The document provides an overview of the banking domain, including: - Defining key terms like money, financial instruments, assets and liabilities, and non-performing assets. - Describing the structure of the banking sector in India including the roles of the central bank and different types of banks. - Explaining various retail banking services offered to individuals and businesses like deposits, loans, credit/debit cards, ATMs, online and mobile banking. - Providing details on deposit products, retail channels, funds transfer mechanisms, and the services offered by banks in areas like corporate, retail, and investment banking.

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3. FEW OF THE GIANTS IN BANKING
 International and Commercial Bank of China
 Assets of this Chinese bank are more than the entire banking
sector of India!
 Assets = 3616 (US$ billion)
 INR= 239789435200000
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5. WHAT IS A DOMAIN?
 Sector of economy for which AUT is being developed.
 Insurance
 Banking
 Life sciences
 Telecommunication
 E-Commerce
 Game Application
 etc.
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6. ADVANTAGES OF DOMAIN KNOWLEDGE
 Reduces the training time
 Knowledge of functional flow chart (work flow, business process &
rules)
 Good Idea on UI features
 Helps in writing precise and accurate test cases
 Those hoping for the position of ‘Business Analyst’ at the earliest must
need a strong command on domain knowledge
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7. OBJECTIVE
 Provide an overview of Banking Domain
 Enable Technology people understand Financial Terms
 Explain Operations in specific lines of banking
 Cover Global Banking Practices
 Introduce some of the recent developments in banking
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8. KEYWORDS
 Concept of money
 Financial Instruments
 Financial Statements
 Introduction to Banking
 Retail Banking
 Consumer Lending
 Cards and Payments
 Commercial and Wholesale Banking
 Investment banking
 Investment Management
 Settlement
 Corporate Services
 Insurance
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9. MONEY
 Standard unit of Exchange- advancement over barter system
 Currencies-based upon development level of countries
 Exchange Rates- Who decides, Pegged currencies
 Face value of currency
 Standard Value currency
 Interest charged on loan amount- Simple and Compound
 Simple- On Rs.100 by 10 per cent, amount paid every year is Rs. 10
 Compound- On Rs.100 by 10 per cent, amount paid every year varies
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10. INFLATION
 Rise in cost of goods and services over a period
 Real rate of interest = Nominal rate of Interest-Inflation Rate
 Nominal rate of interest = 10%
 Inflation rate 4%
 Real rate of interest = 6%
 Increase in Prices reduces the value of currency
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11. COST OF CAPITAL
Land, Labor, CAPITAL, Enterprise(Idea)
 Depends upon- Borrower, type of financing, market timing, collateral,
tenure for debt
 Cost of capital include following
 Interest for debt
 Dividend, expected earning for equity
 WACC- Weighted Average Cost of Capital- If more than one source of
finance is used.
 WACC= Cost of each*Weight
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12. FINANCIAL INSTRUMENTS
 Capital- Business needs capital for operations, fixed assets.
 Methods by which capital can be raised
 Debt
 Bank Loans
 Bond/Debentures: Fixed, Floating-rating, Corporate, Govt.
 Equity
 Owners equity
 Venture Capital
 IPOs
 Mutual Funds
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13. …CONTINUED
 Derivatives
 Forwards
 Future
 Options
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14. DEBT
 Money owed by one entity to other
 Cost is interest
 Debt is considered senior to equity i.e. the interest on debt is paid
before the dividends on stock in case of liquidation of assets
 Examples- Bonds, Loan, Commercial papers
 Investors chose between debt and equity based on their investment
objectives
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15. BONDS
 An investor loans money to an entity at a specific interest rate.
 Small deposits from multiple people
 Investment ceiling
 Interest is generally paid semiannually
 Factors influencing coupon rate
 Prevailing economic conditions
 Issuers Credit rating (risk)
 In return investor gets the bond/certificate which contains:
 Interest rate (Coupon rate)
 Maturity date (Repayment date)
 Face amount
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16. …CONTINUED
 Corporate bond
 Secured bonds- backed by specific assets
 Unsecured bonds (Debentures)
 Treasury Securities (Government agencies)
 Treasury bills-Short term
 Treasury bonds-Long term
 Most secure bonds
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17. EQUITY
 Equity (Stock)- represents ownership interest
 Common Stock
 Voting Rights
 Majority shareholders manage organization
 Popular
 Corporations sells it through IPO
 Can be traded in secondary markets-BSE, NYSE etc.
