Banking occupies one of the most important positions in the modern economic world.
It is necessary for trade and industry. Hence it is one of the great agencies of commerce.
Although banking in one form or another has been in existence from very early times,
modern banking is of recent origin. It is one of the results of the Industrial Revolution and
the child of economic necessity. Its presence is very helpful to the economic activity and
industrial progress of a country.
The term ‘Bank’ has been defined in different ways by different economists. A few definitions
are:
According to Walter Leaf “A bank is a person or corporation which holds itself out to
eceive from the public, deposits payable on demand by cheque.” Horace White has defined
a bank, “as a manufacture of credit and a machine for facilitating exchange.”
According to Prof. Kinley, “A bank is an establishment which makes to individuals such
ances of money as may be required and safely made, and to which individuals entrust
money when not required by them for use.”
This project was done by me under cheif marketing manager of J&K bank,the study was conducted by me in both rular and urban areas of srinagar to kmow consumer perception towards products and services of J&KBANK
WHAT IS A BANK, CLASSIFY AND DISCUSS BANKS.
Bank: a bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Banking occupies one of the most important positions in the modern economic world.
It is necessary for trade and industry. Hence it is one of the great agencies of commerce.
Although banking in one form or another has been in existence from very early times,
modern banking is of recent origin. It is one of the results of the Industrial Revolution and
the child of economic necessity. Its presence is very helpful to the economic activity and
industrial progress of a country.
The term ‘Bank’ has been defined in different ways by different economists. A few definitions
are:
According to Walter Leaf “A bank is a person or corporation which holds itself out to
eceive from the public, deposits payable on demand by cheque.” Horace White has defined
a bank, “as a manufacture of credit and a machine for facilitating exchange.”
According to Prof. Kinley, “A bank is an establishment which makes to individuals such
ances of money as may be required and safely made, and to which individuals entrust
money when not required by them for use.”
This project was done by me under cheif marketing manager of J&K bank,the study was conducted by me in both rular and urban areas of srinagar to kmow consumer perception towards products and services of J&KBANK
WHAT IS A BANK, CLASSIFY AND DISCUSS BANKS.
Bank: a bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
Normal Labour/ Stages of Labour/ Mechanism of LabourWasim Ak
Normal labor is also termed spontaneous labor, defined as the natural physiological process through which the fetus, placenta, and membranes are expelled from the uterus through the birth canal at term (37 to 42 weeks
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
2. MEANING OF BANK
Bank is a financial institution which collects money from the
public in the form of savings and deposits.
The accumulated money is distributed by the way of loans &
advances to the needy persons in various fields such as
agriculture, industries, commerce etc.
Definition: An establishment for custody of money , which it
pays out on customer’s order.
3. BANK IS LIKE A TANK OF MONEY
Bank works in the same way how water tank works i.e.
collecting water from different sources and afterwards
distributing it through different channels.
4. ORIGIN OF BANKS
• The word ‘Bank’ is derived from:
Italian word, “Banco”
French word, “Banque”
Latin word, “Bancus”
Which means a Desk or a Bench.
• In olden days money lenders used Desk or Bench to
exhibit the coins of different nations.
• The early bankers transacted their business at benches in
a market place.
5. ORIGIN OF BANKS CONTD…
Some people stated that the word ‘Bank’ is derived from a
German word “Bunk” or “Banck” which means ‘joint
stock fund’ or ‘common fund’ collected from the large
number of members for financing industry, commerce &
agriculture.
6. EARLY HISTORY OF BANKING
In olden days people used to deposit money in temples
with priests acting as financial agents.
People lost faith in religion and hesitate to deposit money
and valuables in money.
As popularity of temples started diminishing private
banks came into existence.
7. REASON FOR EMERGENCE OF PRIVATE
BANKS
With temples people were getting only security.
As Private banks started paying interests, temples could
not compete with banks.
Bank of Venice, Italy is oldest national bank in the world.
Bank of Geneva
Bank of Amsterdam
These are the oldest banks that came into existence.
8. DEVELOPMENT OF BANKING IN ENGLAND
Credit goes to Goldsmiths & Merchants.
A London goldsmith is considered as the founder of Banking in
England.
