Stélio Tauzene • Head of the Credit Operations and Legal Department at FNB Mozambique
In the financial context of credit and credit guarantees, the pledge of time deposit accounts has become increasingly prominent, providing a high level of security from the perspective of both the creditor and the customer. In this article, we will analyse how banking institutions use time deposit accounts as valuable collateral for granting credit.
The time deposit pledge involves the voluntary blocking of amounts deposited in bank accounts as security for the payment of a certain credit. The depositors, as debtors, agree not to move these amounts until the claim has been settled in full.
The holder of a time deposit account has the right to request the return of the amount deposited in it – a right that is safeguarded in the bank deposit contract and the pledge, whereby the bank must return the value of the time deposit when the obligations are settled.
The object is to make the amount deposited available as a form of guarantee for credit obligations
As for formalising the operation, setting up a term deposit pledge is quick and efficient. All that is needed is an express expression of interest from the account holder authorising the creation of the pledge. The bank, as the creditor, must confirm the existence of the customer’s time deposit account and activate the pledge by means of a captive that makes it impossible for the debtor to move the amount in question.
In the event of default, the creditor is legally authorised to debit the amount due from the account indicated as collateral. This type of pledge has advantages for both the creditor and the debtor. It offers solidity to the creditor by transferring the asset to their legal sphere, while also allowing the debtor to maintain the profitability of the deposit.
It is essential to emphasise that, when we talk about the term deposit pledge, the object is to make the amount deposited available as a form of security for credit obligations. This guarantee can be used to secure various credit agreements, with the date on which the agreement was created taking precedence. The pledged account remains intact until all the guaranteed credits have been settled.
In conclusion, the term deposit pledge is a valuable tool in the financial context and, if used well, can be an effective solution for guaranteeing the fulfilment of financial obligations without compromising the profitability of deposits.
