Depository Bond Law and Legal Definition

Depository bond means a bond given by a bank to guarantee both the safety of funds and their availability for withdrawal as indicated in the terms of deposit to the depositors. It protects a public body’s deposits if the bank becomes insolvent. It is normally used for municipalities and school districts. A depository is not a "public officer;" hence a depository bond is not an "official bond," within the strict meaning of the term. The purpose of depository bonds is to protect the municipality against the loss of its funds placed on deposit with the depository, and interest due thereon.[ State ex rel. Board of Finance v. Aetna Casualty & Surety Co., 100 Ind. App. 46 (Ind. Ct. App. 1934)].