange rate fluctuations

Types of Deposits
Based on the nature of the transaction
 Transaction deposit
 Non-transactional deposits
 Other non-transactional deposits
Transaction deposit
Transaction deposit (Demand deposit): is a
form of capital mobilization of commercial
banks by opening accounts called payment
deposit accounts for customers. This account
is open to customers, individuals or
organizations who need to pay via bank.
Transaction deposit
 In essence: The money is still in the payment
process => money circulation part => Central
bank acts to control inflation
 Scale of capital: there is a certain stability
 Means of use: checks, payment orders, etc.
 User account: checking account or current
account

Transaction deposit
 Legally, when depositing money in a current
account, it represents an implicit contract
between the customer and the bank.
 From 1994 and earlier, payment accounts were
only opened for businesses, state agencies and
social organizations. Since 1994, the objects
that can send money for payment have been
extended to individuals.
Trần lãi suất huy động Vietinbank 13/6/2016 (%/năm)

Kỳ hạn VND USD EUR
Cá nhân Tổ chức Cá nhân Tổ chức Cá nhân Tổ chức
Không kỳ hạn 0,50 0,80 0,00 0,00 0,10 0,10
Dưới 1 tháng 0,50 1,00 0,00 0,00
Từ 1 tháng đến
4,80 4,50 0,00 0,00 0,25 0,25
dưới 2 tháng
5,00 4,80 0,00 0,00 0,25 0,25
dưới 3 tháng
5,50 5,00 0,00 0,00 0,25 0,25
dưới 4 tháng
5,50 5,00 0,00 0,00 0,25 0,25
dưới 5 tháng
5,50 5,00 0,00 0,00 0,25 0,25
dưới 6 tháng
5,80 5,50 0,00 0,00 0,25 0,25
dưới 7 tháng
5,80 5,50 0,00 0,00 0,25 0,25
dưới 8 tháng
5,80 5,50 0,00 0,00 0,25 0,25
dưới 9 tháng
5,80 5,50 0,00 0,00 0,25 0,25
dưới 10 tháng
5,80 5,50 0,00 0,00 0,25 0,25
dưới 11 tháng
5,80 5,50 0,00 0,00 0,25 0,25
dưới 12 tháng
12 tháng 6,80 6,50 0,00 0,00 0,50 0,25
Trên 12 tháng đến
6,80 6,50 0,00 0,00 0,50 0,25
18 tháng
Trên 18 tháng đến
6,80 6,50 0,00 0,00 0,50 0,25
dưới 24 tháng
VCB dành cho

Kỳ hạn VND EUR USD
KH cá nhân
Tiết kiệm
Không kỳ hạn 0.30 % 0.01 % 0.00 %
7 ngày 1.00 % 0.00 %
14 ngày 1.00 % 0.00 %
1 tháng 4.50 % 0.30 % 0.00 %
2 tháng 4.80 % 0.30 % 0.00 %
3 tháng 5.00 % 0.40 % 0.00 %
6 tháng 5.40 % 0.50 % 0.00 %
9 tháng 5.40 % 0.50 % 0.00 %
12 tháng 6.50 % 0.75 % 0.00 %
24 tháng 6.50 % 0.85 % 0.00 %
36 tháng 6.50 % 0.85 % 0.00 %
48 tháng 6.50 % 0.85 % 0.00 %
60 tháng 6.50 % 0.85 % 0.00 %
Tiền gửi có kỳ hạn
1 tháng 4.50 % 0.30 % 0.00 %
2 tháng 4.80 % 0.30 % 0.00 %

Non-transactional deposits
Non-transactional deposits (Saving deposit) :
means an individual's money deposited into a
savings account, confirmed on a savings card,
entitled to interest in accordance with
regulations of the savings deposit receiving
organization and guaranteed insurance in
accordance with the law on deposit insurance.
 Savings deposit according to an informed account:
that is, a deposit with no maturity date that the
depositor must notify the bank when he wants to
withdraw.
 Savings deposit with purpose: Depositors deposit in
banks to use for certain purposes, such as buying a
house, paying for their children's education costs,
etc. For those who deposit this type of money, the
bank Customers usually provide credit to make up
for the shortfall when used for the purpose of
savings deposits.
 In essence: the customer's purpose is provision,
profit and safety
 Scale of capital: high stability
 Means of use: not used
 User account: savings account

