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- Fixed-Term Deposit (FD): is money deposited at bank/mfi that cannot be withdrawn for a specified term/tenure (unless a penalty is paid). When the term is over it can be withdrawn or it can be held for another term.
- Certificate of Deposit (CD): Certificate deposit is different from that of fixed-term deposit in terms of its negotiability. CD is negotiable and can be rediscounted when the holder needs some liquidity, while fixed deposits typically would be (or must be) kept until maturity.
Use-case: Creating/
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Setting up a Deposit Account
When openingsetting up/creating a deposit account the following details need to be known:
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- Maturity date: Given commencement date and tenure length, maturity date is known.
- Accrued interest on maturity: Given the deposit does last until maturity date as intended, the amount of interest accrued on the deposit over the term can be calculate using an excel like FV algorithm
- Maturity amount: Given the deposit does last until maturity date as intended, this is simply the sum of origin deposit amount and the accrued interest on maturity.
A status is automatically assigned to the deposit account of PRE-ACTIVATION.
Use-case:
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Activation/Commencement of Deposit Account
The deposit account may commence on the exact date given when 'creating/openingsettingup' the deposit account. The date on when the 'deposit' transaction is received by the bank/mfi is the date typically from which the deposit account becomes 'active'.
When activating/commencing the deposit account, it should be able possible to modify/set details of the account as needed (commencement date, interest rate, term, deposit amount) which in turn would result in possibly different results in the 'derived' fields of maturity date, accrued interest on maturity, maturity amount:
- Term/tenure: What is the length of the term/tenure (in months)
- Deposit amount: How much money is being deposited for the term.
- Nominal annual interest rate: What is the interest rate to be applied to deposit amount for the term expressed as a nominal annual rate.
- Interest compounding frequency: Interest is usually compounded at periodic intervals like monthly, quarterly, annually
- Commencement date: On what date does the term/tenure commence from.
As a result of activation any or all the following 'derived' fields should be set
- Maturity date: Recalculate the projected maturity date given the current commencement date and tenure length.
- Accrued interest on maturity: Recalucate the the amount of projected interest accrued given the current deposit amount and tenure.
- Maturity amount: Recalculate using new projected interest accrued
- Account status: The status of the account should transition from 'PRE-ACTIVATION' to 'ACTIVE'.
- Record of deposit transaction: When account is activated, a transaction recording transaction related information such as date, amount and type of transaction (DEPOSIT) should be recorded.
Use-case: Withdrawal and closure on Maturity of Deposit Account
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