ARE CERTIFICATE OF DEPOSIT AND SAVING BOOK THE SAME?

Certificate of deposit and savings book both help protect and increase asset value. However, the functions, conditions, interest rates, flexibility… of these two types of documents are different. Then, specifically, how are certificate of deposit and savings book different?

Certificate of deposit are different from savings book

Certificate of deposit is a type of financial instruments and foreign bank branches to mobilize capital within the territory of Vietnam. Simply summarized, a certificate of deposit is a type of confirmation on debt obligations of the issuance organization.

Passbook or savings book is the certificate of ownership of savings deposit made by the depositor held at a credit institution, applied to the case of taking of savings deposit at the legal transaction office under the operation network of the credit institution.

Besides banks or foreign bank branches, certificates of deposit can be issued by financial companies or financial leasing companies; Savings books are also issued by microfinance institutions and people’s credit funds. Correspondingly, the conditions related to issuance, purchase, transfer… also have differences.

Thus, these are two completely different products. Normally, the interest rate on certificates of deposit will be higher than the savings interest rate.

Who can buy certificates of deposit?

Pursuant to current laws, subjects eligible to buy certificate of deposit include:

– Vietnamese organizations (including credit institutions and FBBs) and individuals;

– Foreign organizations and individuals.

It should be noted that for certificate of deposit issued by financial companies and financial leasing companies, buyers only include organizations (Vietnamese and foreign countries). In addition,credit institutions and foreign bank branches are only allowed to purchase financial instruments with a term of less than 12 months.

What is the face value of a certificate of deposit?

Certificate of deposit is issued in the form of certificates, book entries or other forms as prescribed by laws.

In particular, the face value of the certificate of deposit is VND100,000 (one hundred thousand) or a multiple of VND100,000 (one hundred thousand).

May certificate of deposit be use as collateral?

Certificate of deposit can be used as collateral.

The use of financial instrument in this case must comply with the instructions of credit institutions and foreign bank branches in accordance with the provisions of law on secured transactions.

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