 Legally, a time deposit is a credit agreement in
which the borrower is the bank (except for
blockaded currencies for specific purposes).
 There are many different terms, with the principle
that the longer the term, the higher the interest rate.
 There are many forms of interest payment:
prepayment, periodic interest payment, interest
payment at maturity.
Excercise
Compare 2 savings deposit products?
Give your review and decision base for
your product choice.
Other non-transactional deposits
 Is a variant form of term deposits mobilized in the

form of promissory notes or bonds.
 Existing in the form of GTCG => high liquidity,
attractive interest rates
 Active deposit

Factors affecting the source of deposits

 Interest rate
 Banking service quality
 Public trust in banks
 Competition in the market
 Other external factors
Measures to attract deposits
Economic measures
Psychosocial measures
Technical measures
Economic measures
Interest rate policy
Key target pricing policy
Interest rate policy on the

basis of overall
relationship with
customers

Deposit mobilization measures

1. Economic measures:
- Interest policy
- Key target pricing policy
- Interest rate policy on the basis of overall relationship with
customers
2. Psychosocial measures:
- Improve public confidence in the banking system.
- Forms of promotion, advertising for new products and
services.
3. Technical measures:
- About the product
- About distribution
Interest rate policy
It is a measure that commercial banks often use to

mobilize deposits to create capital for banks. The
bank's interest rate policy must be suitable for each
mobilized money source according to the principle
that the longer the term, the higher the interest rate.
`
 Market penetration interest rate policy
(competitive interest rate): with this interest rate,
banks usually pay higher deposit interest rates
than other banks.
-> shouldn't be done often
 The increase in deposit deposit rates by banks is
partly due to the supply and demand of money,
and partly to the measures to reduce inflation by
the State Bank.

Key target pricing policy

For banks, deposits are a source of capital with low
interest rates and play an important role.
Characteristics:
 Short term.
 Constantly fluctuating
The more deposits it attracts, the larger the pool of

capital will be created and limit unstable.
For each individual customer, corporate customer,

the Bank will have specific policies to better serve the
unique needs of each type of customer.
To attract individuals and businesses with large
sources of idle money, the Bank must have
advertising works, implement communication
strategies with attractive and preferential interest rates
for customers, especially loyal customers. .
Preferential policies for customers with great
financial status and potential.
Interest rate policy on the basis of overall

relationship with customers
The bank stipulates a lower fee and a higher

income for customers who have a long-term
relationship with the bank and the bank sets a
price according to the number of services used
by the customer.
-> The method of implementing incentives is
according to the regulations of each Bank and
the strategy of that Bank

In addition to the above incentives, the Bank

also scores customers to consider specific
incentives: incentives to reduce loans, reduce the
margin of guarantee or open L/C, increase the ratio
of loans to valuable assets guaranteed treatment…
 Sacombank is a bank dedicated to women
This is a female-only bank branch, with more incentives than

usual, along with health care, beauty and fashion services.
Sacombank – March 8 Branch, in addition to providing all
normal banking products and services like other branches in
the whole system, Sacombank also studies the needs,
preferences and habits of customers to launched specific
products and services to serve the branch's customer system
Increasing public confidence in the banking system
An accepted, classy brand will create a trust in

customers and customers will be loyal to that brand
and service.
All product names, brands, slogans… must
combine to create a beneficial image imprinted in
the minds of customers.
-> Bank creates trust for customers and makes
them stick with the bank longer.

 To develop the brand, banks need to focus on the staff.Good

service will create a good impression and win a lot of love
from customers increase the number of customers
depositing money in the bank. Employees must have
knowledge and regularly improve their skills so that when a
customer needs to advise on something, they also have enough
confidence to answer, so that the customer can be
knowledgeable enough to confidently send the message.
money in the bank
 In addition, it is also necessary to create a unique feature for
the product. Due to the competition of similar products, the
creative pressure will give rise to the need to differentiate
products with at least some unique characteristics.
 Comply with the deposit insurance as prescribed by the
Government
 Increase deposit from promotion
 For example: SHB implemented a savings
program with high interest rates and many special
offers "SHB gives good luck with trust" applied to
individual customers throughout the system.
 SeABank implemented the capital mobilization
program "Golden fortune" in parallel with the
program "Welcome the spring, welcome the golden
fortune".
Promotion and promotion for new products and

services.
Promotions are short-term incentives to
encourage customers to use a service. Promotion
has the effect of attracting attention and providing
information that leads customers to products and
services and it is also an invitation to stimulate and
motivate customers to immediately use products
and services.

