Definition of 'Redeposit'
1. The requirement for a person to reinvest a certain amount of money into their retirement fund after he or she previously requested and obtained a return on the deposits made to the fund during a set time period, in order to receive a certain payout from the fund upon retirement.
2. A cash management policy used by the Bank of Canada, where money is transferred from the central bank to the chartered banks.
Investopedia explains 'Redeposit'
1. If an employee is eligible at anytime to request a refund on the contributions made to a retirement fund, they will have to redeposit back into the fund at some point to retain the level of retirement pay they're due to receive before receiving the refund and to maintain the age at which they are eligible to retire. This repayment is referred to as a redeposit service.
2. By transferring money to the chartered banks, there is an injection of funds into the money supply. The purpose of increasing the money supply by a redeposit is to prevent interest rates from climbing too high.