Banking Basics

Miscellaneous Banking Activities

Safe Deposit Vaults

Safe Deposit Locker, popularly called Lockers, Facility is one of the subsidiary services provided by the bank for keeping the valuables in the Safe Deposit Locker. This provides safety to the belongings of the customers against theft / burglary. Bank provides specially designed lockers kept at specially built strong rooms for keeping the valuables of the hirer purchased from reputed manufacturers.

These boxes are said to be impervious to fire, flood, and theft, and their contents are covered by the bank's insurer. Access to individual boxes is secured through two different keys: one kept by the customer, the other by the bank. The contents of a safe deposit box are not insured in the same way bank deposits are. Due to the fact that there is no way to verify the contents of a safe deposit box, banks will not insure their contents.
All the procedures prescribed by Know Your Customer (KYC) and Anti Money Laundering norms are followed for operations of the lockers.

Safe Deposit Vaults

Account opening

Lockers Agreement
Locker Rent Non- Payment of Rent Operation of Lockers Lost Keys Nomination Facility Delivery of Locker Contents

Safe Custody
Safe Custody is a service wherein a customer can handover any permissible article such as jewels, documents, etc. to the bank for safe custody on periodic payment of a fee. And the bank would keep the article/ document safe, would return the same to the customer on demand. It needs to be observed that there is a material difference between Safe Deposit Locker facility and Safe Custody. While in the former case the customer need not disclose the items placed in the Safe Deposit Locker, in the latter the article is handed over to the bank and the Banker is aware of what is being offered for Safe Custody. In the case of Safe Deposit Locker, the relationship between the banker and the customer is that of a landlord and a tenant, while in the matter of Safe Custody it is one of a bailor and a bailee.

Cash Management Services

Cash Management Service (CMS) is an ancillary service provided by the banks. Through CMS bank helps corporate /mid-corporate and business houses to efficiently manage their resources with great time saving, with utmost accuracy and at enormous cost savings in addition to greater customer care. The services offered under Cash Management Services can be broadly categorized under four categories: Cash Services Collection Services Payment Services Reconciliation Services

CMS Cash Services

Under the Cash Services, the bank arranges to pick up the cash, at stated intervals, from the centers indicated by the Customer. Once it is received at the designated premises, it is deemed to have been deposited in the Customers account. The risk of transporting the cash to the branch lies with the bank. Normally, banks tie-up with security agencies for this kind of activities and the transportations occur under the supervision of armed guards. A combination of Photo Identity Card and Scratch Card is a common practice employed by the banks to establish the identity of the pick-up agent.

CMS Collection Services

Large business houses receive thousands of cheques and drafts every day. These instruments will be drawn on various locations across geographies. When the volume becomes very large, these business houses tend to outsource the collection process to their banks. The Collection Services aims to speed up the collection of receivables of the Customer and can be sub-divided into 2 distinct processes.

1. Local cheques collection, and

2. Outstation cheques collection

CMS Payment Services

As with the case of receipt of cheques and drafts, large business houses have to write cheques and purchase demand drafts in bulk. When the volume grows large, they outsource these activities to their banks through the CMS offering of Payment Services . The Payment Services basically involves:

1. Customer Cheque Printing, and 2. Bulk Demand Draft Printing

Demat Accounts
Demat Account, short for Dematerialized Account is a type of banking account which dematerializes the paper based physical securities such as shares, debentures and bonds into electronic form. It can be considered as another form of a personal bank deposit account where people keep shares instead of money. A Demat account, however, can be opened with no balance of shares.

Depositories and Depositary Participants Opening a Demat Account Operation of Demat Accounts Fees Involved
Account-opening fee Annual maintenance fee Custodian fee Transaction fee Dematerialization and Rematerialization Charges

Sale of Mutual Fund Schemes

In many countries, including India, sale of mutual funds can be carried out through certified agents. While banks take up Corporate Agency, they have their designated staff certified in this respect and carry out the business through them. Sale of mutual funds is a risk free and commission earning business for the banks. Banks, as agents, provide basic information and services on the schemes launched to investors, such as: Assisting them in filling application forms Submission of application forms along with the cheques and documents Delivering redemption proceeds, and Answering scheme related queries investors may have. These are transaction oriented services where investors make the investment decisions themselves, and rely on the banks mostly for execution and logistics support.

