Distinguish Between · Q4
Q.Distinguish between Renewal of a Deposit and Repayment of a Deposit.
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Start your 14-day free trial to unlock the full solution →Renewal of a Deposit and Repayment of a Deposit are the two alternative outcomes a depositor may choose as a deposit's maturity date approaches, and they differ as follows:
| Basis | Renewal | Repayment |
|---|---|---|
| What happens to the principal | Continues with the company for a further period | Returned in full to the depositor |
| Deposit Receipt | Original receipt discharged; a fresh Deposit Receipt issued for the renewed period | Original receipt discharged and the deposit is closed permanently |
| Rate of interest | Generally the current rate offered on fresh deposits of similar tenure, which may differ from the original rate | Not applicable going forward — final interest up to the maturity date is paid along with the principal |
| Effect on the depositor's relationship with the company | Continues as a creditor for a further period | Ends the depositor's relationship with the company as a creditor for that deposit |
| Who initiates | The depositor's own written decision, in response to the company's renewal letter | Either the depositor's own written decision, or automatically if the depositor does not choose to renew |
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