The merchants of London started depositing their earnings and
valuables with the goldsmith.
Goldsmith used to issue a receipt known as “Goldsmith Notes”.
This System became popular in England.
Goldsmith started lending money that lied with him unused.
This business became profitable and majority of goldsmiths
started this banking business.
Ultimately joint stock banks were established on the basis of
limited liability to banks.
Thus, the ‘Bank of England’ was established in 1694. It was
the first bank in the world.
9. DEVELOPMENT OF BANKING IN INDIA
Banking in India is started by two British ‘Managing
agency houses’, namely,
Ferguson & Company
Alexander & Company
Banking in India originated in 18th Century. The first bank
was The General Bank of India which was started in
1786.
Bank of Hindustan was the second bank which started
in 1790. But both banks failed.
10. DEVELOPMENT OF BANKING IN INDIA
CONTD…
After failure of these two banks. Britishers started three
Presidency Banks in Presidency Towns (Status given by
British to some big cities).
Bank of Bengal (1839).
Bank of Bombay (1840).
Bank of Madras (1843).
Later these three banks were merged to form the “Imperial
bank of India” in 1921. Which was transformed into “State
Bank of India” in 1955.
11. DEVELOPMENT OF BANKING IN INDIA
CONTD…
After this period Swadeshi Movement started in
India.
Demand was there that Banks should be
established entirely with Indian Capital & should be
managed by Indian People.
12. INDIAN BANKS WHICH WERE STARTED IN PRE-
INDEPENDENCE ERA
Oudh Commercial Bank was the first purely Indian bank
(1881).
Corporation Bank (1906). Now merged with Union Bank
of India.
Punjab National Bank (1894) One of the founders of this
bank was Lala Lajpat Rai.
Bank of India- first bank to open overseas branch in
London (1946).
Bank of Baroda.
Central bank of India.
13. BANKER &
CUSTOMER
There is no statutory definition of the
term ‘banker’ and ‘customer’
Banker
The business of a banker in ordinary
consists in receiving money from or an
account of a customer and repaying
the same on demand.
14. The Negotiable Instrument
banker as any person acting
Act defines a
as a banker.
The Banking Regulation Act, 1949 defines
‘banking company’ as a ‘company which transact
the business of banking in India.
15. Meaning of Banking:
Banking is an industry that handles cash, credit and other
financial transactions. Banks provide a safe place to store extra
cash and credit. They offer savings accounts, certificates of
deposits and checking accounts. Banks use these deposits to
make loans. These loans include home loans, business loans,
car loans etc.
Definition: Banking is defined as As per Sec.5 (b) of the
Banking Regulation Act “ Accepting of deposits of money
from public for the purpose of Lending or Investing, repayable
on demand or otherwise and withdrawable by cheque, draft or
otherwise”
16. CUSTOMER
A customer is a person who has some sort
of account, either deposit or current
account, with the banker.
17. DEFINITION OF CUSTOMER
According to Sir John Paget, Customer is a person,
(1) Who has account in the bank.
(2) Who enjoys service rendered by bank.
Bank do not have special customer as such, but
have some special procedure to treat their some
kind of customer.
Those who are distinguished from other types of
ordinary customer by some features, so they are
called as special types of customer.
18. WHO IS CUSTOMER ?
Customer of a bank ia a person who is maintaining an
account in his own name or in whose name the
deposits are maintained.
The customer is a person have an account with the
bank
19. Special Type of Customer
Individual A/C Institutional A/C
Holder Holder
20. 1. Minor
2. Illiterate
3. Lunatic
4. Married women
5. Joint account
6. Joint Hindu Family
7. Trust account
8. Clubs, Societies and Charitable Institutions
9. Partnership Firm and
10.Joint Stock Companies.
21. EXPLAIN IN DETAIL
1. Minor: A person who has not attend 18 years of age is
known as minor. Minor can not open account individually,
if he want to open account he has to take consent of parent
or guardian.
2. Lunatics : Lunatics is a person with unsound mind. Who
can not make rational decisions while entering in to
contract. So while making contract with lunatics, bank
takes guarantor on behalf of him.
3. Illiterate persons: Illiterate person who can not read or
write. Bank requires right hand thumb impression of
customer in stead of sign.
