banking study

Defination of accounts

2018-12-10T09:20:00.001+05:30

DEFINATION OF ACCOUNTS:

The systematic recording, reporting,& analysis of financial transactions of a business.Accounting or accounting is the measurement, processing & communication of financial information about economic entities. It was founded by Italian mathematician luca pacioli in the end of the 15^th century. Accounting which have been called the language of business, measures the results of an organizations economic activities and conveys this information to a variety of users including investors, creditors, management, & regulations. Practitioners of accounting are known as accountants. The term accounting & financial reporting are often used as synonyms.

Meaning, Advantages and disadvantages of Mobile Banking

2018-12-04T11:19:00.002+05:30

Mobile Banking:

Mobile banking conjointly referred to as M-Banking, SMS banking etc. Mobile banking could be a term used for acting balance checks, account transactions, payments, etc. Mobile banking uses the same infrastructure like the ATM solution. But it's very simple and cheap to implement. It reduces the cost of operation for bankers in comparison to the use of ATMs.

Advantages of Mobile Banking:

It utilizes the mobile connectivity of telecom operator and therefore does not require an internet connection.

With mobile banking, users of mobile phones will perform many monetary functions handily and firmly from their mobile.

Mobile banking is available round the clock 24/7/365, it is easy and convenient and an ideal choice for accessing financial services for most mobile phone owners in the rural areas.

Mobile banking is claimed to be even safer than online/internet banking.

People can check their account balance, review recent transaction, transfer funds, pay bills, locate ATMs, deposit cheques, manage investing, etc.

Disadvantages Of Mobile Banking:

Modern mobile devices like smart phone and tablets are better suited for mobile banking than old models of mobile phones and devices.

Regular users of mobile banking over time can accumulate significant charges from their banks.

Mobile banking users square measure in danger of receiving faux SMS messages and scams.

The loss of a person’s mobile device often means that criminals can gain access to mobile banking PIN and other sensitive information.

Meaning,advantages,disadvantages and uses of Internet banking

2018-12-03T19:05:00.001+05:30

INTERNET BANKING:

Internet Banking means that any user with a private laptop and a browser will get connected to his bank’s web site to perform any of the virtual banking functions.

Internet banking includes familiar and relatively mature electronically-based products in developing markets, such as telephone banking, credit cards, ATMs and direct deposit. It also includes electronic bill payments and products mostly in the developing stage, including stored-value cards and Internet-based stored value products.

Objectives of Internet Banking:

To provide low-cost and financial services to rural and under-serviced communities.

To reduce risk of handling cash. To provide a system that delivers efficient payments linked to a bank account.

To provide services in users’ own setting for convenience and accessibility.

Advantages Of Internet Banking:

Higher Interest Rate:

This is great advantage of Internet banking is the interest rates which basically range from 3.40% to 5% annually.
Very convenient:

Internet banking is totally easy thing to do. In the comfort of home or offices, people can do whatever monetary transactions they wish to do with their bank.

Easy way of payment:

Bill payments can also handled properly and smartly. Instead of waiting for certain due dates, people can easily pay all their transactions using their transactions using their computer and in coordinations with their bank.
No time constraint:

Internet banking is also stress free because it never closes unlike the traditional banking that has cut-off time.
Unlimited service day and night:

The services and various features of bank are always available seven days a week and 24 hours daily.
Easy Transactions:

Online transactions, compared to ATM or traditional banking, works fater.
Efficient and Effective:

Internet banking is both efficient and effective.

With only 1 secure web site, all financial transactions can be managed orderly.

Disadvantages Of Internet Banking:

Bank web site changes:
Even the biggest banks sporadically upgrade their on-line programs, adding new features in unfamiliar places.

Trust Aspect:

For many people, the biggest hurdle to online banking is learning to trust it. Internet banking should be entered very carefully if people wish to enjoy their financial life.

Learning Curve:

Banking sites will be tough to navigate initially.

Plan to invest some time and read the tutorial in order to become comfortable in virtual lobby.
Time Taking in start-up:

In order to register for bank’s online program, people will probably have to provide ID and sign a form at a bank branch.

Uses of Internet Banking:

Fund Transfer:

Transfer any amount from one account to another account of the same or any another bank. Customers can send money anywhere in India.

The transfer can occur during a day some, whereas in a traditional method, it takes about three working days.

Credit Card Customers:

With internet banking, customers can not pay their credit card bills online but also get a loan on their cards. If anyone looses his/her credit card, he/she can report about the lost card online.
Shopping:

With a range of all kind of products, one can shop online and the payment is also made conveniently through the account. One may also get railway and air tickets through net banking.

