The document discusses various aspects of banking transactions. It defines what a bank is, noting they accept deposits and provide loans. The document outlines bank characteristics like dealing with money and connecting depositors with borrowers. It also describes key bank functions such as accepting deposits, lending money, transferring funds, and collecting payments. Additionally, the document discusses the types of bank accounts including savings, current, recurring, and term deposits. It provides details on opening an account, like selecting an account type and submitting documents, and highlights advantages of having a bank account like safe money storage and access to loans.
2. What is A Bank?
Word bank is derived from Italian word “Banco” or French word
“banque” – meaning a “Bench” or money exchange table
Banks are financial institutions which use money deposited by
customers as investments and agreed to return when they need
Banks also provide loans for potential customers & charge
interest
Banking system must be strong for any country to develop
Banks advance money to agriculture, industries, traders and all
other sections of the society
Services of bank is called Banking
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3. Characteristics of Banks
Dealing with money
Individual/firm/company
Acceptance of deposits from public & return to them when
required
Lending loans to all sectors & individuals
Payment & Withdrawal can be done to help customers
Agency & Utilities services
Profit & Service Orientation
Ever increasing functions: Various services & activities
Connecting link: Between depositors & borrowers
Banking business
Name identity
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4. Functions of Banks
Accepting deposits from public & others
Lending money to public, institutions or industries
Transferring money from one place to another or from one
account to another
Collecting money by cheques, drafts & bills
Discounting of bills
Hiring safe deposit lockers to store gold, documents, etc.
Issuing letters of credit & guarantee
Conducting government transactions (State & Central)
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5. Bankers & Customers
Relation between banker & customer can be General or Special
General relationship:
Debtor or Creditor relationship
Subsidiary relationship
Agent & Principal Relationship
Special relationship:
Obligation to honour cheques
Maintain secrecy of accounts
Many services are offered by Banks:
Loans: Credit cards, personal, home, vehicle & business loans
Mange trading: Mutual funds
Signature guarantees
Provide safe deposit lockers
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6. Banking Transactions & Post Offices
Banking transactions are controlled by Reserve Bank of India (RBI)
which controls all the banks
RBI formulates the monetary policy which is followed by all banks
State Bank Groups, 20 Nationalised Banks, 21 Private Banks & 19
Foreign banks – total 8000 bank branches in rural & urban areas
Postal department planning to start a bank “Postal Bank of India”
Provide financial services like Postal savings, national savings certificate,
Kissan Vikas Patra, Monthly recurring deposits, Postal life insurance
Important banks of India are:
RBI, Commercial, Industrial Development, Land Development, Co-operative,
& Individuals
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7. Types of Bank Accounts
Generally four kinds of bank accounts
Savings Bank Account:
Used by people who have regular income
Given to students, senior citizens, pensioners, etc.
Encourage people to save – provides interest
Current Account:
Mostly used by businessmen who have large number of regular
transactions with the bank
Includes deposits & withdrawals on a regular basis – no limit transaction
No interest is given but some service charge might be collected
Recurring Deposit Account: opened to serve for a future date
Term Deposit Account: used to deposit money for a certain
period
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8. Procedure to Open Bank Account
Select the type of account to open
Approach a bank & meet them
Fill bank account proposal form
Provide reference for opening the account
Submit the bank account form fully filled in – attach
photograph
Officer will verify the documents submitted
Make initial deposit to the account
Mobile Banking, internet banking & credit card details must not be
provided to anyone
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9. Advantages of Opening Bank Account
Safe custody of money
Helps in making payments
Helps in collection of money
Holders get advances & loans
Smooth financial transactions
Safe deposit lockers
Banks provide:
Facility to build savings & looking for lending
Provide no restriction to transactions
Provide cheques & drafts for collection to concerned account
Help in providing cash using cheques, ATM cards, or withdawal slips
Help in paying bills: telephone, water, electricity, credit cards, etc.
Can help in transfer of bank accounts to different branches.
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