Business banking unit1
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This document discusses business banking and outlines the learning objectives of Module 4. It will define business customers and their common banking needs, explain types of lending in foreign business transactions and to the agricultural and construction sectors, discuss main forms of business finance in Uganda, and correlate business practices to current situations in the country. The module will cover understanding business customers and their needs, assessing customer needs, lending in different contexts, and alternative sources of business finance. It provides an overview of different types of businesses and their typical financing needs, such as short-term loans, overdrafts, and term loans for working capital and fixed assets.
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Introduction to financial services 2
The document discusses Uganda's financial services sector. It begins with an overview of the history of banking in Uganda, from the initial four commercial banks at independence to periods of economic breakdown and reforms. It then describes the structure of Uganda's financial sector, divided into four tiers - commercial banks, credit institutions, microdeposit taking institutions, and other organizations. The roles of key players like the Bank of Uganda, commercial banks, development banks, insurance companies, and informal financial services are outlined. Mobile money is also mentioned as a newer non-traditional financial service.
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Introduction to financial services 1
The document discusses Uganda's financial services sector. It begins with a historical overview of banking in Uganda, from the initial four commercial banks at independence to periods of economic breakdown and reforms. It then describes the structure of Uganda's financial sector, including the roles of various institutions such as commercial banks, development banks, microfinance organizations, and the Bank of Uganda as regulator. The informal financial sector is also briefly outlined.
The legal environment unit2
This document discusses contract law and its importance in banking. It covers the following key points:
- Contract law is central to banking as banks enter into many contracts with customers for services like opening accounts and providing loans.
- The essential elements of a valid contract are an agreement between parties involving an offer, acceptance, and consideration.
- For a contract to be enforceable it must also meet additional requirements around legality, capacity, consent, and formalities.
- Breach of contract occurs when one party fails to perform according to the terms and the injured party can sue for damages. This is important in banking when mistakes are made processing items like checks.
The legal environment unit5
The document discusses the banker-customer relationship under contract law. It defines key terms like banker, customer, and bank. A banker is defined as someone who carries out the business of banking like accepting deposits and honoring checks. A customer is anyone who uses a bank's services, including those without an account. The relationship is a contractual one, with implied rights and duties. Rights of bankers include charging fees and interest, while duties include keeping information confidential and honoring valid checks. The contract can end through termination by either party, by operation of law like death, or after reasonable notice from the bank.
The legal environment unit5 copy
This document discusses the banker-customer relationship under contract law in Uganda. It begins by defining key terms like "banker", "customer", and "banking". A banker is defined as someone who carries out the business of banking, such as accepting deposits and honoring withdrawals. A customer is anyone who enters an agreement with a bank for services.
The relationship between a banker and customer is described as contractual, with implied rights and duties. General contract law principles apply. When opening an account, banks must verify a customer's identity and obtain signatures or mandates authorizing transactions. Both bankers and customers have legal rights and duties in the contract, such as bankers having the right to charge fees and customers having the duty to
The legal environment unit4
This document discusses negotiable instruments and bank cheques. It defines negotiable instruments as documents used in commerce to secure payment of money. Cheques are specifically defined as written promises by the drawer for the bank to pay the payee on demand. The key parties to a cheque are the drawer, drawee (bank) and payee. Features of a cheque include the cheque number, sort code, account number and crossing lines instructing the bank to deposit funds in the payee's account rather than paying in cash. Negotiable instruments must bear the maker's signature, include an unconditional promise to pay a fixed sum, specify a payment on demand or at a definite time, and be payable to order or to bear
Economic environment unit2
Banks play an important role in the economy by serving as financial intermediaries. They accept deposits from savers and pool those funds to provide credit to borrowers, either directly through lending or indirectly by investing in capital markets. This transfers funds from those with surplus money to invest to those who need to borrow funds. Commercial banks also facilitate national and international trade by transferring funds, which is key to the functioning of the economy. Banks include central banks that implement monetary policy, commercial banks that accept deposits and provide credit, savings banks for lower income savers, and development banks that lend to new businesses.
Economic environment unit8
This document discusses environmental conservation and its relationship to economics. It begins by defining economics and the environment. It then outlines global trends in increasing priority given to environmental protection, including frameworks like the UNFCC and Kyoto Protocol. For Uganda specifically, the document notes that environmental sustainability is a strategic objective in development plans but the country has not performed well on related MDG measures. It emphasizes that Uganda's prosperity relies on biodiversity that faces threats. Finally, it describes the interrelationship between the environment and economics, noting the environment supplies resources and economic prosperity relies on it.