Bancassurance The Bank Insurance Model (BIM), also sometimes known as Bancassurance, is the term used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products. Bancassurance simply means selling of insurance products by banks. This is a system in which a bank has a corporate agency with one insurance company to sell its products. In this arrangement, insurance companies and banks undergo a tie-up, thereby allowing banks to sell the insurance products to its customers.

Like sale of mutual funds, the banks have to utilize certified personnel to undertake the business.

Travelers Cheque
A Traveler's Cheque is a check that is issued by a bank or a financial institution which can be used as a form of payment. Traveler's Cheques are most often used by those traveling because they are widely accepted as payment in many parts of the world, yet can be replaced if lost or stolen by the issuing bank or financial institution. Traveler's Cheques are issued in a variety of monetary denominations such as the US Dollar, Euro, Japanese Yen, Canadian Dollar, Australian Dollar, and British Pound. The Players Issue of Traveler's Cheques

Encashing Traveler's Cheques

Fees and Commissions Loss or Theft

Bank Guarantees
A bank guarantee is a commercial instrument in the nature of a contract, intended between two parties, to secure compliance with the contract. It is an off-shoot of the main contract between two parties. A bank guarantee is a guarantee made by a bank on behalf of a customer (usually an established corporate customer) should it fail to deliver the payment, essentially making the bank a co-signer for one of its customer's purchases. No cash transaction occurs with respect to the payments until the guarantee is invoked by the beneficiary. The banks charge commissions and fees depending upon the amount and periodicity of the guarantee. Bank guarantees take either of the following forms: 1. 2. Financial Bank Guarantee Performance Bank Guarantee

Equipment leasing and Hire purchasing

The acquisition of assets - particularly expensive capital equipment - is a major commitment for many businesses. How that acquisition is funded requires careful planning.

Rather than pay for the asset outright using cash, it can often make sense for businesses to look for ways of spreading the cost of acquiring an asset, to coincide with the timing of the revenue generated by the business. The most common sources of medium term finance for investment in capital assets are Leasing and Hire Purchasing.
Leasing and hire purchasing are financial facilities which allow a business to use an asset over a fixed period, in return for regular payments. The customer chooses the equipment it requires and the finance company buys it on behalf of the customer. Leasing can take up any of the following 3 broad forms: Finance Leasing Operating Leasing Contract Hire

Credit Cards
Credit Card is a device used to obtain a revolving consumer credit up to a specified limit at the time of making a purchase. When a purchase is made, the credit card user agrees to pay back the card issuer on an agreed future date.

When a consumer makes a purchase using a credit or charge card, a small portion of the price is paid as a fee (known as the merchant discount), with the merchant keeping the remainder. There are typically three parties who split this fee amongst themselves: Acquiring bank
Issuing bank Network association

Credit Card Charges

Admission Fee Annual Subscription Over Limit Charges Cheque Pickup Charge Late Payment Charges Lost Card Charges Charge Slip Request Mobile Alerts Charges Auto Debit Charges

Cheque Return Charges Balance Enquiry Charges Cash Withdrawal Charges Card Replacement Charges Transaction Fee on Railway Tickets Balance Transfer Processing Charges Foreign Currency Transactions Markup Outstation Cheques Collection Charges Surcharge at Petrol Pumps

Financial Inclusion
Insurance Companies Financial Advice Commercial Banks and Financial Institutions

Insurance Products

Financial Inclusion
Access to financial services and products from formal financial system

Loan Accounts

Savings Accounts
Payment Services

Small Loans

Postal Savings Accounts Remittance Services Micro Financial Institutions Post Offices

Financial Inclusion - Scope Scope Financial Inclusion

Financial Inclusion should include access to financial products and services like, Bank accounts check in account Immediate Credit Savings products Remittances & Payment services Insurance - Healthcare Mortgage Financial advisory services Entrepreneurial credit

Financial Inclusion Scope Financial Inclusion Process

Customers with Smart Cards

Business Correspondent with Point of Transaction Terminal

Sponsor Banks Branch

Service Providers Server

Banks Main Server

Value Added Services

ATM / Debit Cards

Electronic Statements
Internet Banking Mobile Banking Bill Pay Service Online Trading Private Banking