22. 4. Married Women: A married can open account in the bank
with the documents.
5. Joint Account: A joint account is opened jointly by any two
or more persons.
6. Sole Proprietorship: It is an account in the name of business
owned by one individual who is its proprietor.
7. Partnership Firm: A firm account should always be opened in
the name of the firm and not in the name of the individual
partner because a partner does not have authority to open a
bank account on behalf of the firm in his own name.
8. Joint Stock Companies: A joint stock company is an artificial
person and it has a separate legal entity. So a bank account can
be open. A joint stock company may either be a private limited
company or a public limited company.
9. Clubs, Associations societies, Trusts
24. Deposits with the bank is for fixed period of time
Principal is repayable on expiry of the term
Also known as term deposit
Deposit period=1 years or More
High rate of interest
25. After october 1997,banks were permitted to charge their
own interest rates.
Interest to be paid according to the schedules in the act.
Interest rate varies from bank to bank.
Depends upon the amount and period of deposit.
Minimum period of deposit was reduced to 7days from
April 1997
Maximum period=10 years
26. Interest may be paid quarterly or half-yearly or on the
request of the depositor
It is based on “half-yearly rests” or ”quarterly rests”
Amount is credited to the depositor’s saving or principal
account.
Withdrawal is not permitted through cheque.
27. It is a document of title
Not a negotiable instrument
Cannot be transferred by mere endorsement
Duly assigned and given to the bank
No cheques can be drawn
FDR signed by the depositor and presented by 3rd
party banker to get “Letter Of Authority”
28. Amount can be claimed by court’s order if FDR is lost
Amount due can be attached by court
No stamp to be fixed if the depositor is the prospective
claimant
Joint FD repayable to all or to one person
Limitation period=according to conditions printed on back
of the receipt
If FDR is lost/destroyed-duplicate receipt
-Indemnity Bond
30. Meant for personal savings
Interest rate is less than that of FD
Until 24.11.2020, interest rate=3-4%
31. SAVINGS BANK ACCOUNT
A savings account comes with a passbook and
cheque book feature. A savings bank
account earns low interest rate but allows the
customer the freedom to withdraw funds at any time
subject to a limit on monthly withdrawals. It is
possible to pay bills from your savings account.
32. Number of withdrawal is 50 for 6 months
Minimum withdrawal amount through,
(i)cheque =Rs.5
(ii)Form =Rs.1
(iii) ATM= Rs.100 (Max. Rs. 10000-15000)
Cheques and other instruments payable to 3rd parties
cannot be used.
33. banks prescribe their limit
Usually,Rs.500-Rs.1000 (Public Banks).
5000-10000 Rs. (Private Banks)
Zero Balance Accounts are also Offered (Pradhan Mantri
Jan-Dhan Yojna & Salary Accounts).
• Calculated quarterly or longer rest on the minimum balance
• Calculated between 10th and 30th/31st of everymonth
• Interest is credited twice in a year
34. o Accounts are opened with nil balance
o Provide banking facility to all sections of society.
o Accounts opened under Mahatma Gandhi National Rural
Employment Guarantee Act 2005 or MNREGA for
Indian Labour Law and Social Security that aim to
guarantee the ‘right to work’.
o Pradhan Mantri Jan Dhan Yojna that aims to expand
affordable access to financial services like bank
accounts, remittances, credit, Insurance and pensions.
35. Also known as cumulative deposit
Fixed amount of money is deposited every month(in
multiples of Rs.100)
Rate of interest is similar to FD
Monthly instalments to be made before the last
working day of the month
Maturity period of the deposit=6-10years
36. Recurring Deposit (RD) is a popular investment
option in India. It comes with an option of flexibility
for customers in the choice of investment amount
and tenure accompanied by multiple other benefits.
Investors can thus choose a minimum amount to be
invested every month over the term for assured
wealth generation.
If you do not have a lump sum amount to meet
short-term goals, depositing a small share of your
income to the RD account every month serves the
purpose well.
RECURRING DEPOSIT ACCOUNTS
37. The term periods are divided into three categories:
Short-Term Tenure: A short-term tenure usually
lasts from 6 months to a year.
