Académique Documents
Professionnel Documents
Culture Documents
defines Banking as
INTERMEDIATION
RISKS IN LENDING
Credit Risk
Liquidity Risk
Interest Rate Risk
Banks are essentially risk
managers
Payment
system
Pay deposits on demand
Payment through cheques
Facilitate movement of money
Circulatory system of the economy
Financial services provider
Products of mutual funds and
insurance companies
Collection of utility bills, etc.
Banking
Cheque
issued by a bank on
itself but payable at another
branch
In case there is no branch of the
issuing bank, arrangements can
be made with the other bank(s)
having its/their branch(es)
Networking
of the branches
and centralised computer
system is a pre-requisite
Customer
Transfer
Local
Clearing
ECS or Electronic Clearing
Cheque Collection
National Clearing
CMS Cash Management
Services
Bills Collection
Services involving Foreign
Exchange
Debit ECS
Benefits
Speed
Accuracy
Secured channel
Avoids manual intervention (processing of
transactions)
Saves time due to systemic handling
Benefits flow to bank, customer and user
public
Current Accounts
Demand deposits
No interest is paid on balances in current
accounts
Savings Accounts
Demand deposits for non-business entities
Interest is paid on balances
Fixed Deposit Accounts
Accepted for fixed period
Pre-mature payment is permitted as measure
of customer service
Recurring Deposit Accounts
Saving of a fixed sum every month for a fixed
period
Retail Loans
Personal Overdrafts
Credit Cards
Retail Loans
Provided to individuals
Nature
Consumer durables
Housing
Vehicle
Personal expenses
Eligibility
Margin
Interest application
Repayment monthly or quarterly
Unsecured and secured
Personal Overdraft
For unexpected and periodic
requirements
Eligibility
Margin
Interest application
Repayment
Unsecured and secured
Credit Cards
For purchases / withdrawals
Eligibility
Credit limit
Repayment monthly or in
installments
Unsecured
Business credit
For acquisition of fixed assets
For financing current assets
Eligibility
Amount
Borrowing/repayment
Secured and unsecured
overdraft
cash credit
packing credit
demand loans and lines of credit
business cards
Cash Credit
Packing Credit
Similar to cash credit
For meeting export orders
Originally on order to order basis
Presently running account facility is
permitted
Concessive interest rate
Liquidation can be only by export
proceeds
Delay in liquidation attracts penalty
Secured by a charge on the current
assets
Sagar mal sharma
Business Card
Equivalent of a credit or debit card to
individuals
Enables business entities to make their
purchase of required supplies without
resorting to use of cheques or demand
drafts
Interest is charged from day one
Being popularized in India
Cheque purchase
Bill purchase
Bill Discount
Letter of Credit
Bill Negotiation
Guarantees
Cheque Purchase
Avoids delay involved in collection of cheques
Funds are made available to sellers immediately
Interest is charged from the date of purchase to
date of realization of the cheque
Bill Purchase
Advance against documentary bills is payable at
sight
Bills are then sent for collection
Advance is liquidated from collection proceeds
Interest is charged from the date of purchase to
the date of receipt of proceeds is recovered
upfront
Bill Discount
Advance against documentary Usance
bills
Interest charged for the Usance period is
called discount
Discount is recovered upfront
Letter of Credit
Bill Negotiation
Purchase or discounting of a bill
accompanied by an LC
Risk to negotiating bank is less
Interest/discount is charged upfront
Guarantees
Issued by banks at the request of
customers in respect of transactions
other than normal trade transactions
It can be as a replacement of EMD, for
receipt of mobilisation advance, for
release of retention money, towards
payment of penalty for non performance
Commission is charged for issue of
guarantee resulting in fee income to
bank
It is a non-fund based facility
Distribution
Collection of taxes and bills
DeMAT accounts
Safe keeping
Advisory services
The
products offered by
banks within the collection
service are
Taxes
Utility Bills
The
Banking Channels:
ATMs
POS Terminals
Internet banking
Phone banking
Mobile banking
Branch
Convenience to customers
Cost effective to banks
Nearly 70% of transactions through nonbranch channels