Beruflich Dokumente
Kultur Dokumente
Functioning of a Bank
Accepting deposits from Public/Others (Deposits) Lending money to Public (Loans) Transferring money from one place to another (Remittance)
Acting as trustees
Functioning of a Bank
Primary functions:
Acceptance of deposits: savings account, fixed deposit account, demand deposits Advance loans: routine loans, overdraft, discounting of bills
Other functions:
Agency functions: Collection of interest, dividend, salary, pension on behalf of customers Buying/selling of foreign exchange Payment of rent, insurance premium, electricity and telephone bills Collection of cheques, promissory notes, bills
Functioning of a Bank
General functions:
Issue of letter of credit (LC), travelers cheque, credit cards, ATM cards, debit cards Safe custody of valuables and documents Lockers Special advisory service to customers Electronic fund transfers (EFT) Internet banking Insurance
Banking in India
The Reserve Bank of India (RBI) An introduction Central bank of the nation
Fundamental duties Carry out the duties of financial &economic advisor, fiscal agent and treasurer to the Govt Extend credits to banks and conduct open market operations in order to regulate money supply Carry out money and credit policy as per the needs of the economy Try to maintain price stability Take necessary measures to protect the domestic and international value of the Indian currency and regulates its volume and circulation
Banking in India
RBI
Fundamental duties Determine the terms and types of deposits, as well as their maturity dates and validity periods Manage gold and foreign exchange reserves. Also trade in foreign exchange and precious metals on the stock exchange if need be
Banking in India
RBI Fundamental powers:
Privilege to issue banknotes Authority to take decisions on money and credit issues Submit proposals to the government on financial matters Determine the rediscount, discount and interest rates applicable to its own transactions.
Banking in India
Advisory duties (on request of the Govt)
Advise measures on money &credit regulation in the economy Advise implementation of banking law Consultation establishment of new banks &other financial institutions Consultation liquidation of such institutions
Banking in India
Organised sector
Commercial banks huge geographical coverage great public confidence Also includes public, private, co operative and foreign banks Includes specialised banking institutions: IDBI (Industrial Development Bank of India) financing big industrial projects SIDBI (Small Industries Development Bank of India) finance to the small-scale industries NABARD (National Bank for Agriculture and Rural Development) needs of Agri &rural sector EXIM (Export-Import Bank) topmost expert body handling foreign trade NHB (National Housing Bank)
Banking in India
Unorganised sector Moneylenders &local/indigenous banker who satisfy the needs of large no.of rural people Salient features:
Started since times immemorial Indigenous banker banking + trading activity Illiterate customer base
Banking in India
Unorganised sector They use Hundi as a negotiable instrument
Remittance instrument (to transfer funds from one place to another) Credit instruments (to borrow money IOUs) Trade transactions (bills of exchange) Hundi is a unconditional order, not covered under the Negotiabe Instruments Act, 1881, more often used as equal to cheques by indigenous banker
Banking in India
Unorganised sector Local bankers fall outside the control and supervision of RBI Still major source of funds for small borrowers but started shrinking due to
Fast expansion of bank branches and etc Spread of education Increase in IT
Other Busienss Frequently combines banking with trading activity Usually very high rate of interest. Also Rates of interest comparatively lower fluctuates with the needs of borrowers Lots of paer work, formalities and procedures Min. formalties/procedures Money can be withdrawn only thrugh cheques, drafts, order etc. during No restrictions as to mode of demand, of working hours in bank premises time &place of transaction Number of agency and utility services Do not provide such services to customers Money has to be returned on Usually , money has to be returned after a demand fixed time period High technology used for most purposes Hardly use technology in their work
Banking Business Deals in money & financial products like deposits, loan etc Creators of credit. Receive deposit and lend money Regulated by RBI &other regulatory authorities CRR &SLR - Statutory norms as per RBI Balance between profitability with social justice and public welfare Financial Accounts - Profit and loss statements, cash, flow statements are prepared on routine basis
Other Business Deals in production &sale of goods and services Only engage in manufacturing, trading and providing other services General statutes governing business &special transactions do exist No statutory restriction on liquidity Greater freedom to earn profits Usually final account is prepared once a year
Banker as a trustee
A bank keeps documents &jewellery and other valuables on behalf of its customers (beneficiary) in safe custody and returns them when customer demands
Banker as an Agent
Buying &selling of securities or collects cheques on behalf of its clients
Principle of profitability Interest income: invest surplus funds in securities &earn interest Income spread: financial indicators of bank s profit
Total fixed assets (PPE)Land, building, machinery, furniture &tools Current assets cash &cash equivalents, short-term investments, receivables, inventory &pre-paid expenses Current liabilities bonds, mortgages &loans are payable exceeding 1 yr fixed/long-term liability if it due in current fiscal year current liability
Banker-Customer relationship
Bank: intermediary between borrower &lender Bank customer: should have account with any bank Deposits: customer creditor &bank debtor Overdraft facility: situation reverses Bank liable for breach of contract fail to pay cheque with out valid reason
Banker-Customer relationship
The debt owed by a banker, subject to statutory limitation barred after 6 years Deposit can be demanded by personally or by duly authorized proxy The banker should not leak the terms &conditions governing the relationship to a third party. Good customer service helps to survive, grow and prosper