Medium-Term Tenure: A medium-term tenure
usually lasts from more than a year to 5 years.
Long-Term Tenure: A long-term tenure lasts from
more than 5 years to 10 years.
TERM PERIOD OF THE RECURRING DEPOSIT
ACCOUNT
38. RD Features Applicability
Rate of interest
Between 5% to 8% (variable from
one bank to another)
Amount of minimum deposit From Rs. 10
Tenure of investment Between 6 months and 10 years
Frequency of interest calculation Usually every quarter
Mid-term or partial withdrawal Not allowed
Premature account closure Allowed with penalty
FEATURES OF RECURRING DEPOSIT
39. A simple financial product to invest in.
Guaranteed returns
Tenure and minimum amount to be deposited: Both
Long & Short Term.
Anytime withdrawal
Loan against deposit
Flexible recurring deposits
BENEFITS OF INVESTING IN RECURRING
DEPOSIT
40.
41. Introduced for business purpose
No restriction on number/amount of withdrawal
Deposits to be paid on demand(demand liability of
the banker)
No interest is given
42.
43.
44. FEATURES OF A CURRENT BANK ACCOUNT
A current account allows transactions beyond the scope
of a savings account
It is designed to facilitate frequent transactions –
transfer funds, receive cheques, cash, etc.
A current account can be operated by individuals,
proprietary concerns, public and private companies,
associations, trusts, etc.
No restriction on the number of transactions in a day
The prime objective of current account is to facilitate
smooth transactions for businesses
Nowadays, some banks offer interest rates on current
accounts as well
Current accounts charge interests on short-term funds
the account holder has borrowed from the bank
45. † 3rd party/endorsement cheques can be deposited for
collection
† Overdraft facility
† Loans and advances are given
No cash handling by the customer
Bankers collect cheques etc.
Regional Rural Banks(RRB) may pay 0.5% interest below
borrowing rate fixed for RRB
From May 1983,interest is paid at savings a/c rate for
deceased depositor from date of death till payment to
legal hiers
46. BENEFITS OF A CURRENT ACCOUNT
Allows for prompt business transactions
No limit on withdrawals
No limit on deposits in the home branch
Enables businessmen to make direct payments
using cheques, demand drafts, or pay orders
Provides overdraft facility
Provides internet banking and mobile banking
facilities
47. CHARACTERISTICS/FEATURES OF BANK
Dealing in Money
Name Identity (Must have the word “Bank” in its
name)
Connecting Link between Borrowers & Lenders
Individual/Firm/Company
Acceptance of Deposits
Loans and Advances
Payment and Withdrawal
Agency & Utility Services
Profit & Service Orientation (Objective)
Ever Increasing Functions & Activities
49. A. PRIMARY FUNCTIONS OF BANKS
The primary functions of a bank are also known as
banking functions. They are the main functions of a
bank.
1. Accepting Deposits
The bank collects deposits from the public. These
deposits can be of different types, such as :-
Saving Deposits
Fixed Deposits
Current Deposits
Recurring Deposits
50. a. Saving Deposits: This type of deposits encourages saving habit among the
public. The rate of interest is low. Withdrawals of deposits are allowed subject to
certain restrictions. This account is suitable to salary and wage earners. This
account can be opened in single name or in joint names.
b. Fixed Deposits: Lump sum amount is deposited at one time for a specific
period. Higher rate of interest is paid, which varies with the period of deposit.
Withdrawals are not allowed before the expiry of the period. Those who have
surplus funds go for fixed deposit.
c. Current Deposits: This type of account is operated by businessmen.
Withdrawals are freely allowed. No interest is paid. In fact, there are service
charges. The account holders can get the benefit of overdraft facility.
d. Recurring Deposits: This type of account is operated by salaried persons
and petty traders. A certain sum of money is periodically deposited into the
bank. Withdrawals are permitted only after the expiry of certain period. A higher
rate of interest is paid.
51. A. PRIMARY FUNCTIONS OF BANKS CONTD…
2. Granting of Loans and Advances
The bank advances loans to the business community
and other members of the public. The rate charged is
higher than what it pays on deposits. The difference
in the interest rates (lending rate and the deposit rate)
is its profit.