Recharge Prepaid Phone:

Now just top-up prepaid mobile cards by logging in to internet banking.

By simply choosing the operator’s name,entering the mobile variety and therefore the quantity for recharge, the phone is once more back in action at intervals couple of minutes.

Investing Through Internet Banking:
One can now open an FD online through funds transfer.

ATM meaning,uses, functions,advantages and disadvantages of ATM

2018-12-03T12:42:00.002+05:30

Automated Teller Machine:

ATM is an electronic fund transfer terminal capable of handling cash deposits, transfer between accounts, balance enquirers, cash withdrawal and pay bills. ATM is designed to perform the most important functions of bank. It is operated by plastic card with its special features. The plastic card is replacing Cheque, personal attendance of the customer, banking hour’s restrictions and paper based verification. These are debit cards. ATM itself can provide information about customer account and also receive instructions from customers ATM cardholders. The online ATM enable the customer to avail banking facilities from anywhere. It maybe online or offline.

Advantages of ATMs:

To the customers:

Offer flexibility of cash withdrawal to the customer.

Offer anywhere banking facility.

Allow privacy in transactions.

Are errors free.

Offer quicker and efficient service.

To the banks:

Increase market penetration.

Alternative to opening new branches.

Reduce operating new branches.

Helps banks to avoid transportation of cash and cash handling by the employees.

Disadvantages of ATMs:

Set-up fee to install and network the ATMs.

Monthly or annual service fee for support.

Communications charges for dial-up, leased lines, or wireless data links.

Functions Performed by ATM:

Pin change

Balance Inquiry

Cash withdrawn

Cash Deposit

Fund Transfer

Mini-Statement

TYPES OF ATMs: There are some types of ATMs.

Onsite ATM:
it is situated either within the branch premises or in very close proximity of the branch.

Ofsite ATM:
It is not situated within the branch premise but is located at other places, such as shopping centers, airports, railway and petrol stations.

Worksite ATM:
it is located within the premise of an organization and is generally meant only for the employees of the organization.

Cash Dispenser:
It allows only cash withdrawal, balance enquiry, and mini statement requests. Unlike an ATM, CD cannot be used for depositing cash or cheques.

Mobile ATM:
It refers to an ATM that moves in various areas for the customers. Few private banks have introduced ATM on wheels.

USES OF ATMs:

Paying routine bills, fees and taxes.
Donating to charities.
Games and promotional features.
Purchasing.
Deposit currency recognition, acceptance and recycling.
Printing bank statements.
Updating passbooks.
Loading monetary value into stored value cards.

Electronic Banking, features, objectives,uses of electronic banking

2018-12-02T13:07:00.001+05:30

HOME BANKING:-

Home banking is defined as conducting the transactions and accessing bank account in information via personal computers. Often home banking is referred to as Electronic banking. In order to perform home banking, a personal computer needs to be installed to perform various banking functions.

Online banking is also known as Cyber banking, Home banking, Virtual banking.

Electronic banking saves a lot of time and money for users. Online banking is growing in India.

Meaning of Electronic banking:-

Internet banking means any user with personal computer and a browser can get connected to his banks website to perform any of the virtual banking functions. E-banking includes familiar and relatively mature electronically-based products in developing markets, such as telephone banking, credit cards, ATMs and direct deposit. It also includes electronic bill payments and products mostly in the developing stage, including stored-value cards and internet-based stored value products.

Features of electronic banking in India:-

Can obtain charge and credit card statements.

Can pay bills online.

Can access current account balances at any time.

Can download account transactions.

Can keep a track of accounts online.

Customers have a flexible schedule.

Can transfer money between accounts.

Can send e-mails to the bank.

Can also use additional services like free phone banking, ATM withdrawals, bill paying,

Objectives of Electronic Banking:-

To provide services in users own environment for convenience and accessibility.

To reduce risk of handling cash.

To provide low-cost and financial services to rural and under-serviced communities.

To provide a system that delivers efficient payments linked to a bank account.

USES OF ELECTRONIC BANKING:-

Bill payment service:-

You can facilitate payment of electricity and telephone bills, mobile phone, credit card and service providers and insurance companies, across the country. You can also set up standing instructions online to pay your recurring bills, automatically.

Fund Transfer:- You can transfer any amount from one account of the same or any another bank. Customers can send money anywhere in India.

