Amount of dollar deposit lessening

Amount of dollar deposit lessening

From Bisnis Indonesia

On Nov. 5, 1997, I deposited US$10,000 at Bank BNI Senayan Branch, Jakarta, for a three-month term. On Feb. 5, 1998, upon the maturity of the deposit, I became puzzled when I was told that I could not withdraw the deposit because the bank had run out of dollars.

A bank officer called Tuti suggested that the deposit be shifted to Dolar Plus BNI, another of the bank's deposit schemes.

After explaining to her that I urgently needed the dollars, I could withdraw 50 percent of the deposit and had to put the remaining 50 percent in the Dolar Plus scheme.

Again, however, I was puzzled because the amount of my entire deposit was only $9,947.70. Ms Tuti explained to me that the principal of $10,000 bore an interest of $150.71 for three months (at 7 percent interest rate a year). So the principal plus the interest amounted to $10,150.71.

However, bank provision of 2 percent of this amount, or $203, had to be deducted from this amount, leaving $9,947.71. Well, I deposited $10,000 on Nov. 5, 1997, got an interest of 7 percent per year, had to pay bank provision of 2 percent and finally got back $9,947.71. This means that after depositing my $10,000 for three months I had to sustain a loss of $52.31.

What continues to puzzle me is that to my way of thinking if we deposit some money at a bank with a certain percentage of interest we will have in the end a bigger amount than the principal, and not the other way round.

I look forward to an explanation from Bank BNI.

MIRANTI

Jakarta