The types of bank loans and advances are :-
Overdraft
Cash Credits
Loans
Discounting of Bill of Exchange
52. a. Overdraft
This type of advances are given to current account holders. A certain
amount is sanctioned as overdraft which can be withdrawn within a certain
period of time say three months or so. Interest is charged on actual amount
withdrawn. An overdraft facility is granted against a collateral security. It is
sanctioned to businessman and firms.
b. Cash Credits
The client is allowed cash credit up to a specific limit fixed in advance. It can
be given to current account holders as well as to others who do not have an
account with bank. Separate cash credit account is maintained. Interest is
charged on the amount withdrawn in excess of limit. The cash credit is given
against the security of tangible assets and / or guarantees. The advance is
given for a longer period and a larger amount of loan is sanctioned than that
of overdraft.
53. c. Loans
It is normally for short term say a period of one year or medium term say
a period of five years. Now-a-days, banks do lend money for long term.
Repayment of money can be in the form of installments spread over a
period of time or in a lumpsum amount. Interest is charged on the actual
amount sanctioned, whether withdrawn or not. The rate of interest may
be slightly lower than what is charged on overdrafts and cash credits.
Loans are normally secured against tangible assets of the company.
d. Discounting of Bill of Exchange
The bank can advance money by discounting or by purchasing bills of
exchange both domestic and foreign bills. The bank pays the bill amount
to the drawer or the beneficiary of the bill by deducting usual discount
charges. On maturity, the bill is presented to the drawee or acceptor of
the bill and the amount is collected.
54. B. SECONDARY FUNCTIONS OF BANKS
The bank performs a number of secondary functions,
also called as non-banking functions.
1. Agency Functions
The bank acts as an agent of its customers. The bank
performs a number of agency functions which
includes :-
Transfer of Funds
Collection of Cheques
Periodic Payments
Portfolio Management
Periodic Collections
Other Agency Functions
55. a. Transfer of Funds: The bank transfer funds from one branch to another or
from one place to another.
b. Collection of Cheques: The bank collects the money of the cheques
through clearing section of its customers. The bank also collects money of the
bills of exchange.
c. Periodic Payments: On standing instructions of the client, the bank makes
periodic payments in respect of electricity bills, rent, etc.
d. Portfolio Management: The banks also undertakes to purchase and sell
the shares and debentures on behalf of the clients and accordingly debits or
credits the account. This facility is called portfolio management.
e. Periodic Collections: The bank collects salary, pension, dividend and such
other periodic collections on behalf of the client.
f. Other Agency Functions: They act as trustees, executors, advisers and
administrators on behalf of its clients. They act as representatives of clients to
deal with other banks and institutions.
56. B. SECONDARY FUNCTIONS OF BANKS
CONTD…
2. General Utility Functions
The bank also performs general utility functions, such
as :-
Issue of Drafts, Letter of Credits, etc.
Locker Facility
Underwriting of Shares
Dealing in Foreign Exchange
Project Reports
Social Welfare Programmes
Other Utility Functions
57. BANKER AND CUSTOMER RELATIONSHIP
The relationship between a banker and a customer
comes into existence when the banker agrees to
open an account in the name of the customer. The
relationship between a banker and customer
depends on the activities, products or services
provided by the customer. Thus the relationship
between a banker and customer is the transaction
relationship. Bank’s business depends much on the
strong bondage with the customer. Trust plays an
important role in building a healthy relationship
between a banker and a customer.
58. It means that to become a customer account relationship is a
must. Account relationship is a contractual relationship.
Banking is a trust-based relationship. There are numerous
kinds of relationships between the bank and the customer.
The relationships between a banker and a customer depends
on the type of transaction. Thus the relationship is based on
contract and certain terms and conditions.
59. BANKER AND A CUSTOMER RELATIONSHIP
• The relationship between a banker and a
customer depends on the type of transaction.
• These relationships confer certain rights and
obligations both on the part of the banker and
on the customer.
62. SPECIAL RELATIONSHIP
• Bank as a Trustee
– As per Sec. 3 of Indian Trust Act, 1882: A "trust" is
an obligation annexed to the ownership of
property, and arising out of a confidence reposed
in and accepted by the owner, or declared and
accepted by him, for the benefit of another, or of
another and the owner.’