Credit card customers: Customers can not only pay their credit cards bills online but also get a loan on their cards. If you lose your credit card, you can report about your lost card online.

Recharging your prepaid phone: Just selecting your operator’s name, entering your mobile number and the amount for recharge, your phone is again back in action within in few minutes.

Railway pass: Indian railway has tied up with ICICI bank and you can now make your railway pass for local trains online.

Shopping: You can shop online and the payment is also made conveniently through your account. You can buy railway and air tickets through internet banking.

Investing through internet banking: You can now open an ED online through funds transfer. Investors can easily trade in the stock market.

Risks In Electronic Banking:-

Credit Risk

Legal Risk

Strategic Risk

Reputation Risk

Transaction Risk

Market Risks

BANKING TECHNOLOGY,functions,advantages,objectives of banking technology

2018-12-02T07:52:00.001+05:30

BANKING TECHNOLOGY:-

Introduction:-

banks are investing heavily in digital banking technology. Information technology has increased the financial control and has made collation of information much easier. Not only banks need greatly enhanced use of technology to the customer friendly, efficient and competitive existing services and business, they also need technology for providing newer products and newer forms of services in an increasingly dynamic and globalize environment. Internet banking has come to be recognized as a virtual necessity to face the imminent challenge that is growing felt in modern days, owing to globalization and liberalization of the Indian economy. Information technology is becoming a key business enabler and is being positioned as a key differentiation. The banks have achieved significant success in leveraging IT through the implementation of core business solutions and it has helped them in streamlining, standardizing, and expanding their services portfolio.

Objectives of bank technology:-

The competitive advantage of banks will rely heavily on the capability of technology to implement business process, manage risks, and provide excellent customer service.

  Application standards to reduce need for additional hardware and software,

Shorten time to develop new applications,

Improve ability to distribute information,

  Reduce cost of system support and maintenance and Systems that can perform under heavy network traffic.

  Systems that can perform under heavy network traffic.

Advantage of technology:-

Technology is used by financial system every day to obtain the necessary technology needed to ensure maximum productivity and success. The advantages of technology are as follows:-

Helps financial system to think beyond present.

Financial system can update and set plans in light with the latest world finance scenario.

Getting connected with the changing business and the customer pool.

Survival and sustainable growth with positive performance are indicators of successful financial system.

Excel in true professionalism with right predication or forecast instead of being word of mouth marketers.

FUNCTIONS OF BANK TECHNOLOGY:-

Technology is the biggest force for change in banks. Technology has helped to speed-up the efficiency banking system, simplified the development of budgets and the analysis of performance to plan, streamlined the cash cycle, and enhanced its communication network. Technology has also enabled the globalization of finance.

Main functions of technology are as follows:-

To raise the productivity of the financial system.

To assist financial system with graphics and multimedia projects.

To make system more effective and efficient when performing daily activities.

To facilitate communications.

TECHNOLOGICAL CHALLENGES IN BANKING SYSTEM:-

These are some critical challenges which are faced by the banking system:-

Cost involved in technology implementation

Need to ensure appropriate security and integrity of the system

Disaster recovery management plans

To develop its own communications network

Types of accounts

2018-11-30T12:38:00.001+05:30

TYPES OF ACCOUNTS:-

There are different types of bank account in the Indian banking sector such as:-

Savings deposits account:-

A savings deposit account is an account provided by a bank for individuals to save money and earn interest on the cash held in the account. there are some restrictions are imposed on the depositor under this account. For example, he can withdraw only a specified sum of money in a week. The rate of interest allowed on this account is rather low. This type of deposit account encourages small savings in the country.

Features of saving deposit account:-

There is no restriction on the number and amount of deposits.
The money can be withdrawn either by cheque or withdrawal slip.
The rate of interest payable is very nominal on saving accounts.
Saving account is of continuing nature. there is no maximum period.
A minimum amount has to be kept on saving account.
No loan facility is provided against saving account.
The main objective of saving account is to promote savings.

Current Deposit Account:-

The depositor can withdraw the money from his crrent account whenever he requires it. This account is generally opened by businessmen who may have to withdraw money several times a day. In technical language , it is known as demand deposit or checking deposit.

Features Of Current Deposit Account:-

Current bank account are operated to run a business.
It needs a higher minimum balance to be maintained as compared in the current account.
There is no restriction on the number and amount of deposits. There is also no restriction on the withdrawals.
Current account is of continuing nature and as such there is no fixed period.
generally bank does not pay any interest on current account. Nowadays, some banks do pay interest on current accounts.

