BANKING (FINANCE)

WHAT IS BANKING ?
Bank is a commercial institution licensed as a receiver of deposits. Banks are mainly concerned with making and receiving payments as well as supplying shortterm loans to individuals. Exists to help you make the most of your money. Assist you with your monetary requirements and promote savings. The process which is undertaken by the bank is known as banking

How do they do it ?? By offering different products and Services

Banking Services Deposits E.g. Savings Current Fixed Loans Short Term E.g. Overdraft Long Term Services Retail Institutional E.g. Bank Guarant ee Trade Finance Capital Market E.g. DP Custodian Merchant Banking Debenture Trustees

E.g. E.g. Auto Loan DDs Home Loan Lockers Bill Pay

TYT TYPES OF BANKS rent types of Banks

Types of Banks Central Bank (RBI)

Commercial Banks

Non Banking Finance Companies (NBFCs) Regional Rural Banks State Finance Corporations (SFCs)

Term Financial Institutions

Public Sector E.g. SBI PNB BOB

Private Sector E.g. HDFC Bank ICICI Bank

Foreign E.g. Citibank ABN HSBC

Cooperative Banks

Indian Financial Institutions E.g. IFCI NABAR D SIDBI

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State/Central

Private

Primary Credit Societies

ACTIVITIES OF BANK
Accepting deposits from Public Lending money to public Remittances/Collection Business Keeping valuables in safe custody Government business Acting as trustee Treasury services Capital Market activity Making and receiveing payments for customers

ACCOUNTS

Current account: used for transfer functions Deposit account and saving accounts are used for deposits When a loan is agreed a separate loan account is created for the customer

DEPOSITS AND LOANS

Deposit Deposit Deposit Deposit Bank Loan

Loan

DEPOSITS AND LOANS

Banks accept deposits from various customers (e.g. private individuals, business enterprises, public corporations). These deposits, the liabilities of the bank, enable the banks to grant loans to various borrowers (again private individuals, business enterprises, public corporations). The granted loans are assets in the account of the bank.

BANKS TRANSFORM FUNDS

Transformation of size: banks transform many small deposits into big loans Tranformation of term: a part of short term deposits remains at the disposal of the bank for a longer period of time, e.g. savings deposits repayable on demand remain at the banks disposal for 3 years in average

How banks raise capital for lending

Basically a bank like any other company has two possibilities of raising capital. Owners funds or equity and creditors funds or debt funds.

Creditors

Deposits
Sight deposits Time deposits Savings deposits

Loans from other banks

Inter bank financing

Issue of their own bonds

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ELECTRONIC BANK SERVICES

Online banking is the fastest growing Internet activity in INDIA Types of Services Bank Cards Automated Services

BANK CARD TYPES

TYPE Check Cards or ATM/Debit Cards

DESCRIPTION Bank cards that allow for the payment of goods and services to be subtracted directly from a bank deposit account. Can be used with merchants that take major credit cards known as point of sale (POS) transactions. Bank cards with preset, limited value. Used to pay for goods and services. Alternative to cash.

Stored Value Cards

ELECTRONIC BANK SERVICES

Direct Deposit Transfers between Accounts Transfers to a Third Party Online Banking Bank by Phone ATM

REGULATION OF ELECTRONIC BANKING SERVICES

Electronic Fund Transfer Act
Protects consumers using any type of electronic banking from loss and protects their privacy. Banks must: Offer consumers a record or receipt for all computer transactions. Investigate errors and report to consumer within ten days of error notification.

BANK ACCOUNT TERMS

Bank Statement Cancelled Check Check Check Register/Ledger Endorsement Fee Interest Minimum Balance

Outstanding Transactions Overdraft Overdraft Protection Payee Reconciling a Bank Statement Transaction Limits

COMMONLY ACCEPTED FORMS OF ID

Primary ID*

Photo Driver s License issued within India State Non-Driver Photo ID Photo Learner s Permit Government Photo ID Passport Resident Registration Card

Naturalization Certificate Employee Photo ID (from a recognizable employer) Photo Trade License (barber, plumber, electrician, etc.) Student Photo ID (college/trade school) Medicare Card (must be 65 or older)

COMMONLY ACCEPTED FORMS OF ID

Secondary ID*

Foreign Driver s License State/Local Gun Permit Utility Bill (Name and address of individual account should be listed) Current Bank Statement National Credit Card Bank-issued Debit or Check Card

Pay Stub Car Registration Mortgage Statement Letter of Introduction from Bank, Embassy, or wellknown Employer Welfare Card Supplemental Health Insurance Card

OVERDRAFTS AND BOUNCED CHECKS

Overdrafts and bounced checks occur when you complete a financial transaction (e.g., write a check) for more than what is available in the account. Your financial institution may pay the amount and charge you a fee, known as an overdraft fee or a nonsufficient funds fee.