A bank is an establishment authorized by the government to accept deposits, pay interest, make loans, act as an intermediary in financial transactions, and provide other financial services. Banks play an important role in a country's economic development by facilitating capital formation, supporting agricultural, trade, and industrial development, developing foreign trade, transferring liquidity, monetizing the economy, providing finance and credit, implementing monetary policy, and providing security for individual and organizational savings. People benefit from banking services like deposits, investments, loans, and other financial products.

2. What is a Bank ???
It is an establishment authorized by a government to accept
deposits, pay interest, make loans, act as an intermediary in
financial transaction and provide other financial services to its
customers.
What is Banking ???
The business conducted or services offered by bank.

3. Importance of Banking

4. •  Plays an active role in the economic development of the
country.
•  Accelerating the rate of Capital Formation.
• Supports to agricultural, trade and industrial development.
•  Development of foreign trade.
•  Transfer of Liquidity(money).
•  Monetisation of Economy.
•  Provision of Finance and Credit.
•  Implementation of monetary policy.
•  Provides Security to the savings of individual/organisation.
•  Control Supply of Money and Credit.
•  Provide Government with credit, tax revenues and other
Importance of Banking

5. How do we benefit from Banking???

7. Investments
Deposits
Fixed
Recurring
Money
Market
T-BILLS
CDs
CPs
Acceptance
Market
Call Money
Debt Instrument
Govt
Securities
Bond
Market
CDsPPF

8.  Regular Fixed Deposits:
In this type of FD scheme, the tenure is fixed for a period ranging 1
week to 10 years.The interest rate of each period is pre-determined,
and an investor can choose to stay invested for a suitable period.
 Special Fixed Deposits:
In special tenure FD schemes, the fund can be invested for a special
period like 333, 399 or 555 days, and rate of interest is higher.
Tax Saving Fixed Deposits:
This type of FD scheme attracts investors who want to invest for
saving income tax.There is a compulsory lock-in of five years under
this type, and the fund cannot be withdrawn before completion of
the period.
MinimumAmount= Rs 10,000/-, MaximumAmount= Rs
1,50,000/-
Deposits

9.  Floating Fixed Deposits
Under this scheme, an investor can opt for a market-based interest
rate.The rate of interest is renewed automatically with the change in
the base rate.
 Recurring deposit scheme
Under this scheme, an investor can regularly deposit a fixed amount
every month for a fixed tenure and at a pre-decided interest rate.The
corpus keeps on growing every month towards the maturity period.
*Formulae: MV=n*p+(n(n+1)p*r/2400)
Where MV=MaturityValue, n=number of periods, p=monthly installment,
r=rate%
Deposits(Contd…)

10.  Flexi Fixed Deposits
- Also known as Auto-sweep(sweep-in) and Reverse Sweep(Sweep-out)
- Auto-Sweep is when the balance in excess of a stipulated amount is automatically
transferred to an Fixed Deposit for a default term of one year. Hence, amount in excess
of a fixed limit can now earn a substantially higher rate of return. It has two components
Savings A/c and Current A/c.
• Reverse-Sweep is done when in case of shortfalls in the Savings account to honor
any debit instruction.
• Hence in case the customer wants to withdraw more than what is deposited in the
Savings account component, the bank would withdraw money from the Fixed
Deposit component.
Deposits(Contd…)

11. • 1. By submitting Form 15G/15H
• 2. Distributing FD investment
• 3.Timing the FD
• 4. Splitting the FD
How to save TDS on Fixed Deposits???