Difference Between Current Deposit and Saving Deposit Account:-

Basis of Difference	Current Account	Savings account
1. Meaning	Current account is maintained by businessman and others who have to do regular bank transactions.	Saving account is opened by individuals for the purpose of saving a part of their income.
2. Purpose	The main purpose of opening a current account is to facilities regular transactions.	The main purpose of opening a savings account is to save a part of the income.
3. Interest	Some current accounts offer very low interest.	Interest on savings accounts is usually higher.
4. Cost	The bank charges are high.	The bank charges are lower.
5. Access to money	people can get to their money quickly and easily by writing cheques.	People may have to arrange beforehand yo withdraw their money.

Fixed/term Deposit Account:-

Money in this account is accepted for a fixed period, say, one, two or five years. The money so deposited cannot be withdrawn before the expiry of the fixed period. The longer the period, the higher is the rate of interest. In technical language, this type of deposit is known as time or term deposit.

features of Fixed deposit Account:-

The amount can be deposited only once.
The main purpose of fixed deposit account is to enable the individuals to learn a higher rate of interest on their surplus funds.
A high interest rate is paid on fixed deposits. the rate of interest may vary as per amount, period and from bank to bank.
The period of fixed deposits range between 15 days to 10 years.
Withdrawals are not allowed.

Re-curing Deposit Account:-

Recurring deposit account is generally opened for a purpose to be served at a future date. Generally this account is opened to finance pre-planned future purposes like, wedding expenses of daughter, purchase of costly items like land, luxury car, air conditioner, etc. Recurring deposit account is opened by those who want to save regularly for a certain period of the time and earn a higher interest rate.

Features of recurring deposit account

The main objective of recurring deposit account is to develop regular savings habit among the public.
In India, minimum amount that can be deposited is Rs.10 at regular intervals.
The rate of interest is higher.
The period of deposit is minimum six months and maximum ten years.
No withdrawals are allowed.
The bank provides the loan facility. The loan can be given up-to 75% of the amount standing to the credit of the account holder.

Guidelines for opening accounts

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GUIDELINES FOR OPENING ACCOUNT:-

A bank should be very careful in entertaining a new customer. it will be taking a great risk if it opens an account of a customer without knowing the whereabouts of the latter. The opening of an account involves the honouring of cheques on the part of the bank so long as customer's account has credit balance.Hence, it is essential that the bank should make thorough enquiry regarding the customer before opening an account with him.

APPLICATION FORM:-

The prospective customer is first of all asked to sign an application form prescribed for that purpose after furnishing all particulars. application form contain the rules and regulations of the bank along-with the terms and conditions of the deposit.

SPECIMEN SIGNATURE:-

Every new customer is expected to give three or more specimen signatures. each bank maintains a signature book for this purpose.

LETTER OF INTRODUCTION:-

It is always advisable on the part of the banker to allow the prospective customer to open an account only with a proper introduction.

Protection against fraud
Protection against inadvertent overdraft
Protection against an undercharged bankrupt

INTERVIEW:-

At the time of opening of new account, it is always advisable to have an interview invariably with the prospective customers so as to obviate the chances of perpetration of any fraud at a later stage.

ACCOUNT IN CASH:-

It is a common practice among bankers to allow a new party to open an account only in cash.

FOR EXAMPLE:- if customer's tittle to the cheque is defective, the banker is answerable for it.

MANDATE IN WRITING:-

If a new party wants its account to be operated by somebody else, the banker should demand a mandate from his customer in writing. The mandate contains the agreement between the two regarding the operation of the account, the specimen signatures of the authorized person and powers delegated to the authorized person.

VERIFICATION OF DOCUMENTS:-

If the new party happens to be a corporate body, it is essentail that the banker shoulld verify some of the important documents like memrandum of association, articles of associations, bye-law copy etc, etc.

CONVERSANT WITH THE PROVISIONS OF SPECIAL ACTS:-

Since a banker has to deal with different classes of customers, he has to be thoroughly conversant with certain laws like Indian companies Act, Indian partnership Act, insolvency Act, the various trust acts, the cooperative societies act etc.

PASSPORT SIZE PHOTOGRAPH:-

Their is need a passport size photographs on the application forms at the time of opening accounts.

Relationship between customer & banker

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BANKER AND CUSTOMER:-

DEFINITION OF BANKER:-

Banker is who take deposit account, take current account, issue and pay cheques, collect cheques crossed and uncrossed for his customers.

