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Banking Overview

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  • 1. Agenda
    • I Introduction to Banking
    • II Introduction to Retail Banking
    • III Banking Terminology
    • IV CASA
    • V Time Deposits
    • VI Loans
    • VII Remittances
    • VIII Non-Branch Delivery Channels
    • IX Audit and Supervision
    • X Software Expectations
    • XI Wrap-Up
  • 2. Introduction to Banking
  • 3. Banks
    • Role of Intermediary
    • Banks and “Banking” Functions
    • Competitors to Banks
    • “ Disintermediation”
    • Changing Role of Banks
    • Towards a Financial Supermarket...
  • 4. What is Banking
    • Borrowing and safe keeping of money
    • Lending of money
    • Transmitting of money
    • Exchanging of money
    • Exchange of financial information
  • 5. BANKING FRAMEWORK
    • Retail Banking
      • CASA, Deposits, Loans, Credit Cards, FX, Remittances, Securitization
    • Corporate Banking
      • Trade Finance, Project Finance, Bills, LCs, Guarantees, Syndicated Financing
    • Investment Banking
      • FX, Money Markets, Securities, Leasing, Factoring
  • 6.
    • Private Banking Trusts, Portfolio Management
    • Fiduciary Services
      • Pensions, Custody Services, Will & Estate Management
    • Other services Correspondent Banking, Safe deposit Vaults, Insurance, Travel, Bill Payment, Tax Counselling
    BANKING FRAMEWORK-2
  • 7. Retail VS Wholesale Banking
    • Retail Banking Wholesale Banking
    • Focus On Individual Customers Focus On Large Corporate Entities
    • Wide Branch Network Limited Branch Networking
    • Variety Of Services Available Focus On Smaller Customer Base
  • 8. Money Multiplier Effect
    • Money supply creation by Banks
    • Need to regulate and control
    • Methodology of regulation
  • 9. Customer and the Bank
    • Who is a “Customer”
    • Customer Confidentiality
    • “Ownership” of Accounts
    • Precaution against “Conversion” and “Frauds”
    • Legal Responsibility to prevent Money Laundering Breaking country’s Laws
  • 10. Bank-Client Relationship
    • “ Good Faith”
    • Banker’s General Right of Lien
    • Rights of Set -Off
    • “ Estoppel”
    • Confidentiality
    • Disclosure Under Laws of the Land
    • Full Disclosure of Terms and Conditions of Relationship
    • Can bank Discriminate between Customers in Treatment?
  • 11. Interest
    • Accrual
    • Capitalization
    • Accrual Frequency
    • Capitalization Frequency
    • Interest Methods
      • Monthly Minimum, Daily Balance, Average Balance,...
    • Interest Basis
      • 30/360, Actual/Actual, Actual/360,...
    • Withholding tax, Interest tax deduction
  • 12.
    • Bank Accounting Peculiarities
    • “Window Dressing”
    • Income Recognition
    • NPA Classification
    • International Accountancy Rules
    • Capital Adequacy
    • Deposit Risk Cover Protection
    Banks’ Books of Accounts
  • 13. General Ledger
    • General Ledger and Subsidiary Ledger
    • Central Bank Reporting
    • Multi-Currency Treatment
    • Treatment of Inter-Branch Transactions
    • Treatment of Suspense Accounts, Entries
    • External General Ledger
  • 14. Lending of Money
    • Statutory controls on lending
    • Principles of sound lending
    • Purposes
    • Periods
    • Types of lending
    • Security for advances
  • 15. Principles of Sound Lending
    • Borrower
      • Character
      • Capital
      • Capability
    • Bank
      • Safety of funds
      • Spread of risk
      • Liquidity of funds
      • Profitability
    • Viability of the scheme
  • 16. Traditional Banking...
