L-12 BUSINESS SERVICES
CHAPTER 11 BUSINESS SERVICES: BANKING SERVICES AND DIGITEL PAYMENTS
BUSINESS
SERVICES
MEANING
Business services refer to a range of services that
are provided to businesses by other businesses, rather than to individual
consumers. These services can include banking services, accounting services,
legal services, IT services, marketing services, and many others.
Banking services are a type of business service that
refers to the services provided by banks to businesses, including deposit
accounts, loans, credit cards, and other financial products. These services are
designed to help businesses manage their finances and achieve their financial
goals.
Digital payments are another type of business service
that has become increasingly important in recent years. These services refer to
the use of digital technologies to make payments, such as mobile payments,
online payments, and contactless payments. Digital payments offer businesses a
convenient, fast, and secure way to make and receive payments, and can help to
streamline financial transactions and improve cash flow.
NATURE/FEATURES
OF BUSINESS SERVICES
Business services refer to a wide range of
non-tangible goods or services that are provided to other businesses. These
services are essential for the smooth functioning of a business and can be
broadly classified into the following categories:
Intangible: Business
services are intangible in nature, which means they cannot be touched, felt, or
seen. For example, consultancy services, legal advice, accounting services,
etc.
Heterogeneous: Business
services are heterogeneous, which means that no two services are the same. The
quality of service depends on the skill and expertise of the service provider,
which can vary from one provider to another.
Perishable: Business
services are perishable, which means that they cannot be stored or saved for
future use. For example, a lawyer cannot provide legal services today and save
them for tomorrow.
Inseparable: Business
services are inseparable, which means that they are produced and consumed
simultaneously. For example, a haircut cannot be produced and consumed
separately.
Customizable: Business
services can be customized to meet the specific needs of the client. For
example, a software development company can customize their services to meet
the specific needs of their client.
Knowledge-based: Business
services are often knowledge-based, which means that they require a high level
of expertise and knowledge in a specific field. For example, a consulting firm
may require experts in finance, marketing, or operations.
Customer-oriented: Business
services are customer-oriented, which means that they are designed to meet the
specific needs and preferences of the customer. For example, a hotel may offer
different room types and amenities to cater to the diverse needs of their
customers.
In summary, business services are intangible,
heterogeneous, perishable, inseparable, customizable, knowledge-based, and
customer-oriented. These unique features make business services essential for
the success of any business.
NEED/MPORTANCE
OF BUSINESS SERVICES
Business services are critical to the success of any
business. Here are some of the reasons why they are so important:
Expertise: Business services
providers are experts in their respective fields. They have the knowledge,
skills, and experience to help businesses improve their operations, solve
problems, and make better decisions. For example, a business consulting firm
can provide valuable insights into market trends, consumer behavior, and industry
best practices.
Cost-effective: Outsourcing
business services can be a cost-effective way for businesses to access the
expertise they need without having to hire full-time staff. This can help
businesses reduce costs and improve their bottom line.
Improved efficiency: Business
services providers can help businesses streamline their operations, automate
processes, and implement best practices. This can lead to improved efficiency,
productivity, and profitability.
Flexibility: Business
services providers can be engaged on a project basis, which gives businesses
the flexibility to scale up or down as needed. This can help businesses respond
quickly to changes in the market and customer needs.
Competitive advantage: Access
to specialized business services can give businesses a competitive advantage in
the marketplace. For example, a business that has access to the latest
technology or market research can stay ahead of its competitors.
Focus on core competencies: Outsourcing
non-core business services allows businesses to focus on their core
competencies. This can help businesses improve their products and services,
differentiate themselves from competitors, and grow their market share.
In summary, business services are critical to the
success of any business. They provide expertise, cost-effectiveness, improved
efficiency, flexibility, competitive advantage, and allow businesses to focus
on their core competencies.
ADVANTAGES
OF BUSINESS SERVICES
There are numerous
advantages of business services, including:
Access to specialized expertise: Business
services provide businesses with access to specialized expertise in areas such
as finance, accounting, marketing, and information technology. This allows
businesses to benefit from the knowledge and skills of professionals who are
experts in their respective fields.
