What is a Depository?

A depository is a facility equipped to hold cash, securities, and coin on behalf of people and financial institutions. Materials stored in a depository are secured and insured in case of catastrophic events. This term can encompass everything from small community banks able to accept deposits from customers to national depositories, where stocks of gold, cash, and securities are kept on behalf of the people of a nation, used to control the money supply and provide secure storage for assets controlled by banks across the country.

To act as a depository, an institution usually needs to meet a number of legal requirements for security and safety. This is designed to protect depositors from fraud, theft, and similar events. Depositories typically need to follow building codes when it comes to building secure facilities and must have clear chains of command and procedures in place for handling funds and keeping them secure. Staff members usually must pass background checks in order to work and the organization has to comply with accounting regulations.

Security in a depository is usually accomplished with a vault within the structure. The vault has thick walls designed to resist fire and corrosives, with a heavy door kept secured with a locking mechanism. There may be layers of security between the front doors and the vault, allowing the depository to keep it open during working hours for convenience.

Transport of material between depositories can be done in a number of ways. For small deposits, a runner may be used to carry a deposit envelope and the funds, as seen when ordinary citizens walk into a bank with money to deposit. Large sums are usually moved by armored car. Banks contract with armored car services to pick up funds in order to meet reserve requirements, as well as dropping off money supplies with the bank so it can serve its customers.

The term “depository” may also be used to refer to something like a night drop at a bank. Many banks allow for 24-hour acceptance of deposits with a special box with a small opening. The opening is large enough for people to insert deposit envelopes, but will not admit hands or tools, and they are stored inside the box until a bank employee can bring the contents into the vault for processing. This can be useful for businesses open past regular banking hours that do not want to keep cash on hand overnight for fear of break-ins and other events.