What is the issue of certificates
Posted on Oct 14, 2000 08:15:27 AM
Certificate – a written certificate of the issuing bank’s contribution of funds, certifying the right of the depositor or its assignee to receive after the deadline the deposit amount and interest thereon.
Classification of certificates.
1. Depending on the category of depositor:
■ certificate of deposit – a certificate that is issued to legal persons;
■ Savings Certificate – a certificate that is issued to individuals.
2. Depending on the issue:
■ produced in a one-off;
■ produced in series.
3. By way of registration:
■ inscribed on a form which shall include the name and details of the owner;
■ bearer on a form which has no name and details of the owner.
4. By Maturity:
■ term, the interest on which is paid only after a specified period of time;
■ demand to be paid together with interest immediately on demand.
Maturity of certificates may not exceed 3 years. Upon presentation of a temporary certificate until the maturity of the interest is paid at a reduced rate (usually at the rate of demand deposit).
5. Under the terms of repayment:
■ with the regular amount of interest payable before the end of the billing period;
■ with interest payable on the maturity date of certificate;
■ redemption certificate may be carried out in three ways:
– Certificates of the new model;
– Bank transfer to other types of contributions (or account);
– Cash.
Issue of certificates does not require registration of emission spectroscopy, but requires a mandatory permission to release from the territorial administration of the Central Bank, which provided:
■ conditions of release and circulation of certificates;
■ sample form certificate.
The certificate holder may assign the right of the requirements deriving from thereon to another person, and on certificates to bearer assignment is carried out by re-giving of the certificate itself, but by registered certificates executed a bilateral agreement on the reverse side of the form.
Benefits of certificates before deposit.
1. Due to the secondary market circulation expands the range of possible investors.
2. Due to the secondary market treatment certificate may be prematurely sold by the owner to another person without changes, the Bank’s resources. In this case the owner receives revenue for the period during which the bank has used its resources.
3. Preferential taxation: income on the certificates is taxed at a rate of return on securities of 15%, while return on deposits (for legal entities) – the rate of income tax.
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