Difference Between Personal and Business Fixed Deposits

A fixed deposit account is an account where you place a sum for a pre-determined span of time and earn returns on maturity. However, the policies that apply to the fixed deposit accounts vary based on the applicant type. While individuals are meant to deal with personal banking segment, companies, government bodies, trusts, etc. deal with business banking segment to place the deposit.

We have a fair idea of how fixed deposits work for individuals. Here is a brief introduction to fixed deposits in the business banking environment and the information on how it relates to personal banking:

The Idea of Business Fixed Deposit Accounts

As a proprietor, you can deposit a lump sum in the bank under the organisation’s name to earn a reasonable interest rate on your deposit. On maturity, you will get the deposit with a good interest component. This can be used for the betterment of your organisation.

Not all banks offer a business fixed deposit account. Also, you may not be entertained if you directly talk to the bank staff about opening a fixed deposit account under business banking. An existing customer of the bank shall introduce you to the bank.

Common Things First

Personal fixed deposits and business fixed deposits have many features in common. Some of them are mentioned below:

• The deposit tenure is betwee 1 month and 60 months.
• The minimum deposit amount, generally, starts at RM1,000.
• Both are eligible for coverage by PIDM.
• You can open a joint account under both personal banking and business banking.

Differences?

Criterion	Personal Fixed Deposit	Business Fixed Deposit
Applicable to	Individuals or joint applicants	Companies and Government Offices
Partial Withdrawal	Not allowed	Allowed for Business Banking customers in multiples of RM1,000
Flexible Placement	Not applicable	Available with daily placement facility
Interest Rates	2.90% p.a.-4.10% p.a.	2.95% p.a.-3.65% p.a.

Documents Required to Open a Business Fixed Deposit Account

• Letter of Introduction; given by an existing customer of the bank
• Rubber stamp of the organisation
• A copy of NRIC/MyKad of all directors and signatories of the organisations
• Business registration certificate
• Letter of Approval from all the directors and signatories

Documents Required to Open a Personal Fixed Deposit Account

• A copy of MyKad/NRIC.
• If you are a foreigner, then you have to provide valid Passport and other documents such as work permit or employment pass to verify the purpose of your visit to Malaysia.

Illustration

Let us consider a situation where you are going to invest in Maybank Fixed Deposit. Say, you are investing RM5,000 for a period of 12 months. The bank has designated an interest rate of 3.35% p.a. on a 12-months tenure. So, the total interest you earn over the deposit is calculated as follows:

Interest = (Deposit Amount x Rate of Interest x Deposit Tenure)/100

Interest = (RM5,000 x 3.35 x 1)/100

Interest = RM167.50

Therefore, you receive an amount of RM5,167.50 on maturity.

On the other hand, if you deposit the same amount under Business Banking for the same tenure as mentioned earlier, you get an interest rate of 3.30% p.a. The interest you earn at the end of the tenure is calculated as follows:

Interest = (Deposit Amount x Rate of Interest x Deposit Tenure)/100

Interest = (RM5,000 x 3.30 x 1)/100

Interest = RM165

On maturity, you get a return of RM5,165.

The illustration states that the personal banking fixed deposit offers higher interest rate than business banking fixed deposit. However, you cannot conclude that personal banking is more beneficial than business banking. This is because their individual purposes do not overlap.