– Thus trustee is the holder of property on behalf of
a beneficiary.
63. • Bailee – Bailor
– Sec.148 of Indian Contract Act, 1872: A "bailment" is the
delivery of goods by one person to another for some
purpose, upon a contract
purpose is accomplished,
that they shall, when the
be returned or otherwise
disposed of according to the directions of the person
delivering them.
– The person delivering the goods is called the "bailor".
– The person to whom they are delivered is called, the
"bailee".
– Banks secure their advances by obtaining tangible
securities. In some cases physical possession of securities
goods (Pledge), valuables, bonds etc., are taken.
SPECIAL RELATIONSHIP
64. • Lessor and Lessee
– Sec.105 of Transfer of property Act 1882: A lease
of immovable property is a transfer of a right to
enjoy
time,
such property, made for a certain
express or implied, or in perpetuity, in
consideration of a price paid or promised, or of
money, a share of crops, service or any other thing
of value, to be rendered
specified occasions to the
periodically or on
transferor by the
the transfer on such
transferee, who accepts
terms.
– Safe deposit lockers
SPECIAL RELATIONSHIP
65. • Agent and Principal
– Sec.182 of ‘The Indian Contract Act, 1872’ defines
“an agent” as a person employed to do any act for
another or to represent another in dealings with
third persons.
– The person for whom such act is done or who is so
represented is called “the Principal”.
– Banks collect cheques, bills, and makes payment
to various authorities viz., rent, telephone bills,
insurance premium etc., on behalf of customers
SPECIAL RELATIONSHIP
66. • As a Custodian
– A custodian is a person who acts as a caretaker of
some thing.
– Banks take legal responsibility for a customer’s
securities.
– While opening a Demat account bank becomes a
custodian.
SPECIAL RELATIONSHIP
67. • As a Guarantor
– Banks give guarantee on behalf of their
customers and enter in to their shoes.
– Guarantee is a contingent (conditional) contract.
– As per sec 31, of Indian contract Act, guarantee
is a “contingent contract ."
SPECIAL RELATIONSHIP
68. a. Issue of Drafts and Letter of Credits: Banks issue drafts for transferring money
from one place to another. It also issues letter of credit, especially in case of, import
trade.
b. Locker Facility: The bank provides a locker facility for the safe custody of
valuable documents, gold ornaments and other valuables.
c. Underwriting of Shares: Underwriting means determining the risk and price of a
particular security specially at time of IPO. The bank underwrites shares and
debentures through its merchant banking division.
d. Dealing in Foreign Exchange: The commercial banks are allowed by RBI to deal
in foreign exchange.
e. Project Reports: The bank may also undertake to prepare project reports on
behalf of its clients.
f. Social Welfare Programmes: It undertakes social welfare programmes, such as
adult literacy programmes, public welfare campaigns, etc.
g. Other Utility Functions: It acts as a referee to financial standing of customers. It
collects creditworthiness information about clients of its customers. It provides
market information to its customers, etc. It provides travellers' cheque facility
70. ORIGIN & GROWTH OF COMMERCIAL BANK IN
INDIA
Economists used to distinguish between commercial
banking, investment banking mixed banking systems.
England was the home of the pure commercial banking.
Pure commercial banking is one where commercial
banks mobilise deposits is to lend for short periods only.
Industries require short-term capital to purchase raw
materials, intermediate products and so on. The pure
theory of banking is based on one important assumption.
That is, a commercial bank cannot freeze its funds which
are mostly short-term deposits in permanent capital
investment in business undertakings.
71. Indian banking came into existence in a small way during 19th
century. Some industrialists established a few banks at that time. In
the early years of 20th century the swadeshi movement gave a
stimulus for the setting up of banks in India by Indian national. In the
beginning banks faced severe financial crisis. Particularly during and
after the First World War, about 87 banks liquidated. During great
depression in 1930s the bank failure in India was very severe. During
1937-48, as many as 620 banks failed. Thus the development of
banking in India before independence was lopsided. It was
characterized as a crop of bank failures.
