Banking Procedure Essay Example

visit
the bank in person and make a deposit.

If the account exists, opening a Fixed Deposit (FD) is easier. Otherwise, we have to provide address and identity proof. In both cases, we need to fill out a deposit form and pay at the cashier. For Recurring Deposit (RD), the bank will give us a form that needs to be filled and paid at the teller counter. Subsequently, bank officials will give us a small passbook for RD with information about the payment date and amount. Every month, visiting the bank is essential for making the RD payment.

Loan and Advance Facilities Offered by the Bank

The bank extends various loan and advance facilities to both the business community and the general public. These facilities include:

• Overdraft: Current account holders can withdraw a specified amount within a set timeframe, usually three months, as an overdraft. Interest is charged only on the amount withdrawn, and collateral security is required.
• Cash Credit: Both current account holders and non-account holders can avail cash credit up to a predetermined limit. A separate cash credit account is maintained for this purpose.
• Discounting of Bills of Exchange: The bank provides advances by discounting or purchasing domestic and foreign bills of exchange. The bank pays the bill amount to the drawer after deducting the applicable discount charges.
• Investments: A portion of the deposit money is invested by the bank in bonds, debentures, and other securities.

Investing in profitable areas results in favorable returns for the bank. Along with its primary functions, the bank also carries out various non-banking functions. These secondary functions are important and can be summarized as follows:

Agency functions:

The bank acts as a representative on behalf of its customers.

Transfer

of funds: The bank transfers funds either within its branches or between different locations. Additionally, the bank collects money from customers' cheques and bills of exchange through its clearing sections.

Periodic payments: In response to client instructions, the bank carries out regular payments for electricity bills, rent, and other obligations. Furthermore, prominent banks offer portfolio management services where they buy and sell shares and debentures on behalf of clients, leading to corresponding debits or credits in their accounts.

The bank provides various services to its clients, including portfolio management for handling regular collections like salary, pension, dividends, and similar payments. Additionally, the bank fulfills other roles on behalf of clients such as trusteeship, executorship, attorneyship, and administration. Moreover, it offers general utility functions such as issuing drafts.

< p >
CS etc Bank provides various services, including drafts for money transfers and letters of credit for import trade. Additionally, the bank offers travellers cheques.

Locker Facility:

For security purposes, CS etc Bank provides a locker facility where customers can safely store valuable documents, gold ornaments, and other valuables.

The bank's merchant banking division is in charge of underwriting shares and debentures, while commercial banks are allowed by the RBI to participate in foreign exchange transactions. Moreover, the bank can offer project reports and feasibility studies for its clients. Additionally, certain countries impose limitations on commercial banks, restricting them from accepting primary deposits that surpass a specific multiple of their paid-up capital. This restriction aims to enhance bankers' responsibility and prevent fund misappropriation.

If the paid up capital is low, the deposits with the bank will be low, and therefore credit creation capacity will be low.

Liquidity Preference of Public

If the public do not want

more money, banks can not create more money. Bank money is created only if there are borrowers. If the public preference is for non monetary assets, banks will remain as silent spectators Leakages If a cheque is not deposited immediately, a secondary deposit is not created. In India one can keep a cheque upto six months during which no money will be created.

The insufficient interbank communication system leads to substantial delays in cheque collection and processing, often lasting for weeks or even months. Nevertheless, specific banks are addressing this problem by adopting core banking facilities. Furthermore, leakage occurs due to the commissions and collection charges imposed by banks. The monetary policy set by the central bank enforces notable limitations on commercial banks. Key banking terms encompass cheque, accounts receivable, endorsement, deposit slip, lockbox, accounts payable, electronic funds transfer (EFT), automatic teller machine (ATM), and checking account.

A check is a written order from a depositor instructing the bank to pay a specified amount of money to the person or business named on the check.

Depository refers to an individual or business that has money deposited in a bank.

A deposit slip, provided by the bank, is a form that lists the cash and checks intended for deposit.

Endorsement represents an authorized signature on the back of a check, either written or stamped, which transfers ownership of the check.

Blank endorsement solely consists of the signature or stamp of the depositor.

Special endorsement involves transferring ownership of the check specifically to an individual or business.

The payee is the recipient of a check, while the drawer is the one who signs

it. The drawee is the bank that receives the check. In case of any issues during writing, a check will be marked as "void." Reconciling the bank statement involves identifying discrepancies between it and the checkbook. A service charge pertains to a fee for maintaining bank records and processing items from the depositor's statement. A stop payment order is a written request by the drawer to prevent honoring a specific check. An NSF (Non-Sufficient Funds) check occurs when there are not enough funds in the drawer's account. Check 21 enables converting paper checks into electronic images for faster processing.

A business may accept a postdated check instead of the current date. EFTS can handle a large volume of transfers. ATMs can be used for banking activities. M-banking allows for banking through wireless devices, such as cell phones and wireless internet services.