Economic environment unit7
The document discusses international trade and regional economic integration in Africa. It provides details on several major regional economic communities in Africa, including COMESA and the East African Community (EAC). COMESA aims to promote economic development and trade by removing barriers between member states. Its goals include establishing a free trade area and eventually a common market and monetary union. The EAC also seeks to deepen economic and political integration between its members through cooperation in areas like trade, infrastructure, and security. Both organizations aim to boost intra-regional trade and investment through gradual economic harmonization and coordination between states.
Economic environment unit6
The document discusses the role of government in regulating economic activity and maintaining stable market conditions. It describes how governments establish legal frameworks, regulate industries like banking, implement fiscal and monetary policies to influence economic growth and inflation, redistribute resources, and address externalities. Specifically, it outlines the government's role in regulating general business interactions and specific industries, using policies like taxation and money supply management to guide economic stabilization, and providing services that markets do not.
Economic environment unit5
The document discusses different types of business organizations including sole proprietorships, partnerships, limited liability companies, and cooperatives. It provides details on the key advantages and disadvantages of each type. Sole proprietorships are easy to establish but the owner bears all financial risks, while partnerships allow for more capital but partners have unlimited liability. Limited liability companies provide protection of personal assets but involve more legal formalities. Cooperatives make it easier to raise capital from members but with less personal control over business decisions.
Economic environment unit4
This document discusses inflation, including its definition, causes, effects, and methods of control. Inflation is defined as a rise in the general level of prices for goods and services in an economy over time, which causes a loss of purchasing power. Common causes of inflation include increases in production costs, demand, money supply, and imported goods prices. Effects can be both positive, like encouraging investment, and negative, like uncertainty reducing investment. Controlling inflation involves monetary policy through central banks targeting low interest and inflation rates.
Economic environment unit1
This document provides an overview of key economic concepts and the economic environment. It begins by explaining the objectives of the module which are to explain the economic environment, basic economic concepts, micro and macroeconomics, and different economic situations and their causes. It then defines several important economic terms and concepts such as scarcity, resources, supply, demand, market equilibrium, production, cost, efficiency, and opportunity cost. It also distinguishes between microeconomics and macroeconomics and explains economic indicators like economic growth, inflation, employment, and unemployment.
Lending unit 8
The document discusses lending in the banking business and concepts related to insolvency. It begins by outlining the learning outcomes which are to articulate the role of lending, discuss the bank lending cycle, and explain insolvency, bankruptcy, and receivership. It then provides definitions of key terms like insolvency, receivership, and bankruptcy. Finally, it lists 11 signs that can indicate a business or individual is insolvent, such as continuing losses, current liabilities exceeding assets, unpaid taxes, and suppliers requiring cash-on-delivery or special payments. The document aims to explain these lending and insolvency concepts to banking and financial services students.
Lending unit 7
This document discusses lending in the banking business. It covers general principles of good lending, the typical lending cycle, and remedies for defaulting borrowers. Delinquency or default refers to a borrower failing to pay installments on time. Causes of delinquency include inability to pay, business failure, adverse economic conditions, willful default, death, inappropriate loan terms, and bankruptcy. Managing delinquency involves preventing late payments through proper underwriting and tailoring loans to borrowers' needs. It also involves solving existing delinquencies through measures ranging from contact and rescheduling to seizing and selling collateral.
Lending unit 4
The document discusses various aspects of the lending cycle in banking, including promotion, application, screening, approval, contracting, disbursement, administration, repayment, and remedies for defaulting borrowers such as receivership. It covers topics such as the role of lending in banks, general principles of good lending, types of advances, and risks at different stages of the lending cycle. The document is intended to help readers understand the lending process and key issues involved.
Introduction to insurance unit8
This document provides an overview of an introduction to insurance course. The course aims to help students gain a broader understanding of risk and insurance, appreciate the role of insurance in the economy, and understand how insurance industry players work together. The learning outcomes include being able to describe the role of insurance, explain fundamental insurance principles, and recognize how insurance claims are administered. Topics to be covered include risk management, the purpose of insurance, underwriting categories, fundamental principles, terminology, and claims settlement.
Introduction to insurance unit7
This document discusses the key players in the Ugandan insurance industry. It identifies 10 major players: 1) insurance companies that sell policies directly and through brokers/agents, 2) insurance brokers that represent multiple insurers, 3) the Insurance Regulatory Authority that regulates the industry, 4) the Insurance Institute of Uganda that provides training, 5) the Uganda Insurers' Association that represents insurance companies, 6) the Uganda Brokers' Association that represents brokers, and 7) other roles like loss adjusters, assessors, and surveyors.
