DEPOSIT MOBILISATION
SPECIAL ASPECT
2.1 INTRODUCTION
Deposit mobilization is one of the crucial functions of a conventional financial institutions or society
to satisfy one of the requirements of a “banking business”, i.e., Sourcing of funds or borrowing money from
customers. Continuous and adequate deposit mobilization would ensure the society shall be able to sustain
its business of lending and investing, thus incurring profit for future growth. Nevertheless, different types
of deposits have different and distinct characteristics and features which in consequence impose different
risks and costs to the society. Therefore, in many cases, deposit mobilization strategy relies heavily to the
society’ asset and liability management policy. In a relationship between society and depositors, the rights
and duties for both parties vary according to the nature of deposit mobilization. The ability of the society to
fulfil their duties is an important measure of the society’s acceptance by the public, or by far as comparison
yardstick with other society.
2.2 IMPORTANCE OF DEPOSIT MOBILISATION:
The selected society mobilize deposits as their primary source of funds. Having optimal deposits
level, society shall be able to lend the funds to generate interest on lending. In addition to lending, the
deposits fund can be placed in certain investments avenues which suits the society’ or the deposits’
objectives. Deposit mobilization is a continuous function for a society to ensure the sum total of deposits at
any time adequate to maintain the current level of lending and investments specially to compensate the
withdrawals made by depositors. Usually, the deposits level is kept slightly or certain percentages above
the lending and investments level to ensure the society has adequate cash reserves to meet expected
withdrawals and also recurring withdrawals. The cash reserves are called Liquidity Reserves. Deposits
bring costs to the banks, either on the maintenance of the deposits and its transactions or on the interest
payout onto the deposits upon deposit maturity.
2.3 HOW SELECTED PACS MOBILIZES DEPOSITS
Society receives deposits from individuals, organizations and businesses, initially by opening an
account with the society itself. Based on the types of deposits, minimum initial deposits are set together
with the rules and regulations governing the accounts. Subsequent deposits can be made into the accounts,
except for time deposits where the amount is fixed until deposit maturity. Depositors maintain deposits
, with specific society due to many factors, but in particular trust and confidence with the society are the
major factors. Once these are established, the society continuously attract depositors and deposits by
providing convenience society, quality services, excellent brand association and higher interest payout.
However, there are instances where depositors put their money into the society mainly for security
purposes, i.e., the society to protect their money from loss and theft and also warrant the deposits from
investment loss. As such in Malaysia the government provides guarantee upon deposits placed with
commercial society.
2.4 TYPES OF DEPOSITS ACCEPTED:
The Selected society accepts four types of deposits such as
2.4.1 FIXED DEPOSIT:
The term “Fixed Deposit” means deposits repayable only after the expiry of a specified period.
Hence it is also known as “Time Deposit” account. The rate of interest payable is much higher as compared
to other accounts. The rate of Interest payable is much higher as compared to other accounts. The rate of
interest payable under this type of deposit accounts also depends upon the length of the Time of the deposit.
The longer the period of the deposit, the higher is the rate of interest offered. From the point of view of the
society, this type of account is more advantageous because the banker need not keep ready cash till the
amount in these accounts fall due.
It is also known as an FD, is an investment instrument offered by society, as well as non-
banking financial companies (NBFC) to their customers to help them save money. With an FD account,
you can invest a sizeable amount of money at a predetermined rate of interest for a fixed period. At the end
of the tenure, you receive the lump sum, along with an interest, which is a good money-saving plan.
Society offers different rates of interest for a fixed deposit account.
You can choose a fixed deposit for a period ranging from minimum 7-14 days to maximum 2
years. This is why an FD is sometimes called a term deposit. When you open a fixed deposit account at a
specific interest rate, it is guaranteed, for the rate of interest remains the same, irrespective of any changes,
which happen due to market fluctuations.
The interest you earn is either paid at maturity or on periodic basis depending on your choice. You
are not allowed to withdraw the money before the maturity. If you want to, you have to pay a penalty.
