Bank of Harad

The **Bank of Harad**, or known officially as the **State Bank of Harad** is a bank on the server within Near Haradrim territory. It was created by siph and is currently being run by galadan.

The bank, like most other banks, offers typical services such as asset storage, credit accumulation, loans, cheques/IOUs, and financial consultation. The bank offers these services equally to all players, regardless of faction allegiance.

## History

The idea of a bank in Harad was first conceived in late June, but reached fruition near the end of July. Originally, it was simply meant to be the treasury of the the Near Harad faction, but grew to becoming a general bank. It opened to the public on August 9, 2020.

## Accounts & Information

Before a player can access the bank's services, they must open an account. An account can be opened by messaging Siph in-game or on Discord. Opening an account costs 100c, which can be paid in-game. If a player has opened their first account, they become a registered client in the bank's system, and can then access the bank's services, so long as they have paid the fee to open the account. The client will also be provided with their account ID. New clients always fall under credit ranking C.

The bank may deny a player the opportunity to open an account due on reasonable grounds.

If an existing client wishes to open another account, they can request the bank to do so. Opening another account for a client costs 75c. The client can also request that a newly opened account have a separate name. The client's first account will always be their main account, and this cannot be changed. When another account is opened, the client will also be given its ID.

The bank maintains meticulous records of financial transactions done by clients with the bank. These records include:

* Credit ranking and score
* Credit history
* Account history - such as withdrawals, deposits
* Balances

The bank only records transactions clients *make with the bank*, and does not maintain any formal record of financial actions made with other players and institutions. Moreover, these records are confidential. Only the client and the bank have access to this; other players and or factions will not be given this information, even if requested. The bank will only divulge this information to Staff when necessary and provided with reasonable explanation.

If a client wishes to see their financial record, they can request it for 75c. This accessing provides the client records of all their accounts.

### Shutting Down Accounts

If a client wants to shutdown an account, then it costs no extra fee to do so. If a client has multiple accounts, then they must specify where the assets stored in their former account must go, or they can request to receive these assets personally at an agreed upon time.

If a client only has one account or shuts down their main account, then that is equivalent to withdrawing from the bank system altogether. The bank will give the clients all the assets stored in their account and remove them from its system. The bank will still keep the records of the account. These records cannot be accessed anymore by the owner of the account, as they no longer would be a client.

If a player reapplies to join the bank again at a later time, and their application is approved, they can then again access those former records. Rejoining the bank costs the same fee as opening an initial account: 100c.

### Group Accounts

The bank does not allow for more than one player to have access to an account. For groups, they must designate one person to manage their finances.

## Services

As mentioned earlier, the bank offers a multitude of financial services to all clients. This includes storage for assets, credit accumulation, loans, cheque/IOU withdrawals, and finally financial consultation.

### Asset Storage

One of the main services offered is storage of assets. When a player makes an account, they receive a double chest worth of storage for that account within the bank's vault. Here, the player can store coins and or other items that they perceive as valuable - hence the bank offers asset storage services, not just ones for money. If a person's assigned double chest overflows, a new one will be allocated under the same account, free of charge.

It does not cost any fee whatsoever to deposit or withdraw assets. However, the bank recommends that players not deposit valuables that they will need access to on a short-term basis. This is because the person who runs the bank cannot always guarantee that they will be available to immediately fulfill the client's request. It is recommended that clients store assets that they will need in a long-term time scale.

The bank also provides treasury services for Near Harad.

### Credit System

One of the bank's most important services is the ability for clients to accumulate credit. Credit determines a client's credibility. The more credit that a client has, the more they can take out for loans, alongside additional benefits.

Credit is determined through credit score. Credit score is a number which quantifies how well the bank can trust a client. There is no maximum limit for it, but after a certain point it becomes unnecessary. It is increased by depositing loan payments on time with due interest, fully completing loans, and it can also be boosted with positive interactions and respectable behaviour with the bank. Depositing loan payments early will only increase credit as much as it would depositing loan payments when they are due. In other words, credit score will increase the same whether or not loan payments are done on time or early.

Credit score decreases when loan payments are incomplete/paid late, not completing loan payments, and with disrespectful, abhorrent behaviour towards the bank. However, credit score cannot go below 0.