 Preferred Stock
 No voting rights
 Fixed rate of return
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18. MUTUAL FUNDS
 Investment companies
 Pool resources from individual investors
 MF companies invest into diverse sector of economy
 Investors are equally responsible for loss or gain
 Dividends earned are distributed according to the investment
Hedge Fund
A group of investors who take financial risks together in order to try
to earn a lot of money
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19. DERIVATIVES
 It is a contract between two or more parties
 Obligation on buyer and seller
 Forward
 Agreement to buy/sell an asset in future at a specified price
 Ex. MCX
 Future
 Agreement to buy/sell an asset in future at a future price
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20. FINANCIAL MARKETS
Place where financial instruments are traded
 Primary Financial Markets
 New financial instruments are issued
 Initial Public Offering
 Secondary Financial Markets
 Primary instruments (Shares) are traded
 Investors can monetize their shares
 Ex. BSE, NYSE
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21. BANKING
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22. BANKING
 Any financial institution licensed to accept deposits and issue
credit through loans
 Functions
 Channelize savings
 Credit facilities to borrower
 Investment avenues o investors
 Facilitate the trade and commerce dealings
 Financial Inclusion
 Minimize cash transactions
 Provide financial services
 Creation of money in the economy
 Restricts expansion of black money
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23. STRUCTURE OF BANKING SECTOR IN INDIA
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24. CENTRAL BANK
 Banker’s bank
 Regulator to other banks
 Governments bank
 Provide stable monetary and financial policy
 Decides policy rates-Impacts money in the market
 Protects rights of the consumer by supervising banking institution
 Monitors inflow and outflow of foreign currencies
 Clearing house facility
 Banker of last resort
 Ex. RBI
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25. HOW DO BANK EARN PROFITS?
 Difference in the rate of interest between depositors and lenders
 Number of products
 Through investment of its resources
 Fee based services
 Net banking
 Mobile banking
 Demand Draft
 Universal Banking
 Commercial as well as investment banking services under one roof
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26. BASEL FRAMEWORK
 BIS- Bank of International Settlement
 Located in Basel, Switzerland
 Fosters co-operation among central banks and other agencies in
pursuit of monetary and financial stability.
 A forum to promote discussion and policy analysis among central
banks and within the international financial community
 It sets standards for best practices in banking which are ensured by
all banks
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27. SERVICES OFFERED BY BANK
1. Corporate banking
1. Trade Finance
2. Cash Management
2. Retail Banking
1. Deposits
2. Branch & Electronic Banking
3. Credit card services
4. Retail Lending- Home, Personal, Car
5. Private banking & wealth Management
6. Business banking for SMEs
3. Investment Banking
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28. RETAIL BANKING
 Serves financial needs of individuals (Consumers) and SMEs
 Large volume low value transactions
 Products and services
 Deposits
 Loans
 Credit cards
 Debit cards
 Investment products
 Local branches, ATMs
 Net Banking
 Mobile Banking
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29. ASSETS AND LIABILITIES IN BANKING
 Liabilities- Money received by bank from depositors
 Asset- Loans extended by bank
 Revenue- Money that is maid by an organization in year
 Liquidate- To sell a business/property especially to pay off debt
 Asset-Reconstruction-Here, the right or interest of any bank or financial
institution in any financial asset is acquired by the asset re-construction company for
the purpose of realization of dues.
 NPA-Non-Performing Asset (bad loans)
 An asset of a bank (such as a loan given by the bank) turns into NPA when it
ceases to generate regular income such as interest etc for the bank
 Biggest challenge faced by Indian Public sector banks
 Ex. Kingfisher owes 7000 crore to PSBs
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30. DEPOSIT PRODUCTS
 Demand Deposits
 Deposited and withdrawn on demand
 Saving and Current
 Term Deposit
 Money kept with the bank for a specified period
 Fixed Deposit
 Attractive returns
 Ensure capital availability for banks
 D-MAT Account
 For trading and of shares
 No-Frill Accounts
 Limited services at a low cost
 Zero balance accounts
 Jan-Dhan accounts
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31. RETAIL CHANNELS
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32. BRANCH BANKING
 Teller Operations
 Teller- Deals directly with consumers
 Serves as front line in banking
 Relationship Manager
 Banks POC to the customer
 Develops tailored banking solutions for each client
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33. CORE BANKING/MULTI-BRANCH BANKING
 Network of bank which allows customer of a bank to perform
transaction at any branch of the same bank
 Geographical constraints are removed
 Branch customer becomes bank’s customer
 This is achieved through a set of software called banking applications
 Ex. Finacle(Infosys)
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34. ATM
 Computerized Telecommunication Device
 Typical ATM Services
 Cash withdrawal – Limit per day restricted by respective bank
guidelines
 Money Transfer between accounts
 Cash/ Check Deposits
 Utility Bill Payments
 Balance enquiry /Account Statements
 Mobile Top Ups
 VISA & Master networks are large global networks that service ATMs.
 Interbank operations are settled in clearing house
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35. TELEPHONE BANKING
 Transactions over phone
 Automated phone answering systems(IVR/VRU) with keypad response
 Voice recognition capability
 VRU- Voice Response Unit-A Programmed computer responds to caller
 IVR- Interactive Voice Response-Computer phone application which
accepts keypad selection and responds
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36. ONLINE BANKING
 Financial transactions on a secure website operated by respective bank
 Batch transactions – operations are carried out with least human
intervention
 Bill Pay and Recurring payments
 E-Tax
 Statements : Monthly or quarterly bank statements
 Transaction history
 Fund transfer
 NEFT
 RTGS
 IMPS
 IFSC- Indian Financial System Code
 is an alpha-numeric code that uniquely identifies a bank-branch
participating in the NEFT system.