Cost savings: Outsourcing
business services can be a cost-effective way for businesses to access the
expertise they need without incurring the cost of hiring full-time staff. This
can help businesses save money and improve their bottom line.
Improved efficiency and productivity: Business services providers can help businesses
streamline their processes, automate tasks, and implement best practices. This
can lead to improved efficiency and productivity, which can translate into cost
savings and improved customer satisfaction.
Increased flexibility: Outsourcing
business services allows businesses to scale up or down as needed, without
having to hire or lay off staff. This can help businesses respond quickly to
changes in the market and customer needs.
Focus on core competencies: Outsourcing
non-core business services allows businesses to focus on their core
competencies. This can help businesses improve their products and services,
differentiate themselves from competitors, and grow their market share.
Competitive advantage: Access
to specialized business services can give businesses a competitive advantage in
the marketplace. For example, a business that has access to the latest
technology or market research can stay ahead of its competitors.
Improved risk management: Business
services providers can help businesses manage risks related to compliance, data
security, and financial reporting. This can help businesses avoid costly
penalties and legal disputes.
In summary, the advantages of business services
include access to specialized expertise, cost savings, improved efficiency and
productivity, increased flexibility, focus on core competencies, competitive
advantage, and improved risk management.
TYPES
OF BUSINESS SERVICES
Business services
can be broadly classified into the following types:
Professional services: These
are services that require specialized knowledge, expertise, and qualifications.
Examples include legal services, accounting services, management consulting
services, engineering services, and architecture services.
Financial services: These
are services related to money management, such as banking services, investment
services, insurance services, and tax preparation services.
Information technology services: These
are services related to technology and digital transformation, such as software
development services, website design and development services, cybersecurity
services, and cloud computing services.
Marketing and advertising services: These are services related to promoting and selling
products and services, such as branding services, advertising services, public
relations services, and market research services.
Logistics and transportation services: These are services related to the movement of goods
and people, such as shipping services, freight forwarding services, courier
services, and transportation services.
Facilities management services: These
are services related to the management and maintenance of physical facilities,
such as cleaning services, security services, and maintenance services.
Human resources services: These
are services related to managing and developing human resources, such as
recruitment and staffing services, training and development services, and
payroll services.
In summary, the main types of business services
include professional services, financial services, information technology
services, marketing and advertising services, logistics and transportation
services, facilities management services, and human resources services.
BANKING:
MEANING AND DEFINTION
Banking refers to the business of accepting deposits
from the public and providing credit, loans, and other financial services.
Banks are financial institutions that play a critical role in the economy by
channeling funds from savers to borrowers and providing a range of financial
services to businesses and individuals.
Banks typically accept deposits from customers, which
can be withdrawn on demand or held for a fixed period of time. Banks use these
deposits to make loans to individuals and businesses, which are repaid with
interest over time. Banks also offer a range of other financial services, such
as credit cards, wealth management, investment advice, and insurance.
Banks are highly regulated institutions that are
subject to a range of laws and regulations designed to ensure their safety and
soundness. They are also required to maintain reserves and comply with capital
requirements to ensure that they have sufficient funds to meet their
obligations to customers.
In summary, banking refers to the business of
accepting deposits from the public and providing credit, loans, and other
financial services. Banks are regulated institutions that play a critical role
in the economy by channeling funds from savers to borrowers and providing a
range of financial services to businesses and individuals.
TYPES
OF BANKS
anks can be classified into different types based on
their functions, ownership, and operations. Here are the main types of banks:
Commercial banks: These
are banks that primarily serve businesses and individuals by accepting
deposits, making loans, and providing a range of other financial services, such
as checking and savings accounts, credit cards, and mortgages.
Investment banks: These
are banks that provide financial services to businesses and investors, such as
underwriting securities offerings, assisting with mergers and acquisitions, and
providing financial advice.
