This document provides an overview of banking and financial tools in India. It defines a bank as a financial institution that collects deposits and lends money, with the Reserve Bank of India regulating all banks. It outlines several common banking tools like savings deposits, current deposits, fixed deposits, recurring deposits, letters of credit, lines of credit, customs guarantees, and bank guarantees. Savings deposits provide low interest for withdrawals within limits, while current deposits allow unlimited transactions but no interest. Fixed deposits cannot be withdrawn before maturity but offer higher interest rates.

1. Banking and Financial awareness
By
R.N.D.Prasad
(Asst Manager(po), SBI)

2. What is a Bank
• Bank is a financial institution or financial
intermediary that collects deposits and
channels those deposits into lending activities
• RBI is the central bank in India that
regularizes all the banks in India
• There are 19 public sector banks along with
SBI and 5 associate banks of SBI

3. Banking Tools
• Savings Deposit
• Current Deposit
• Fixed Deposit
• Term Deposit
• Letter of Credit
• Line of Credit
• Customs Guarantee
• Bank Guarantee

4. • Demat account

5. Savings Deposit
• Most common deposit that most of us see in
our daily lives
• Carries an insignificant interest that is decided
by bank itself
• Restricted number of withdrawals and
restricted amount

6. Current Deposits
• Mostly used by organizations or individuals
who requires unlimited number of
withdrawals or amount
• Carries no interest
• Unrestricted withdrawals and amount
• Offers the feature overdue

7. Fixed deposits
• Deposits cannot be withdrawn in the
stipulated period
• Carries higher interest rates
• It can also be called term deposit or time
deposit
• You may get a loan on these certificates

8. Recurring Deposits
• Investing tool for people who have constant
and reliable income
• Amount can be paid in installments
• Carries interest rate greater than Savings
deposit but lesser than FD
• Post office deposits are general example for
these deposits

9. Letter of Credit
• It is a document issued by a financial
institution, or a similar party, assuring
payment to a seller of goods and/or services
provided certain documents have been
presented to the bank
• These are primarily used in international trade

10. Line of Credit
• It is any credit source extended to a
government, business or individual by
a bank or other financial institution.
• A line of credit may take several forms, such
as overdraft protection, demand loan, special
purpose, export packing credit, term loan,
discounting, purchase of commercial bills,
traditional revolving credit card account, etc.

11. Customs Guarantee
• It is a function of the bank offered for
importers
• Banks assess customer’s financial stability and
capability to offer this feature
• An importer can get a customs guarantee from
his bank and he can pay customs tax after he
cashes the imported material
• Banks may charge certain amount for this
feature

12. Bank Guarantee
• It is offered to prove the customer’s
trustworthy or financial capability to a third
party
• If the person failed to achieve underlying
contract the third party can invoke the B.G
• Banks charge certain amount for this feature