Credit score, as mentioned earlier, can be viewed when a client requests to see their financial record.

To make giving out loans and perks easier, the bank groups credit scores into broad credit rankings. There are four rankings: C, B, A, and Elite. Credit rankings also cap out how large of a loan clients can take; the higher credit ranking a client has, the bigger the loans they can apply for. A comprehensive chart covering the rankings:

 **Loan Max.** | 1500c
 **Info** | - All new clients begin in this class, with the score of 0
- Once a person reaches 40 credit score in this ranking, it becomes capped and can only be increased by the bank

#### The 'Elite' Rank

The Elite rank is the highest of all credit groupings. It is important to note that the A ranking only goes up to 40 credit score, whereas Elite begins at 45. In order to reach this ranking, a client needs to demonstrate exceptional behaviour that will increase their credit more than just through loans.

Once a client enters this ranking, they gain several, immediate benefits:

* They can take out loans of any size, so long as the bank can feasibly provide them
* They can take up to 5 loans at a time

One of the most prominent perks is that Elite ranked clients are presented the option to join a special club with other Elite clients. This club has its own, separate Discord server, and a secluded vacation resort in the Minecraft server. This club provides benefits such as immediate networking with other financially settled people.

### Loans

The bank's most important service is that it offers loans. Currently, the bank only offers flat-interest loans, not variable rate ones.

#### Interest Rates

An integral component of the loans that the bank provides is interest. Interest is paid for the privilege of using the bank's money. The rate that the bank charges depends on the size of the loan:

 1600-2700
 2800-3700
 3800-4700
 4800+

The reason why this table only divides loans into multiples of 100 will be discussed later.

#### Loan Applications

In order to apply for a loan, the client must first notify the bank with the amount they want to borrow; this amount can only be a multiple of 100. A client cannot borrow more money than the maximum of their credit ranking. Moreover, a client cannot take out more loans than their ranking allows them. Those in C and B can only take out one loan at a given time, whereas those in A and Elite cannot take out more than three or five loans at a time respectively. Finally, a client must have at least 500c in one of their accounts to apply for a loan.

The bank will then review their credit score, account history, and other surrounding factors before moving forward. If the bank decides that the process can go forward, it will then work with the client to establish a payment plan.

The bank reserves the right to deny loans to any client, so long as reasonable explanation is provided.

#### Payment Plan and Overflow

Before the bank lends the money to the client, a set payment plan must be established. This plan determines:

* How often payments will be made
* How much of the loan will be paid off in a single payment
* The interest charge associated with each payment

A single payment in a single iteration of a time period is called a payment cycle. The payment for each cycle is calculated by adding together a base and the interest surcharge.

For example, suppose a person wants to take out a loan of 1500c. The interest rate for loans of that amount is 9%. Therefore, the amount lent will be calculated with the interest rate: 1500c + (1500c \* 0.09), which gives the total amount to be owed as 1635c, with the interest charge on the loan being 135c. Now, suppose that the client is interested in paying this loan off weekly, with 100c from the base amount every week. This gives the loan 15 payment cycles to be paid off at 100c weekly. This amount is called the 'base'. However, the 135c owed in interest will also then be split over 15 payment cycles, giving 9c: this is the interest surcharge. Therefore, the payment owed in one payment cycle is (100c [base] + 9c [interest]) 109c. Over 15 cycles, 109c \* 15 cycles = 1635c, thus paying off the loan in full.

However, suppose the same client is now interested in paying the loan off in 10 payment cycles instead. The 135c interest charge for the entire loan stays the same, but the base will change: 1500 / 10 = 150c as the new base for each payment cycle. Likewise, the interest surcharge must be added to each payment: 135 / 10 = 13.5c. Because decimal amounts do not exist in terms of silver coins, the bank will always round decimals up, making the interest surcharge of every payment be 14c. Now, the base and the surcharge are added together: 150c + 14c = 164c per payment cycle. 164c \* 10 cycles = 1640c. However, this amount is greater than the amount owed to the bank. This amount is called the 'excess,' and its difference from the original amount owed is called the 'overflow'. The overflow in this situation would be 1640c - 1635c = 5c. The bank will not keep this 5c extra, but instead pay it back to the client when the loan is completed.