Central banks: These
are banks that are responsible for managing a country's monetary policy and
regulating its financial system. Central banks also provide banking services to
commercial banks and government agencies.
Retail banks: These
are banks that primarily serve individual customers by providing a range of
financial services, such as checking and savings accounts, credit cards, and
personal loans.
Private banks: These
are banks that provide banking services to high-net-worth individuals and
families. Private banks typically offer personalized services, such as
investment management and estate planning.
Cooperative banks: These
are banks that are owned and operated by their members, who are typically
individuals or small businesses. Cooperative banks focus on providing services
to their members and may offer specialized services, such as microfinance.
Online banks: These
are banks that operate exclusively online, without physical branches. Online
banks typically offer higher interest rates and lower fees than traditional
banks, but may offer fewer services.
In summary, the main types of banks include commercial
banks, investment banks, central banks, retail banks, private banks,
cooperative banks, and online banks.
1.
Commercial Banks
Commercial banks are financial institutions that
primarily serve businesses and individuals by accepting deposits, making loans,
and providing a range of other financial services. Commercial banks play a
critical role in the economy by channeling funds from savers to borrowers and
providing liquidity to the financial system.
Here are some of
the main features of commercial banks:
Accepting deposits: Commercial
banks accept deposits from customers, which can be withdrawn on demand or held
for a fixed period of time. Banks typically offer a range of deposit products,
such as checking accounts, savings accounts, and certificates of deposit.
Making loans: Commercial
banks make loans to individuals and businesses, which are repaid with interest
over time. Banks also offer a range of other credit products, such as credit
cards and lines of credit.
Providing financial services: Commercial
banks offer a range of financial services to customers, such as currency
exchange, wire transfers, and safe deposit boxes. Banks also offer investment
services, such as mutual funds and annuities, and insurance services, such as
life and health insurance.
Managing risk: Commercial
banks are exposed to a range of risks, such as credit risk, interest rate risk,
and liquidity risk. Banks use a range of tools, such as diversification,
asset-liability management, and risk management strategies, to manage these
risks.
Regulatory oversight: Commercial
banks are highly regulated institutions that are subject to a range of laws and
regulations designed to ensure their safety and soundness. Banks are required
to maintain reserves and comply with capital requirements to ensure that they
have sufficient funds to meet their obligations to customers.
In summary, commercial banks are financial
institutions that primarily serve businesses and individuals by accepting
deposits, making loans, and providing a range of other financial services.
Commercial banks play a critical role in the economy by channeling funds from
savers to borrowers and providing liquidity to the financial system.
2.
Industrial Banks
Industrial banks, also known as industrial loan companies
(ILCs), are financial institutions that specialize in making loans to
businesses, often in specific industries such as healthcare or energy.
Industrial banks are regulated by state authorities, rather than the Federal
Reserve System, and are subject to different rules and regulations than
commercial banks.
Here are some of
the main features of industrial banks:
Specialized lending: Industrial banks focus on
making loans to businesses in specific industries, such as healthcare or
energy. This specialization allows them to develop expertise in these
industries and better understand the unique needs of their customers.
Non-deposit taking: Industrial
banks do not accept deposits from the public, unlike commercial banks. Instead,
they rely on funding from other sources, such as issuing debt or borrowing from
other financial institutions.
State regulation: Industrial
banks are regulated by state authorities, rather than the Federal Reserve
System. This means that they are subject to different rules and regulations
than commercial banks.
Limited operations: Industrial
banks are typically smaller than commercial banks and have a more limited range
of services. For example, industrial banks may not offer checking accounts or
other retail banking services.
Controversy: Industrial
banks have been controversial because of concerns about their potential impact
on the financial system. Some critics argue that industrial banks pose a risk
to the stability of the financial system because they are not subject to the
same regulatory oversight as commercial banks.
In summary, industrial banks are financial
institutions that specialize in making loans to businesses, often in specific
industries. Industrial banks are regulated by state authorities, rather than
the Federal Reserve System, and are subject to different rules and regulations
than commercial banks.
3.