Introduction to insurance unit6
This document provides an overview of insurance concepts and categories. It begins by outlining the learning objectives and outcomes of the course, which are to understand risk management, the insurance industry, and key insurance terms and principles. It then defines insurance and discusses risk management. It outlines the main categories of non-life and life insurance products and provides examples of common types of policies. It also discusses insurance underwriting procedures, microinsurance, and the roles of different players in the insurance industry.
Introduction to insurance unit5
This document provides an introduction to insurance concepts. It outlines the learning objectives and outcomes of the course, which are to understand risk management, the role of insurance, and how the industry operates. Key topics covered include the definition of insurance, risk management, fundamental insurance principles such as utmost good faith, indemnity, subrogation, contribution, insurable interest, and proximate cause. The roles of industry players and categories of insurance are also discussed.
Introduction to insurance unit4
This document discusses an introduction to insurance module. It aims to help students gain a broader understanding of risk and insurance as a means to manage risk. The module will explain how insurance works by pooling risks from many policyholders to pay for the losses of a few. Key topics that will be covered include the roles of insurance players, underwriting procedures, fundamental principles, and claim settlements. After completing the module, students should understand how insurance diversifies risk and the overall insurance industry.
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Business banking unit1
- 1. THE UGANDA INSTITUTE OF BANKING & FINANCIAL SERVICES UIBFS ISO 9001:2008 CERTIFIED 1 Module 4: Business Banking
- 2. THE UGANDA INSTITUTE OF BANKING & FINANCIAL SERVICES UIBFS ISO 9001:2008 CERTIFIED LEARNING OBJECTIVES • Define business customers and explain their common banking needs • Explain the types of lending in foreign business transactions • Explain the basics of lending to the agricultural sector • Articulate features of lending to the construction and contracting sector • Discuss the main forms of business finance in Uganda • Correlate the business practices to the present situations prevailing in the country, and effectively appraise businesses 2
- 3. THE UGANDA INSTITUTE OF BANKING & FINANCIAL SERVICES UIBFS ISO 9001:2008 CERTIFIED Understanding the Business Customer Understanding the Customer’s Business Assessing Customer Needs Lending in Foreign Business Transactions Financing Property Developers and Contractors Financing Agricultural Projects MODULE COVERAGE 3 Alternative Sources of Business Finance
- 4. THE UGANDA INSTITUTE OF BANKING & FINANCIAL SERVICES UIBFS ISO 9001:2008 CERTIFIED Understanding the Business Customer Who is the business customer to a bank? This is a customer (sometimes known as industrial customers) who is in an economic activity which they either own, control or both own and control. They purchase products or services to use in the production of other goods/products and services to satisfy wants and needs. The business customer’s banking needs are often tied with the need for smooth running, profitability and success of their businesses. It is rare that these businesses related banking needs are completely de-linked from their personal banking needs. 4
- 5. THE UGANDA INSTITUTE OF BANKING & FINANCIAL SERVICES UIBFS ISO 9001:2008 CERTIFIED Types of businesses and their financing needs Banks’ business customers vary in their size and what they do. 1. Large size productive business These are large, productive businesses like factories, farms and processing plants. These need term loans and equity financing at start or as they are expanding, steady and revolving finance for working capital and leasing for vehicles and other equipment. The larger the enterprise, the more complex and bigger the financing needs can get. 2. Medium size productive businesses These are medium sized productive businesses which have their fixed capital in place but they mainly need working capital. For these, short term loans and overdrafts are useful and sometimes critical. 5
- 6. THE UGANDA INSTITUTE OF BANKING & FINANCIAL SERVICES UIBFS ISO 9001:2008 CERTIFIED 3. Small size productive businesses These are very small productive business and medium/small retail business that need modest amounts of working capital. Their needs range from bank type short term loans to microfinance loans. 4. Large size service businesses These are large service businesses like construction/ contracting, transport, hospitals and schools. These typically have peaks and troughs in their business volumes and therefore in their cash flows and financing needs. For them, overdrafts are the most common type of financing needed although at establishment and expansion, they also need long term finance. It is important for a banker to know the industry in which the business customer works and the cash flow realities of the sectors. 6
Editor's Notes
- Introduction This module covers the basics of business banking, and is concerned with providing suitable, responsive banking services to the business sector. Every banker should be familiar with business banking because it is often the most profitable part of the business. Also, any bank will attract more customers if it has good business focused banking products.