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Fixed-Term Deposit (FD): is money deposited at bank/mfi that cannot be withdrawn for a specified term/tenure (unless a penalty is paid). When the term is over it can be withdrawn or it can be held for another term.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 tpyically would be (or 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:

Term/tenure: What is the length of the term/tenure (in months)
Deposit amount: How much money is being deposited for the term. There would typically be some rules around min and max deposit supported.
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.
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.

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 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.

Use-case: 'Activating' 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: Withdrawal and closure on Maturity of Deposit Account

A typical scenario is that the deposit account reaches the maturity date and the customer withdraws their deposit amount and accrued interest which effectively closes the deposit account.

Use-case: Renewing or 'Rolling over' 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) then we simply want to create/open another deposit account with the same 'terms'. The following may be diiferent:

Deposit amount: The amount deposited might be the originial deposit again or the entire amount received from previous deposit account.
Record it as a renewal: We should record that this deposit account is a renewal from a pre-existing deposit account (probably best to track the deposit account id it is a renewal of.)

Use-case: Full withdrawal and pre-closure of deposit account

Some deposit accounts allow for the customer to withdraw thier money in full from the account earlier than the maturity date but the result of this is heavy penalization. This is known as pre-closure. On pre-closure the interest accured to date is calculate from the closure date (length of time money was in deposit account), pre-closure interest rate and the original deposit amount.

Use-case: Partial withdrawal from deposit account incurring penalization but not closure?

Use-case: Window for back out without penalty?

Use-case: Automatic rollover or renewal of deposit account

Appendix:

Algorithm to calculate Effective Annual Rate (EAR) = (1 + (i/n))^n -1 where,

i = nominal interest rate
n = number of compounding periods

Algorithm to calculate accrued interest due on future maturity date: use excel FV function where,

rate = rate per compounding period e.g. in case of monthly rate (6% per annum / 12 months)
number of periods = number of compounding periods in term/tenure e.g. 12 for a 12 month loans with monthly compounding
present value = the amount of the deposit (the present value represented as a negative number)