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Deposits
Deposit

Depositors are free to choose a bank for depositing their own funds and may have their deposits with any one or more banks.

Belarusian banks offer a wide choice of kinds of deposits both in Belarusian roubles and foreign currency, on different terms and conditions of keeping. The banks independently specify the terms of transactions with the customers and fix interest rates on deposits based on the level of refinancing rate of the National Bank, money market condition, own deposit policy, and need for ensuring availability of loans. Interest rate on certain kinds of deposits is determined by length of deposit, amount, income payment frequency, scope and nature of ancillary services, and finally by customer’s contractual compliance.

The citizens may administer their savings at their sole discretion. After a depositor has chosen one or another form of keeping their savings, he or she bears certain risks related to deriving maximum yield on his or her deposits.

The customer who desires to choose one or another kind of deposit for placement of money can be recommended to consider terms of deposit, taking account his expectations from keeping his savings and having regard for both the level of interest return and other terms of deposit. For example, if an opportunity to withdraw deposit with minimum loss of yield is a priority for a potential depositor, regard should be paid for existence of such a condition and minimum time of keeping money on deposits which ensure yield conservation. If maximum yield is preferable, and the customer likely won’t need his money in the nearest future, then yield on deposit and interest basis (e.g. compounding interest ensures high yield on deposit) can be a point of departure.

It is notable that many banks have introduced the kinds of fixed-term deposits providing an opportunity to derive additional income in the form of bonuses, deposit premiums, prizes depending on actual time of depositing.

Moreover, special attention should be paid to the following conditions: whether interest rate on deposit is fixed or the bank is entitled to change it unilaterally; interest rate in case of early withdrawal of deposit.

The National Bank is a monetary market regulator which applies different methods in order to provide inflation guard keeping of rouble savings without interference with contractual relations between the bank and its customers. Moreover, measures are taken to ensure safe keeping of monetary resources of natural persons placed on accounts and/or bank deposits in the Republic of Belarus. According to Decree of the President of the Republic of Belarus No. 22 dated November 4, 2008 “On Guarantee of the Safety of Monetary Resources of Natural Persons Placed on Accounts and/or Bank Deposits”, the state guarantees absolute safety of private deposits, refund of full amount of deposits to natural persons (residents and nonresidents) in the deposit currency in all banks of the country.

Interest on deposits

    

The size of percentage rate is an important condition of bank deposit.  Bank deposit percentage rate reflects in annual income percent without reference to the amount of deposit.

Interest can be accrued by formula of simple interest and composite interest (capitalization).

Simple interest is an interest accrued to the amount of deposit on the basis of the term of the deposit with the periodicity defined by the bank deposit contract without reference to the interest which was earlier accrued to the amount of deposit.

The sum of money owed to depositor during the accrual of simple interest on deposits is calculated by formula:

∑% = money +  money x percent x days

                  100 x 365(6)

Where money is the amount of money at the deposit account, percent – the annual interest rate, days – number of days for which the interest is accrued.

Namely if you  execute a deposit for 12 months with 30% per annum and deposit 5 000 000 BYR with banker, then the amount of money due to return on termination of the term of the deposit, in case the deposit doesn’t presuppose capitalization, makes up:

∑% = 5 000 000 + 5 000 000x30x 365     = 6 500 000

 100 x 365(6)

Composite interest (capitalization) is an interest accrued to the amount of deposit and the sum of interest which was earlier accrued  to the amount of deposit with regard to the term of the deposit with the periodicity defined by the bank deposit contract.

The existence of this term in the contract means that accrued interest will be automatically (monthly, annually), without your participation, added to the main amount of deposit and will also bring income.

The sum of funds due to return to the depositor on termination of the term of the deposit during accrual of composite interest is calculated by formula:

∑% = money x  (    1 + percent x days     )  n

100 x 365(6)

Where n  is the number of periods for which interest is accrued during the term of deposit.

For example, the amount of deposit is 5 000 000 BYR, the term of deposit is 12 months, accrual of interest  at the rate of 30% per annum with the quarterly capitalization, n=4 since during the term of deposit income will be accrued 4 times. We assume, that there are 91 days in the quarter.

In this case the amount of the money due to return to the depositor on termination of the term of the deposit (it consists of the amount of deposit with percent) makes:

∑% = 5 000 000 x   (  1 +     30 x 91         ) n  = 6 672 242

              100 x 365(6)

Therefore the amount of money due to return to the depositor on termination of the term of the deposit with the quarterly capitalization of percent (in the second case) is 172 242 BYR more. 

Types of deposits

The contract can provide any not inconsistent with the applicable law terms of deposit return. The terms of bank deposit can provide the capacity to increment the deposit and expend part of funds of deposit during its validity.

Bank deposits are divided in three main categories: call deposit, term deposit and conditional deposit.

By conditional deposit is meant the deposit according to which the amount of deposit with the accrued interest returns to the depositor after the (not) occurrence of the event which was defined in the existing contract. It is used seldom enough.

Call deposit. By the terms of the call deposit the term or other condition of the deposit return are not determined. The deposit is in bank so much time as the depositor see fit, notably till the rescission of a contract of bank deposit and termination of a deposit account. You can withdraw a deposit in any time without losses in percent. But the deposit interest rate of such deposit usually is low.

A term deposit is made on terms of payment return upon the expiration of the term determined by the contract. A term deposit is convenient for the keeping savings and acquisition of income. The size of interest on deposits determined by bank can depend on the amount, term and other conditions of the deposit. For instance, the more the amount and longer the term, the higher the interest.

In the contract there can be a condition of its prolongation for the same term, but on condition and at rate of interest available in bank for this type of deposit at the moment of the contract prolongation.

The depositor has the right to demand the return of deposit prior to the expiration of the term determined in the contract. The bank is obliged to return the deposit during 5 days since the claims submission date of its return.

In case of pre-term return of the deposit, the interest, as a rule, is paid at a rate determined by the bank for the call deposit, if the other rate is not provided in the contract.

Online deposit

Time moves on, technologies and customers’ priorities change. The growing number of depositors want to operate their savings over the Internet, without living home, twenty-four seven. They don’t want to turn to the bank to carry out transactions and set up an account. Today Belarusian banks provide such an opportunity to their customers and namely they offer bank card users to establish a deposit account over the Internet. To do this you need to be an owner of a debit card and a user of Internet-banking. You can connect to the Internet banking system in branch office of a bank or remotely on the websites of a bank. Interests on savings of online deposits are usually some percentage points higher than normal deposits. The reason is that such online products reduce the workload of employees operating the deposits.

EXCHANGE rates

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