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19 August, 2024

Classification of Bank Liabilities

 In monetary analysis, only a two-fold classification of bank deposits into (a) demand deposits or demand liabilities and (b) time deposits or time liabilities are made.

Demand Liabilities:Demand deposits or liabilities are defined as deposits payable on demand through cheque or otherwise. It is only demand deposits which serve as a medium of exchange. They are the obligations that a bank must fulfill immediately. Demand Liabilities include current deposits, the demand liabilities portion of savings bank deposits, margins held against letters of credit/guarantees, unclaimed deposits, credit balances in the Cash Credit account, deposits held as security for advances that are payable on demand, and balances in past-due fixed deposits, cash certificates, and cumulative/recurring deposits.

 

Time Liabilities: All other deposits which are not payable on demand and on which cheques cannot be drawn have fixed term to maturity. They are, therefore, called time deposits or time liabilities. They are the debts that a bank must pay off after a certain amount of time. Time Liabilities include fixed deposits, cash certificates, cumulative and recurring deposits, staff security deposits, margin held against letters of credit if not repayable immediately, deposits maintained as security for advances that are not repayable immediately, and gold deposits.

 

For the purpose of maintenance of CRR and SLR, demand and time liabilities should include all on- balance sheet liabilities excluding the items listed below:

 

a) Paid up capital and reserves;

 

b) Loans taken from BB;

 

c) Credit Balance in Profit and Loss account;

 

d) Inter-bank items;

 

e) Repo, Special Repo and any kind of Liquidity Support taken from BB.

 

Banks are advised to approach BB for any doubt in reckoning a particular liability as demand or time liability for CRR and SLR computation.

 

2.6 List of Demand and Time Liabilities:

 

The following list includes several demand and temporal liabilities that can be taken into account when calculating the necessary CRR and SLR. The things on the list apply to both conventional and Islamic banking and are of a general character.

 

1. Demand Liabilities:

 

(a) Demand Deposits (General)

 

i) All Current Accounts except from banks.

 

ii) All Cash Credit Accounts (Credit Balances

iii) Demand Portion of savings bank Accounts.

iv) Overdue Fixed Deposits accounts.

v) Call Deposits accounts other than from banks (on Demand)

 

vi) Unclaimed balance accounts.

 

vii) Interest accrued on above accounts.


viii) All other Deposits payable to public on demand e.g.

 

1. Outstanding Bills.

 

2. Payment Orders.

 

3. Telegraphic Transfers & M.T.

 

4. Outstanding Drafts.

 

5. Drafts payable Account.

 

6. Demand Drafts.

 

7. Hajj Deposits.

 

8. Bonus scheme Remittances Payable.

 

9. Branch Remittances Payable.

 

10. Bills Payable.

 

11. Certificates Payable.

 

ix) Foreign Currency Deposit account

 x) Unsold balance of NFCD account

xi) Convertible Taka account.

(b) Other Demand Liabilities

i) Margin on L/ cs.

ii) Margin on Guaranties.

 

iii) Lockers Key Security Deposits.

 

iv) Unclaimed Dividend/ Dividend Payable

v) Credit Balance and adjustment account.

vi) Security Deposit accounts (amount deposited by Supplier of stationery and furniture etc. as security).

 

vii) Sundry Deposits accounts.

 

viii) Any other miscellaneous deposits payable on demand.

 

2. Time Liabilities:

 

(a) Time Deposits (General).

 

i) Fixed Deposits from Customers other than from banks.

 

ii) Special Notice Deposits other than those from other banks.

iii) Time portion of the savings bank deposits.


iv) Short term Deposit accounts. 

v) Recurring Deposits

vi) Interest accrued on all above accounts. (b) Other Time Liabilities.

i) Employees' Provident Fund Accounts.

ii) Staff Pension Fund.

iii) Employees' Security Deposits.

 

iv) Staff Guarantee or Security Fund.

 

v) Contribution towards Insurance Fund.

 

vi) Any other miscellaneous liabilities payable on notice or after a specified period. 

vii) Margin account- Foreign Currency.

viii) Liabilities towards Foreign banks/ Correspondence bank.

ix) Bi-lateral trade liabilities.