12. As per RBI definition, ” The money market is a mechanism that
deals with the lending and borrowing of short term funds (less
than one year)”.
Money Market and its Features
 Transaction have to be conducted without the help of brokers.
 It is not a single homogeneous market, it comprises of several
submarket like call money market, acceptance & bill market.
The component of Money Market are the commercial banks,
acceptance houses & NBFC (Non-banking financial companies).
In Money Market transaction can not take place formal like stock
exchange, only through oral communication, relevant document
and written communication transaction can be done .
 Defination:-
 Features:-

13. Composition of Money Market
Call Money
Commercial
Paper
Acceptance
Market
Treasury Bill
Certificate of
Deposits

14. Call Money Market• Short Term Finance, Repayable on Demand with a maturity period of one to
fifteen days.
• Used for INTER-BANK transactions.
• Money Lent for one day is ‘Call money’ and if exceeds one day then ‘Notice
Money’. And rate of interest is known as ‘Call rate’.
• Call money is a method by which banks lend to each other to be able to
maintain the CRR(Cash Reserve Ratio).
• Highly volatile, interest varies from day to day or sometimes even hour to hour.
Commercial Paper(CPs)• Short term unsecured loan issued by a corporation typically financing day to
day operation.
• Much safer investment because the financial situation of a company can
easily be predicted over a period.
• Only company with high credit rating issue CPs.

15. Treasury Bills (T-Bills)(T-bills) are the most marketable money market security.
They are issued with three-month, six-month and one-year maturities.
T-bills are purchased for a price that is less than their par(face) value; when they
mature, the government pays the holder the full par value.
 T-Bills are so popular among money market instruments because of affordability
to the individual investors
Currently, the rates of T-Bills are:
91-day T-Bill: 8.6456%
182-day T-Bill: 8.7050%
364-day T-Bill: 8.7432 %

16. A banker’s acceptance (BA) is a short-term credit investment created
by a non-financial firm
BAs are guaranteed by a bank to make payment i.e Low-Risk.
Acceptances are traded at discounts from face value in the secondary
market
BA acts as a negotiable time draft for financing imports, exports or
other transactions in goods.
Banker's Acceptance
Certificate of deposit (CD)
A CD is a time deposit with a bank.
Like most time deposit, funds can not be withdrawn before maturity
without paying a penalty.
CDs have specific maturity date, interest rate and it can be issued in
any denomination.
The main advantage of CD is their safety.
Anyone can earn more than a saving account interest.

17. Other Debt instruments Government Securities Market (G-Sec Market):
• It consists of central and state government securities. It means
that, loans are being taken by the central and state government.
It is also the most dominant category in the India debt market.
• It is the Reserve Bank of India that issues G-Secs on behalf of the
Government of India.
• These securities have a maturity period of 1 to 30 years. G-Secs
offer fixed interest rate, where interests are payable semi-annually.
For shorter run T-BILLS.
• Includes the Money market Instruments also.
Bond Market:
• These are the bonds issued to meet financial requirements at a
fixed cost and hence remove uncertainty in financial costs.
• Consists of Corporate Bond, Fixed rate bond, Floating rate bond,
zero-coupon bond, Capital Indexed Bond, Bonds with call/put

18.  Corporate Bonds
• These bonds come from PSUs and private corporations and
are offered for an extensive range of tenures up to 15 years.
• Comparing to G-Secs, corporate bonds carry higher risks,
which depend upon the corporation, the industry where the
corporation is currently operating, the current market
conditions, and the rating of the corporation.

19. Fixed Rate Bonds:
• These are bonds on which the coupon rate is fixed for the entire life of the
bond. Most government bonds are issued as fixed rate bonds.
 Floating Rate Bonds:
• These bonds are securities that do not have a fixed coupon rate. The
coupon is re-set at pre-announced intervals (say, every 6 months, or 1 year)
by adding a spread over a base rate.
• In this case so far, the base rate is the weighted average cut-off yield of the
last three 364-day Treasury Bill auctions preceding the coupon re-set date,
and the spread is decided through the auction.
• Floating rate bonds were first issued in India in September 1995.
 Zero Coupon Bonds:
• Zero coupon bonds are bonds with no coupon payments. Like T-Bills, they
are issued at a discount to the face value.
• The Government of India issued such securities in the 90s; it has not issued
zero coupon bonds after that.

