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The importance of deposits mobilization to the survival of the banks October 18, 2009

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The importance of deposits mobilization to the survival of the banks

By Rhesa Yogaswara, S.Si

(rhesayogaswaraa@yahoo.com)

First, deposit means a claim of customer over the bank on his account.[1] In economic concept, any kinds of wealth need to be distributed fairly. It affected to the economic stability of the state. One of wealth type in individual level is money, which can be deposited in a bank. Bank is one of the players who have this important role to mobilize the deposits.

To mobilize the deposits, banks can do several activities. First, making finance activities. Those activities are good in wealth distribution, which can be useful for another party who needs the money. In sample nowadays, financing activities in property, car, trading, etc are the type financing which distributed by the banks from depositor to the borrower.

Depositor acts as a people, who have more money. Borrower acts as a people, who have less money. Bank has a function as an intermediation institution who mobilizes the depositor’s money. In the financial systems nowadays, financial markets have the important functions to mobilize the money.

In financing activities, banks have several purposes, which are targeted. First, banks would like to get positive return on financing. Positive return will cover the NPF in another financing; will be used for banking development, and for profit sharing between banks and depositor.

Second is provision of working capital. Next is shifting of funds into productive hands. Moreover, the last is to stabilize bank performance in order to be a backbone of national economy.

So does bank in financial market, investment functions are usually performed by Treasury Office of the bank. Treasury invests deposit for ensuring optimum utilization of available resources, rising additional resources required for meeting credit demands, and also managing market and liquidity risks.

All of those purposes are the bank’s strategy to make bank survive in operation of the deposit mobilization, which affected to the states economic.


[1] Yasir, Muhammad. The Process of Deposit Mobilization. Presentation Slide.National Bank of Pakistan.

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