The Second World War brought a revolutionary change in the Indian
banking system. In the wake of huge war expenditure, deposits of the
banks increased. Branches were opened in Public sector and self-
employment were to receive their due share in obtaining bank
finance.
Apart from this the banks are required to reconstitute their board of
directors. The government set up National credit council in 1968.
The Finance Minister was the chairman and the Governor of the
Reserve Bank was the vice chairman of the council
72. COMMERCIAL BANKS
Commercial Banks are regulated under the Banking
Regulation Act, 1949 and their business model is
designed to make profit. Their primary function is to
accept deposits and grant loans to the general public,
corporate and government. Commercial banks can be
divided into-
1. Public Sector Banks
These are the nationalised banks and account for more
than 75 per cent of the total banking business in the
country. Majority of stakes in these banks are held by the
government. In terms of volume, SBI is the largest public
sector bank in India and after its merger with its 5
associate banks (as on 1st April 2017) it has got a position
among the top 50 banks of the world.
73.
74. 2. Private Sector Banks
These include banks in which major stake or equity is
held by private shareholders. All the banking rules
and regulations laid down by the RBI will be
applicable on private sector banks as well. Given
below is the list of private-sector banks in India
75. 3. Foreign Banks
A foreign bank is one that has its headquarters in a foreign
country but operates in India as a private entity. These banks
are under the obligation to follow the regulations of its home
country as well as the country in which they are operating.
Given below is the list of foreign banks operating in India –
76. 4. Regional Rural Banks
These are also scheduled commercial banks but they are
established with the main objective of providing credit to
weaker sections of the society like agricultural labourers,
marginal farmers and small enterprises. They usually
operate at regional levels in different states of India and
may have branches in selected urban areas as well. Other
important functions carried out by RRBs include-
Providing banking and financial services to rural and
semi-urban areas
Government operations like disbursement of wages of
MGNREGA workers, distribution of pensions, etc.
Para-Banking facilities like debit cards, credit cards and
locker facilities
77.
78. SMALL FINANCE BANKS
This is a niche banking segment in the country and is aimed
to provide financial inclusion to sections of the society that
are not served by other banks. The main customers of small
finance banks include micro industries, small and marginal
farmers, unorganized sector entities and small business
units. These are licensed under Section 22 of the Banking
Regulation Act, 1949 and are governed by the provisions of
RBI Act, 1934 and FEMA
79. PAYMENTS BANK
This is a relatively new model of bank in the Indian
Banking industry. It was conceptualised by the RBI and is
allowed to accept a restricted deposit. The amount is
currently limited to Rs. 1 Lakh per customer. They
also offer services like ATM cards, debit cards, net-
banking and mobile-banking.
80. COOPERATIVE BANKS
Co-operative banks are registered under the Cooperative Societies Act,
1912 and they are run by an elected managing committee. These work
on no-profit no-loss basis and mainly serve entrepreneurs, small
businesses, industries and self-employment in urban areas. In rural
areas, they mainly finance agriculture-based activities like farming,
livestock and hatcheries.
Urban Co-operative Banks
Urban Co-operative Banks refer to the primary cooperative banks
located in urban and semi-urban areas. These banks essentially lent
to small borrowers and businesses centered around communities,
localities work place groups.
According to the RBI, on 31st March, 2003 there were 2,104 Urban
Co-operative Banks of which 56 were scheduled banks. About 79% of
these are located in five states, – Andhra Pradesh, Gujarat,
Karnataka, Maharashtra and Tamil Nadu.
State Co-operative Banks
A State Cooperative Bank is a federation of the central cooperative
bank which acts as custodian of the cooperative banking structure in
the State.
81. The different products in a bank can be broadly
classified into:
• Retail Banking
• Trade Finance
• Treasury Operations.
Retail Banking and Trade finance operations are
conducted at the branch level while the wholesale
banking operations, which cover treasury operations,
are at the head office or a designated branch.
FINANCIAL PRODUCT & SERVICES OFFERED BY BANKS
82. Retail Banking:
• Deposits
• Loans, Cash Credit and Overdraft
• Negotiating for Loans and advances
• Remittances
• Receiving all kinds of bonds valuable for safe
keeping
Trade Finance:
• Issuing and confirming of letter of credit.
