Introduction

There functionality of Deposit Accounts covers typical use-cases of deposit account in microfinance which are Fixed-Term Deposits and Certificate of deposit.

• Fixed-Term Deposit (FD): is money deposited at bank/mfi that cannot be withdraw 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 When the term is over it can be withdrawn or it can be held for another term.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 deposit must be kept until maturity.

Use-case: Creating/Opening a Deposit Account

When opening/creating a deposit account the following details need to be known:

1. Term/tenure: What is the length of the term/tenure (in months)
2. Deposit amount: How much money is being deposited for the term. There would typically be some rules around min and max deposit supported.
3. Nominal annual interest rate: What is the interest rate to be applied to deposit amount for the term expressed as a nominal annual rate. There would typically be some rules around min and max interest rate supported.
4. Interest compounding frequency: Interest is usually compounded at periodic intervals like monthly, quarterly, annually
5. Commencement date: On what date does the term/tenure commence from.

Using the above information, it should be possible to derive the following at time of opening/creating a deposit account:

• Maturity date: Given commencement date and tenure lenth, 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 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.

Use-case: 'Activating' or 'Approving' Commencement of Deposit Account

The deposit account may commence on the exact date given when 'creating/opening' 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 the deposit account should be able to modify 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

Use-case: Renewing a Deposit Account

Its typical to allow a customer to renew an existing deposit account on maturity. If deposit account allows renewal (sometimes known as rolling it over)