Technical measures
It is a measure by which the Bank diversify types
of deposit products, creating conditions for
customers to choose to bring maximum benefits to
customers. Besides, the application of E-Banking
technology in banking activities, diversifying deposit
forms is also the technical measure that the bank
chooses.
About the product
That is when banks offer diverse and convenient

deposit services for customers.
Currently, the diversity shown in terms is mainly
in short-term deposits, but not much in medium and
long-term deposits.
Some popular methods of deposit mobilization in

banks today:
- Demand deposit
- Term Deposit
- Savings deposit without term
- Term Savings Deposit

About distribution
For individual customers, convenient location is
one of the important issues. Customers not only
come directly to the bank but also have access to
the bank through services such as homebanking or
ATM... if these systems are fully equipped, it will
also create great convenience for customers.
Technical measures
 Competition encourages customers to open
personal accounts, card accounts...
 Competition to attract demand deposits from
socio-economic organizations.
 Competition attracts savings deposits.
 Convenient and quick to use utilitySave time by

transacting over the internet.
 Low minimum balance, no maximum balance
limit, attractive interest rate.
PAYMENT SERVICE PROVIDED
 Open an account
 Provide means of payment
 Organize payments between banks

Bank account
 Is a means of monitoring the bank's records in
deposit and loan transactions.
 The main transactions are done on the account.
Bank account
Principles of account management
 Customers must meet the conditions and procedures of the
bank specified
 Principle of using money on the account: within the
deposit.
 If overspending (overdraft) must be approved by the Bank
 Account is partially or completely blocked
 Account is closed
Types of bank accounts

 Deposit account: no outstanding balance
 Current account: can be outstanding/credit balance
Means of payment
Based on the characteristics of payment documents
 Group of means of payment by paper documents
 Group of means of payment with electronic vouchers
Based on the form of payment means

 Cash
 Cheque
 Order to pay
 Payment collection
 Bank card
 Other means of payment such as bills of exchange,

promissory notes... in accordance with relevant laws.

Cheque- Check
 Is a means of payment issued by the account
holder (Drawer), ordering the bank or payment
service provider (Drawee) to deduct money
from his/her account to pay the beneficiary
(Payee).
Cheque- Check

Check payment process
Types of cheque
Based on the nature of check transfer
 Identification check
 Anonymous check
 Check by order
 Checks to order but not transferable by endorsement
Based on how to pay check

 Wire transfer check
 Cash check
Types of cheque
Based on the level of guarantee, money will be
received to the beneficiary
 Bank check (cash)
 Bank guarantee check (certified check)
And some other special checks

 Traveller's Cheques
 Cross cheque
 Check the beneficiary's account

Mandatory elements on a check

of using checks in payments
of using checks in payments
Case study
On September 15, 2015, Mr. Binh signed check
number AA012345 worth 200 million VND to pay for
the purchase of goods to the seller, Mr. Thanh. On
September 30, 2015, because he needed money to
repair his house, Mr. Thanh signed the transfer to Phat
Tai business building materials. On October 20, 2015,
this business brought check number AA012345 to
request payment. Do you think the bank agrees to pay
this check? Why?

On September 15, 2015, Mr. Binh signed a check

worth VND 200 million to pay for the purchase of
goods to the seller, Mr. Thanh. On September 30,
2015, because he needed money to repair his house,
Mr. Thanh signed the transfer to Phat Tai business
building materials. On October 20, 2015, this business
brought a check to request payment. The balance in
Mr Binh's current account is 100 million. How will the
bank handle it?
Order to pay/Order for payment

 A means of payment in the form of a money
order from the account holder requesting the
bank/payment service provider to deduct a
certain amount of money from the account to
pay the beneficiary.
Mẫu ủy nhiệm chi

Order for payment process
Pros and Cons
Documentary Collections
 As a means of payment in the form of a power
of attorney made by the customer (in the form
of the Bank) to authorize the Bank to collect
on behalf of the buyer/recipient after the
goods/services have been provided.