Exchange Banks
Exchange banks, also known as foreign exchange banks,
are financial institutions that specialize in facilitating international trade
and currency exchange. Exchange banks provide a range of services to
individuals and businesses that need to exchange currency or make international
transactions.
Here are some of
the main features of exchange banks:
Currency exchange: Exchange
banks specialize in buying and selling foreign currency, making it easier for
individuals and businesses to conduct international transactions. Exchange
banks offer competitive rates and can provide a range of currencies to meet the
needs of their customers.
International money transfers: Exchange
banks also offer services to transfer money internationally, either through
wire transfers or other electronic payment methods. This allows individuals and
businesses to send and receive payments across borders.
Trade finance: Exchange
banks provide financing and other services to facilitate international trade.
This can include letters of credit, which guarantee payment to suppliers, as
well as other trade finance products such as import and export financing.
Hedging services: Exchange banks also offer hedging
services to help businesses manage currency risk. This can include options and
other derivatives that can protect businesses from fluctuations in exchange
rates.
Regulatory oversight: Exchange
banks are subject to regulatory oversight by financial authorities, such as
central banks and financial regulators. This helps to ensure that exchange
banks operate in a safe and sound manner and provide high-quality services to
their customers.
In summary, exchange banks are financial institutions
that specialize in facilitating international trade and currency exchange.
Exchange banks provide a range of services to individuals and businesses that
need to exchange currency or make international transactions, including
currency exchange, international money transfers, trade finance, and hedging
services. Exchange banks are subject to regulatory oversight to ensure that
they operate in a safe and sound manner.
4.
Agriculture Banks or land mortgage Banks
Agriculture banks, also known as land mortgage banks,
are financial institutions that specialize in providing credit to farmers and
rural communities. Agriculture banks offer a range of services to support
agricultural development, such as financing for land purchases, farm equipment,
and livestock.
Here are some of
the main features of agriculture banks:
Focus on agriculture: Agriculture banks
specialize in providing credit to farmers and rural communities, and they have
expertise in agricultural lending. This allows them to better understand the
needs of their customers and offer tailored financing solutions.
Land mortgage loans: Agriculture
banks offer land mortgage loans, which are loans that use land as collateral.
This can help farmers and landowners to purchase or improve land for farming
purposes.
Farm equipment loans: Agriculture
banks also offer loans for farm equipment, such as tractors, harvesters, and
other machinery. This can help farmers to invest in the tools they need to
increase their productivity and efficiency.
Livestock loans: Agriculture banks provide loans to
purchase or improve livestock, such as cattle, pigs, and poultry. This can help
farmers to grow their herds and increase their production.
Agricultural development: Agriculture
banks play an important role in supporting agricultural development in rural
areas. By providing credit and financial services, agriculture banks can help
to promote economic growth and stability in rural communities.
Government support: Agriculture
banks may receive government support, such as loan guarantees or subsidies, to
encourage lending to farmers and rural communities. This can help to increase
the availability of credit and make it more affordable for farmers.
In summary, agriculture banks are financial
institutions that specialize in providing credit to farmers and rural
communities. Agriculture banks offer a range of services to support
agricultural development, including land mortgage loans, farm equipment loans,
and livestock loans. Agriculture banks play an important role in promoting
economic growth and stability in rural areas, and may receive government
support to encourage lending to farmers.
5.
Savings Banks
Savings banks, also known as thrift banks or savings
and loans associations, are financial institutions that primarily focus on accepting
deposits and providing mortgages and other loans for residential and commercial
real estate. Savings banks typically offer a range of savings and checking
accounts, as well as other financial products and services, to their customers.
Here are some of
the main features of savings banks:
Focus on real estate lending: Savings banks primarily
focus on providing mortgages and other loans for residential and commercial
real estate. This can include loans for home purchases, home improvements, and
real estate development.
Deposits: Savings banks
accept deposits from customers, which are used to fund their lending
activities. Customers can open savings accounts, checking accounts, and other
deposit accounts at savings banks.