SPECIAL ASPECT
2.1 INTRODUCTION
Deposit mobilization is one of the crucial functions of a conventional financial institutions or society
to satisfy one of the requirements of a “banking business”, i.e., Sourcing of funds or borrowing money from
customers. Continuous and adequate deposit mobilization would ensure the society shall be able to sustain
its business of lending and investing, thus incurring profit for future growth. Nevertheless, different types
of deposits have different and distinct characteristics and features which in consequence impose different
risks and costs to the society. Therefore, in many cases, deposit mobilization strategy relies heavily to the
society’ asset and liability management policy. In a relationship between society and depositors, the rights
and duties for both parties vary according to the nature of deposit mobilization. The ability of the society to
fulfil their duties is an important measure of the society’s acceptance by the public, or by far as comparison
yardstick with other society.
2.2 IMPORTANCE OF DEPOSIT MOBILISATION:
The selected society mobilize deposits as their primary source of funds. Having optimal deposits
level, society shall be able to lend the funds to generate interest on lending. In addition to lending, the
deposits fund can be placed in certain investments avenues which suits the society’ or the deposits’
objectives. Deposit mobilization is a continuous function for a society to ensure the sum total of deposits at
any time adequate to maintain the current level of lending and investments specially to compensate the
withdrawals made by depositors. Usually, the deposits level is kept slightly or certain percentages above
the lending and investments level to ensure the society has adequate cash reserves to meet expected
withdrawals and also recurring withdrawals. The cash reserves are called Liquidity Reserves. Deposits
bring costs to the banks, either on the maintenance of the deposits and its transactions or on the interest
payout onto the deposits upon deposit maturity.
2.3 HOW SELECTED PACS MOBILIZES DEPOSITS
Society receives deposits from individuals, organizations and businesses, initially by opening an
account with the society itself. Based on the types of deposits, minimum initial deposits are set together
with the rules and regulations governing the accounts. Subsequent deposits can be made into the accounts,
except for time deposits where the amount is fixed until deposit maturity. Depositors maintain deposits
, with specific society due to many factors, but in particular trust and confidence with the society are the
major factors. Once these are established, the society continuously attract depositors and deposits by
providing convenience society, quality services, excellent brand association and higher interest payout.
However, there are instances where depositors put their money into the society mainly for security
purposes, i.e., the society to protect their money from loss and theft and also warrant the deposits from
investment loss. As such in Malaysia the government provides guarantee upon deposits placed with
commercial society.
2.4 TYPES OF DEPOSITS ACCEPTED:
The Selected society accepts four types of deposits such as
2.4.1 FIXED DEPOSIT:
The term “Fixed Deposit” means deposits repayable only after the expiry of a specified period.
Hence it is also known as “Time Deposit” account. The rate of interest payable is much higher as compared
to other accounts. The rate of Interest payable is much higher as compared to other accounts. The rate of
interest payable under this type of deposit accounts also depends upon the length of the Time of the deposit.
The longer the period of the deposit, the higher is the rate of interest offered. From the point of view of the
society, this type of account is more advantageous because the banker need not keep ready cash till the
amount in these accounts fall due.
It is also known as an FD, is an investment instrument offered by society, as well as non-
banking financial companies (NBFC) to their customers to help them save money. With an FD account,
you can invest a sizeable amount of money at a predetermined rate of interest for a fixed period. At the end
of the tenure, you receive the lump sum, along with an interest, which is a good money-saving plan.
Society offers different rates of interest for a fixed deposit account.
You can choose a fixed deposit for a period ranging from minimum 7-14 days to maximum 2
years. This is why an FD is sometimes called a term deposit. When you open a fixed deposit account at a
specific interest rate, it is guaranteed, for the rate of interest remains the same, irrespective of any changes,
which happen due to market fluctuations.
The interest you earn is either paid at maturity or on periodic basis depending on your choice. You
are not allowed to withdraw the money before the maturity. If you want to, you have to pay a penalty.