Giving payments on-time will cause increases in credit. If a person wants to pay payments early, or combine them and pay them on-time or earlier, it will give the same increase in credit as someone paying on-time. For combined payments, credit score will increase more.

As for the time of the day and the method the payment is made, the client and the bank can agree upon a time. If the client cannot make it in-game for a payment, they can consent to the bank to take the amount required for the payment from one of the client's accounts. If the client does not consent, then the money will be considered overdue and penalties willbe applied. Furthermore, a client can choose to make loan payments come exclusively from an account of their choosing - that way, they will not need to manually come online every payment cycle and the bank can simply withdraw the required amount from their account when the time comes.

If the bank cannot make it and the payment has to be rescheduled, the client will incur no penalty whatsoever, even if the payment is given later than its original date.

#### Late and Incomplete Payments

If a payment is made late, but in full, the client will earn much less credit than usual. If a payment is still not paid for longer than a payment cycle, no credit will be earned whatsoever.

If a payment is made on-time but not in full, then the leftover amount owed will be added to the next payment cycle. For example, if a person owed 120c for one payment cycle but only payed 90c, that 30c will be added to their next payment cycle, making their next payment be 150c. Giving an uncompleted payment will also offer no credit increase whatsoever.

If a payment is not made on time and not fully, then the leftover amount owed will be added to the next payment, and an immediate credit penalty will be imposed.

However, if a client provides a sufficient explanation as to why a payment is not delivered on-time or completely, the bank may waive any credit penalties. However, the bank will not waive any leftover amounts; those must still be paid. If a client consistently struggles to deposit loan payments properly, they may choose to work with the bank to establish a new payment plan that better suits their needs. Moreover, this renegotiation will cost no extra fee. A new payment plan comes into effect on the date that the bank and client agree to.

When a client completely refuses to communicate, and does not pay loan payments at all, the bank may request Staff involvement as refusing to pay back a loan without an explanation that the bank approves is practically theft. Moreover, in such cases the bank reserves the right to completely suspend the client permanently and all their accounts. The bank will contact this client and return to them their assets.

#### Suspension to Loan Payments

When a client encounters a time of crisis, the bank may choose to suspend their loan payments for a period of time if the client properly communicates their situation.

The bank can also choose to suspend payments for all clients, especially when its services would not be available for a long period of time.

When loan payments are suspended, they do not accrue penalties. Moreover, suspensions do not mean that a loan is completely waived; all suspended loans are required to be paid back eventually. When a suspension ends depends on the client for individual suspensions, and the bank on suspensions for all clients.

#### Completing a Loan

When a client makes a loan's final payment on time, they gain an additional boost in credit. If a loan is not finished on time, no extra credit will be earned. For C and B ranking clients, completing one loan lets them apply for another.

### Cheques & IOUs

The bank also lets clients sign promises or cheques to other players, specifying an amount of money. These cheques must be given out to players in the format of:

1. Date of issue (YYYY-MM-DD)
2. Name of the player, Discord username of the player
3. Amount in coins, which account to withdraw from (provide the account ID)
4. The person who has issued this promise

Any player who has received a cheque, not just a client, can then present it to the bank. The evidence of this cheque must be provided in the form of a Discord screenshot or a screenshot of chat messages. The bank will then contact the person who has issued the cheque and request verification. If a cheque has been verified, the bank will then withdraw the amount specified from the account stated, and then give it to the player who deposited it.

If the verification process fails, then no money will be withdrawn and the cheque will be rendered permanently invalid.

### Financial Consultation

The bank also offers consultation services to all clients. These services include advice on managing accounts, savings, setting up funds and other financial entities, and advice for business and investment. In essence, the bank offers any financial advice that a client may require.

Consultations cost 150c per 30 minutes. If consultation lasts a significant amount of time but less than 30 minutes (greater than 15 minutes), the same fee will still be charged.

### Referrals

If a client recommends the bank to another player, and the player signs up for an account and mentions the name of the client that referred them, that client will receive a significant boost in credit.