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37. FUND TRANSFER
NEFT RTGS
 National Electronic Fund
Transfer
 No transaction limit
 Not a immediate mode of
transfer during banks working
hours only.
 Real Time Gross Settlement
 There is minimum amount limit
 Immediate mode of transfer
though during working hours of
bank
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38. IMPS
 Immediate Payment Service
 Instant money transfer through mobile phone or online
 Mobile number of remitter and beneficiary should be linked to their
respective bank accounts
 Best way for transferring remittances
 MMID- Mobile money identifier is generated
 There is a limit on amount of transaction
 SWIFT- Society for Worldwide Interbank Financial
Telecommunications
 SWIFT transports messages between two financial institutions. This
activity involves the secure exchange of proprietary data while ensuring its
confidentiality and integrity
 BIC- Uses Bank Identifier Code
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39. INTERNATIONAL BANKING
 Facilitate imports and exports of their clients – trade financing
 Arrange for foreign exchange – cross-border transactions and foreign
investments
 Participate in international loan syndicate – lending to MNCs- project
financing and to sovereign governments – economic development
 Trade foreign exchange products for their own account
 Gateway for the transfer of remittances by expatriates
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40. INVESTMENT BANKING
 Functions
 Private Equity
 Buying/Selling
 Corporate Advisory
 Managing company assets
 Capital Raising
 Underwriter
 Security middlemen
 Long term financing
 Emerging Markets
 Merger & Acquisitions
 Ex. TechMahindra-Satyam, IGate-Patni, Facebook-Whatsapp
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41. CARDS AND PAYMENTS
 Cards- Fastest growing means of non-cash payments
 Non-cash payment instruments
 Cheque
 Debit card
 Credit card
 C0-Branded cards- like credit cards associated with a particular firm
 Affinity card-Tie-up between a bank and an organization
 Corporate/ Commercial card
 Prepaid card- gift card, mall cards
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42. EMERGING PAYMENTS
 Internet Currencies/Digital cash/E-wallets
 Preload account with money
 Transfer money or make payments
 No time barrier
 No need to enter card credentials
 Ex. Paytm wallet
 Contactless Payments
 Radio Frequency ID
 Near Field Communication(NFC)
 Eliminate swiping card, signing slip at the POS
 Targeted at eliminating cash transactions at retail counters
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45. MORTGAGE
 A customers personal guarantee with the lender
 Commonly used to refer to loan for the purpose of purchasing property.
 Commercial Mortgage
 Commercial building as a collateral
 Loan taken by businesses
 Residential Mortgage
 Residential property as a collateral to secure repayment.
 Loan taken by individual borrowers
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46. MORTGAGE FLOW
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47. ROLE OF INFORMATION TECHNOLOGY (IT) IN
THE BANKING
 Competitiveness compel to adapt to latest technologies
 Instrument of cost reduction
 Effective communication with people and institutions associated with
the banking business.
 Better market infrastructure
 helps the financial intermediaries to reach geographically distant and
diversified markets in a cost effective manner
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48. Insurance
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49.  Definition: Insurance is defined as the equitable transfer of the risk
of a loss from one entity to another in exchange for payment
 Terminologies:
 Insurer: Insurance company selling the policy
 Insured: Policy holder or the entity availing the policy
 Re-Insurance: Insurance by another insurer of all or a part of a risk
previously assumed by a insurance company
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50. CONTINUED…
 Premium: An amount charged by insurer in order to cover insured
against a risk
 Factors determining premium amount:
 The Frequency of Claims (how many)
 The Severity (Cost of each Claim)
 Condition of insurer, kind of policy, probability of risk, etc.
 Underwriter: Person who approves the policy and determines the
premium to be charged against a coverage.
 Claim: Request by insured in order to seek policy benefits from insurer
 Adjudicator: One who processes or settles the claims.
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51. TYPES OF INSURANCE
 Life Insurance (Long Term)
 Non-Life Insurance (Short Term)
 By the Law of Insurance in USA
 Unemployment Insurance
 Social Security
 Worker’s Compensation
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52. CATEGORY OF INSURANCE
 Dental
 Health
 Life
 Business
 Residential
 Transport/Communication
 Other
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53. INSURANCE PROCESSES
Branches of Insurance company
1) Policy Administration Systems
2) Claim Management System
3) Investment Management System
4) Third Party Administration Systems
5) Risk Management Solutions
6) Regulatory & Compliance
7) Actuarial System (Valuation & Pricing)
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59. 59
Plant trees & save water for the sustainability of earth
AND save baby girl for the sustainability of human
race.