Banker is an institution which borrows money by accepting deposits from the public for the purpose of lending to those who are in need of money.

A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and the lender. He borrows from one party and lends to another.

DEFINITION OF CUSTOMER:-

A customer is a person who has some sort of account, either deposit or current or some similar relation with a bank and from this it follows that any person could become a customer by opening or current account or having some similar relation with a bank.

Relationship between Banker and Customer:-

There are two types of relationship between banker and customer

General relationship
Special relationship

General relationship:-

The general relationship between banker and customer are describes into 2 forms:-

Primary relationship
secondary relationship

Primary Relationship:- Relation of debtor and creditor:- The true relationship between a banker and his customer is that of a debit and a creditor.

Creditor must demand payment:-

The banker is a debtor and customer is creditor, it is not at all necessary for the debtor to go to the creditor to pay the amount.

demand must be made in proper from:-

it means that the demand for the refund of money deposited must be made through a cheque or an order as per the common usage amongst the banker.

Secondary relationship:-

Bailee-Bailor:- Whom delivered the goods are bailee. delivering the goods one person to another for some purpose upon a contract, they are bailor.

Lessor-Lessee:- On hiring out of locker, bank becomes lessor and the hirer a lessee and the relationship is that of landlord and tenant.

Guarantor and Guarantee:- A bank as guarantor gives guarantee to its customer by issuing a letter of credit. A bank guarantee contains an undertaking to pay the amount without any demur on mere demand of the principal amount on the ground for non-performance or beach of contract.

Agent principal:-

Purchasing or selling of securities.collection of income.collecting cheques, hundies, drafts of the customers.Receiving safe custody valuables and securities lodged by his customers.

Fiduciary relationship:-

Every relation of trust and confidence is a fiduciary relation.

Special relationship between banker & customer:-

Duties of a banker:- these duties are as following:-

Duty to provide proper service to customer.

Duty to pay bill

Duty to submit periodical statements.

Duty to care

Duty to maintaining secrecy of customer's account.

Duty to honour the customer's cheques.

Duty to give reasonable notice before closing the account.

Duties of customer's to banks:-

To draw cheques in such a manner so as to avoid any change of alternation.

To pay reasonable charges for services rendered.

To make a demand on the banker for repayment of deposit.

Rights of banker:-

Right to retain goods
Right to recover extra ordinary expenses.
Right to full value of goods.
Right to close accounts.
Right not to produce books of accounts.

BANKING SYSTEM

2018-11-27T11:21:00.000+05:30

BANKING SYSTEM:-

The modern banking system in India started with the establishment of general bank of India in 1786.

MEANING OF BANKING:-

Bank is German word which means 'to collect'. The main functions of the banks is collection of funds as deposits. A bank is a financial institution that accepts deposits from the public and creates credit.

Features of Banking:-

There are some important features of banking.

It deals with money and accepts deposits from public.

The buying and selling of bullion and specie.

The receiving of all kind of bonds or valuable on deposit or for safe custody.

The buying and selling of foreign exchange including banks notes.

The drawing, accepting, buying, selling, collecting and dealing in bills of exchange,promissory notes,debentures, and other instruments and securities whether transferable or negotiable or not.

The purchasing and selling of bonds, scripts or other forms of securities on behalf of constituents or others, the negotiating of loans and advances.

The borrowing, raising or taking up of money.

The granting and issues of letters of credit, traveler's cheques and circular notes.

TYPES OF BANKS:-

Banks can be divided into two groups.

The scheduled banks.
Non-scheduled banks.

SCHEDULED BANKS:-

A scheduled bank is one which is registered in the second scheduled of the RESERVE BANK OF INDIA. Scheduled banks are further classified into:-

commercial banks.
co-operative banks.

COMMERCIAL BANKS:-

Commercial banks are those banks which perform all kinds of banking functions such as accepting deposits, credit creation, and agency functions. some of the commercial banks in India are Andhra bank, Canara bank, Indian bank, Punjab national bank etc.

CO-OPERATIVE BANKS:-

Co-operative banks came into existence with enactment of the co-operative of the co-operative credit societies act of 1904 which provided for the formation of co-operative credit societies.

NON-SCHEDULED BANKS:-

Banks which are not included in the Second schedule of the RBI, are known as non- scheduled banks.

Banks can be classified into the following categories.

COMMERCIAL BANKS
CENTRAL BANK
CO-OPERATIVE BANK
SAVING BANK
EXPORT-IMPORT BANK
DEVELOPMENT BANK