20. Capital Indexed Bonds:
• These are bonds, the principal of which is linked to an accepted index of
inflation with a view to protecting the holder from inflation.
• These bonds were first issued in December 1997 for a period of 5yrs.
• The government is currently working on a fresh issuance of Inflation Indexed
Bonds wherein the payment of both the coupon as well as the principal on
the bonds would be linked to an Inflation Index (Wholesale Price Index).
• In the proposed structure, the principal will be indexed and the coupon will be
calculated on the indexed principal. In order to provide the holders protection
against actual inflation, the final WPI will be used for indexation.
 Bonds with Call/Put Options:
• Bonds issued with features of optionality, wherein the issuer can have the
option to buy back (call option) or the investor can have the option to sell the
bond(put option) to the issuer during the currency of the bond.
• The optionality on the bond could be done after the completion of five years
from the date of issue.
• Govt has the right to buy-back the bond(call option) at par value(equal to the
face value), while the investor has the right to sell the bond(put option) to the
government at par value at the time of any of the half-yearly coupon dates

21. Public Provident Fund (ppf)

22. • PPF is a long term investment scheme floated by Govt. of INDIA.
• To encourage Savings habit and provide Tax benefits to salaried and
self-employees.
• Investor can invest as minimum as Rs. 500 to maximum Rs. 1,50,000
in the PPF account in one complete financial year in one lump sum
subscription or in maximum 12 transactions.
• Tenure is 15yrs, aftr the completion, investor can invest furthur for
5yrs or withdraw the amount.
• Can avail loan, mostly 70-80% of the amount paid.
• Tax Benefits on investment as well as on interest and maturity
payments.
• Current Interest rate varies from 8.8%-9.5%, depending on the Banks
Criteria.
Public Provident Fund (ppf)(Contd…)

23. Public Provident Fund (ppf)(Contd…)

25.  Personal
Loans
Eligibility For salaried Individuals For Self-Employed
Individuals
Minimum and Maximum Age 21 years and 58 years
respectively
25 years and 65 years
respectively
Minimum Annual Income ` 1,20,000 ` 1,50,000
Minimum years in service/
business
1 year 3 years
Loan Tenure 1 years to 7 years 1 years to 7 years
Interest Rates 12-24%. 12-24%.
Mode of Repayment Post-dated cheques or
Standing orders to debit from
personal A/c
Post-dated cheques or
Standing orders to debit
from personal A/c

26.  Home
Loans
Eligibility For salaried Individuals
For Self-Employed
Individuals
Minimum and Maximum Age
21 years and 65 years
respectively
21 years and 70 years
respectively
Maximum Annual Income ` 1,00,000 ` 1,50,000
Minimum years in service/
business
1 year 3 years
Loan Tenure 5 years to 20 years 5 years to 20 years
Interest Rates 9-16% 9-16%

27.  Mortgage (Loans against
Property)
Eligibility For salaried Individuals
For Self-Employed
Individuals
Minimum and Maximum
Age
21 years and 60 years
respectively
21 years and 65 years
respectively
Minimum Annual Income ` 1,20,000 ` 1,50,000
Minimum years in service/
business
1 year 3 years
Loan Tenure 1 years to 15 years 1 years to 15 years
Loan to cost ratio 60% of residential cost 50% of commercial cost
Tax Rebate NIL NIL

28.  Auto loans (2-wheeler, 3-wheeler & 4-
wheeler)
Eligibility For salaried Individuals
For Self-Employed
Individuals
Minimum and Maximum Age
21 years and 60 years
respectively
21 years and 65 years
respectively
Minimum Annual Income ` 1,00,000 ` 60,000
Loan Tenure 1 years to 7 years 1 years to 7 years
Loan to cost ratio 85-90% of car cost 85-90% of car cost

29.  Education
Loan
Eligibility For Students
Minimum and Maximum Age 16 years and 26 years respectively
Expenses covered
course and examination fee, refundable
deposits, procurement of books, travel
expenses
Loan Amount for studies in India Upto ` 10,00,000
Loan Amount for studies abroad Upto ` 20,00,000
Repayment Period
5-8 years(includes 2 yrs monetary
period)

30. Thank You