    • Competition, Disintermediation and Diminishing Spreads
    • Movement towards Fee-income
    • Technology Driving Banking, Banking Driving Technology
    • Market Place crowded, Mixed, Technology-driven
  • 17. Types of lending
    • Fund based
      • Term Loans
      • Cash Credit / Overdraft
      • Purchase & Discount of Bills (inland & foreign)
    • Non Fund based
      • Letters of credit
      • Guarantee
      • Bills Co-acceptance
  • 18. Term Loans
    • Fixed Amount
    • For purchase of fixed assets
    • Payable
      • in suitable installments
      • in lump sum (principal + interest)
    • Usually Secured
  • 19. Cash Credits & Overdrafts
    • Running accounts
    • Drawings fluctuate within a pre-determined band
    • As many drawals as necessary
    • Interest charged on daily balances
    • Cash credit : Usually secured
    • Overdraft : Could be secured or unsecured
  • 20. Bills : Purchase & Discount BILLS INLAND FOREIGN DEMAND USANCE DOCUMENTARY CLEAN
  • 21. Types of Bills
    • Demand Bills
      • Payable on demand or At sight or
      • On presentment or
      • No time for payment specified
    • Usance Bills
      • Payable on the expiry of a certain period after date or sight
  • 22. Types of Bills
    • Clean Bill
      • Unaccompanied by any other allied documents
      • eg : Cheques, Warrants
      • Trade bills without the relative document evidencing dispatch of goods
      • Unsecured. Can be Sight or usance
    • Documentary Bill
      • Accompanied by document of title to goods
      • Secured/Unsecured: Secured/Unsecured
  • 23. Advantages of Bill Business
    • Definite date of repayment
    • Re-discounting facilities
    • Stability of value
    • High profitability
    • Greater legal protection
  • 24. Bill Transactions
    • Collection
    • Purchase & Discount
    • Negotiation
  • 25. Letters of Credit
    • Issuing bank undertakes to make payment to the beneficiary of the LC against presentation of specified documents
    • Beneficiary is assured of payment
    • No immediate outflow of funds
    • Parties to a credit
      • Applicant (buyer)
      • Beneficiary (seller)
      • Issuing bank
  • 26. Guarantees
    • To perform the promise or discharge the liability of a third party in case of his default
    • Three parties
      • Guarantor / Surety (banker)
      • Principal Debtor (on whose behalf)
      • Principal Creditor (in whose favour)
    • Financial Guarantee
    • Performance Guarantee
    • Deferred payment guarantee
    • No immediate outflow of funds
  • 27. Related Services
    • Merchant banking
    • Counselling corporate clients on
      • Capital structure
      • Form of capital to be raised
      • Terms & conditions of the issue
      • Under writing of the issue
      • Timing of the issue
      • Preparation of the prospectus
      • Raising of long term loans
  • 28. Related Services (contd...)
    • Trustee, executor, & admin services
    • To handle
      • Investments / estates / properties
      • Distribution after death
    • To act as guardian of a minor’s property
    • To administer public trusts
  • 29.
    • Factoring
    • Factor maintains the trade debts of the client company
      • Maintains sales ledger
      • Issues invoices
      • Collects payments
    • Credit protection
      • Factor assumes responsibility for trade debts, due to the client company
    • Factor advances a proportion of the trade debts immediately and the balance on maturity of the debts
      • Improves client's liquidity
    Related Services
  • 30. Clearing House Operations
    • Outward clearing
    • Inward clearing
    • Returns- outward clearing
    • Returns- Inward clearing
    • Re-presentations
    • Time factor
    • Reconciliation
  • 31. Automated Clearing House
    • Electronic clearing
    • Paperless transfers of funds
    • Settlement
  • 32. Foreign Exchange
    • FX Market
    • Exchange rates
    • Risks
    • Revaluation
    • Mark to the market
    • Risk management
  • 33. Legal aspects in Banking
    • Customer
    • Types of legal relationships
    • Duties and obligations
    • Rights and remedies
    • Confidentiality
    • Law relating to Limitations
    • Disclosure regulations in Accounts
  • 34. Law and Banking
    • Application of Law
    • Jurisdiction
    • Civil laws
    • Criminal laws
    • Law of limitation
  • 35. Supervision of Banks
    • “Central” Bank of the country
    • Degrees of supervision
    • Modes of Supervision
    • Audit and self-regulation
    • Importance of proper supervision
    • Cross-country regulation of Banks