• Drawing, accepting, discounting, buying, selling,
collecting of bills of exchange, promissory notes,
drafts, bill of lading and other securities.
83. Treasury Operations:
• Buying and selling of bullion. Foreign exchange
• Acquiring, holding, underwriting and dealing in shares,
debentures, etc.
• Purchasing and selling of bonds and securities on behalf of
constituents.
• The banks can also act as an agent of the Government or local
authority. They insure, guarantee, underwrite, participate in
managing and carrying out issue of shares, debentures, etc.
• Apart from the above-mentioned functions of the bank, the bank
provides a whole lot of other services like investment counseling
for individuals, short-term funds management and portfolio
management for individuals and companies. It undertakes the
inward and outward remittances with reference to foreign
exchange and collection of varied types for the Government
84. 1. Credit Card: Credit Card is “post paid” or “pay
later” card that draws from a credit line-money made
available by the card issuer (bank) and gives one a grace
period to pay. If the amount is not paid full by the end of
the period, one is charged interest
2. Debit Cards: Debit Card is a “prepaid” or “pay now”
card with some stored value. Debit Cards quickly debit or
subtract money from one’s savings account, or if one
were taking out cash. Every time a person uses the card,
the merchant who in turn can get the money transferred
to his account from the bank of the buyers, by debiting an
exact amount of purchase from the card. To get a debit
card along with a Personal Identification Number (PIN).
COMMON BANKING PRODUCTS AVAILABLE:
85. 3. Automated Teller Machine: The ATM’s are used by
banks for making the customers dealing easier. ATM
card is a device that allows customer who has an ATM
card to perform routine banking transaction at any time
without interacting with human teller. It provides
exchange services. This service helps the customer to
withdraw money even when the banks are closed. This
can be done by inserting the card in the ATM and
entering the Personal Identification Number and secret
Password. It allows the customers
• To transfer money to and from accounts.
• To view account information.
• To order cash.
• To receive cash.
86. 4. Electronic Funds Transfer (EFT):The system called electronic fund
transfer (EFT) automatically transfers money from one account to another.
This system facilitates speedier transfer of funds electronically from any
branch to any other branch. In this system the sender and the receiver of
funds may be located in different cities and may even bank with different
banks. Funds transfer within the same city is also permitted. The scheme
has been in operation since February 7, 1996, in India.
5. Telebanking: Telebanking refers to banking on phone services. A
customer can access information about his/her account through a telephone
call and by giving the coded Personal Identification Number (PIN) to the
bank. Telebanking is extensively user friendly and effective in nature.
87. 6. Mobile Banking: Mobile banking is the process of carrying out
financial transactions using your cell phone device. You essentially
use a mobile banking app to access and manage your funds. Most
banks in the country offer dedicated apps that are available on both
G-Pay, Phone-Pay, Paytm and Apple app store to help you with your
banking needs.
7. Internet Banking: Internet banking involves use of internet for
delivery of banking products and services. Banking is no longer
confined to the branches where one has to approach the branch in
person, to withdraw cash or deposits a cheque or request a statement
of accounts. In internet banking, any inquiry or transaction is
processed online without any reference to the branch (anywhere
banking) at any time.
88. Benefits of Internet Banking:
• Reduce the transaction costs of offering several banking services and
diminishes the need for longer numbers of expensive brick and mortar
branches and staff.
• Increase convenience for customers, since they can conduct many
banking transaction 24 hours a day.
• Increase customer loyalty.
• Improve customer access.
• Attract new customers.
• Easy online application for all accounts, including personal loans and
mortgages
89. Demat: Demat is short for de-materialisation of shares. In short,
Demat is a process where at the customer’s request the physical
stock is converted into electronic entries in the depository
system.
In January 1998 SEBI (Securities and Exchange Board of
India) initiated DEMAT ACCOUNT System to regulate and to
improve stock investing. As on date, to trade on shares it has
become compulsory to have a share demat account and all
trades take place through demat.
90. LEARNING OUTCOMES
1. Origin & History of Banking
2. Types of banks
3. Types of customers
4. Types of deposits
5. How did origin of commercial bank? What is the
role of commercial bank in India
6. Financial services offered by banks.