Documentary Collections process
Pros and cons of using

Documentary collection
 Safe and reliable assistance from the bank in obtaining export
collection.
 The process is simple, quick, and less expensive than LCs.
 Easier handling of the documents.
 Faster receipt of payment.
 Seller holds the title of goods until the payment is made.
 Payment warranty to the exporters.
 Sellers can enhance their business throughout the world.
 Tracking of outstanding collections.
 More affordable than LC
 Money transactions can be executed.
 The role of the bank is limited and they do not

guarantee payment.
 No verification of the accuracy of the documents.
 Seller does not get the benefit of a bank
guarantee of the payment provided by
documentary credit.
 Possibility of paying for the return transportation
if the buyer refuses or unable to pay.

BANK CARDS
 Is a means of payment issued by banks or
financial institutions to customers (individuals)
to use to pay for goods and services or
withdraw money from ATMs.
Types of bank cards

 Based on the origin
 Debit card
 Deposit card/Prepaid card
 Credit card
Types of bank cards

Based on the scope of use of the card
 Local card
 International card: Visa, Master card, JCB,

American Express, Diners Club, China
UnionPay.

Types of bank cards

 Based on the card's technique
 Manegtic card
 Smart card/electronic card
Types of bank cards

Based on the method of transaction and payment
by card
 Direct trading
 Indirect transactions online
Organize payments between banks

 Payment via SBV
 Payment via agent banking system
 Clearing between banks

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Banking Operations Chapter 2

PhD. Nguyen Thi Thu Trang

PhD. Nguyen Thi Thu Trang_HUB 1

The 4th Quarter 2009's Financial Statements

PhD. Nguyen Thi Thu Trang_HUB 2

 Measuring customer trust in the bank

PhD. Nguyen Thi Thu Trang_HUB 3

According to sending range

 Deposits in foreign currencies and gold

=>exchange rate fluctuations

PhD. Nguyen Thi Thu Trang_HUB 4

 Other non-transactional deposits

PhD. Nguyen Thi Thu Trang_HUB 5

Trần lãi suất huy động Vietinbank 13/6/2016 (%/năm)

VCB dành cho

PhD. Nguyen Thi Thu Trang_HUB 6

PhD. Nguyen Thi Thu Trang_HUB 7

Other non-transactional deposits

 Is a variant form of term deposits mobilized in the

PhD. Nguyen Thi Thu Trang_HUB 8

Factors affecting the source of deposits

Measures to attract deposits

Interest rate policy

Key target pricing policy

Interest rate policy on the

PhD. Nguyen Thi Thu Trang_HUB 9

Deposit mobilization measures

Interest rate policy

It is a measure that commercial banks often use to

PhD. Nguyen Thi Thu Trang_HUB 10

Key target pricing policy

The more deposits it attracts, the larger the pool of

For each individual customer, corporate customer,

Interest rate policy on the basis of overall

The bank stipulates a lower fee and a higher

PhD. Nguyen Thi Thu Trang_HUB 11

In addition to the above incentives, the Bank

This is a female-only bank branch, with more incentives than

Increasing public confidence in the banking system

An accepted, classy brand will create a trust in

PhD. Nguyen Thi Thu Trang_HUB 12

 To develop the brand, banks need to focus on the staff.Good

Promotion and promotion for new products and

PhD. Nguyen Thi Thu Trang_HUB 13

About the product

That is when banks offer diverse and convenient

Some popular methods of deposit mobilization in

PhD. Nguyen Thi Thu Trang_HUB 14

 Convenient and quick to use utilitySave time by

PAYMENT SERVICE PROVIDED

PhD. Nguyen Thi Thu Trang_HUB 15

 Account is partially or completely blocked

Types of bank accounts

 Current account: can be outstanding/credit balance

 Group of means of payment with electronic vouchers

Based on the form of payment means

 Other means of payment such as bills of exchange,

PhD. Nguyen Thi Thu Trang_HUB 16

PhD. Nguyen Thi Thu Trang_HUB 17

Check payment process

 Checks to order but not transferable by endorsement

Based on how to pay check