Community-focused: Many
savings banks have a strong focus on serving their local communities. This can
include offering specialized products and services for local businesses or
providing financial education and other resources to community members.
Mutual ownership: Many
savings banks are mutual institutions, meaning that they are owned by their
depositors rather than shareholders. This can give customers a greater say in
the bank's operations and may lead to a more customer-focused approach to
banking.
Government regulation: Savings
banks are subject to government regulation to ensure that they operate in a
safe and sound manner and protect the interests of their customers. In the
United States, savings banks are regulated by the Office of the Comptroller of
the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).
In summary, savings banks are financial institutions
that primarily focus on accepting deposits and providing mortgages and other
loans for residential and commercial real estate. Savings banks accept deposits
from customers and may have a strong focus on serving their local communities.
Many savings banks are mutual institutions, meaning that they are owned by
their depositors, and savings banks are subject to government regulation to
ensure that they operate in a safe and sound manner.
6.
Central Bank
A central bank is a financial institution that is
responsible for managing a country's monetary policy and regulating its banking
system. The primary role of a central bank is to oversee the supply of money
and credit in the economy, and to promote stability in financial markets.
Central banks also act as the lender of last resort for commercial banks,
providing them with liquidity during times of financial stress.
Here are some of
the main functions of central banks:
Monetary policy: Central
banks are responsible for setting and implementing monetary policy, which
includes managing interest rates, controlling inflation, and maintaining the
stability of the currency.
Regulation of the banking system: Central
banks are responsible for regulating the banking system and ensuring that banks
operate in a safe and sound manner. This can include setting capital
requirements, conducting stress tests, and monitoring banks for risks.
Issuing currency: Central
banks are responsible for issuing currency and maintaining the integrity of the
currency. They also oversee the circulation of currency and ensure that there
is an adequate supply of cash in the economy.
Lender of last resort: Central
banks act as the lender of last resort for commercial banks, providing them
with liquidity during times of financial stress. This can help to prevent bank
runs and other forms of financial instability.
Managing foreign exchange reserves: Central banks manage a country's foreign exchange
reserves, which are used to support the value of the currency and to facilitate
international trade.
Economic research and analysis: Central
banks conduct economic research and analysis to inform their policy decisions
and to better understand the state of the economy.
In summary, a central bank is a financial institution
that is responsible for managing a country's monetary policy and regulating its
banking system. Central banks play a critical role in promoting stability in
financial markets and ensuring the smooth functioning of the economy. Central
banks have a range of functions, including setting monetary policy, regulating
banks, issuing currency, acting as the lender of last resort, managing foreign
exchange reserves, and conducting economic research and analysis.
7.
Indigenous Banks
The term "indigenous banks" can refer to
banks that are locally owned and operated, and that serve primarily local
customers. In some cases, indigenous banks may also have a focus on serving
underbanked or underserved populations, such as rural or low-income
communities.
In some countries, indigenous banks may also refer
specifically to banks that are owned and operated by indigenous people, meaning
the original inhabitants of a particular region or country. These banks may
have a focus on serving indigenous communities, promoting economic development,
and supporting cultural preservation.
In general, indigenous banks can play an important
role in promoting financial inclusion and economic development, particularly in
regions or communities that may be underserved by larger, multinational banks.
These banks may have a greater understanding of local market conditions and
customer needs, and may be better positioned to provide tailored financial
products and services to meet those needs. Additionally, indigenous banks can
help to promote local ownership and control over financial resources, which can
contribute to broader economic empowerment and social equity.
FUNCTIONS
OF COMMERCIAL BANKS
Commercial banks perform a variety of functions that
are essential to the functioning of the economy. Here are some of the main
functions of commercial banks:
Accepting deposits: One
of the primary functions of commercial banks is to accept deposits from
individuals, businesses, and other organizations. These deposits can take the
form of savings accounts, checking accounts, time deposits, and other types of
accounts.
Lending money: Commercial
banks also lend money to individuals, businesses, and other organizations. This
can include loans for consumer purchases, business investments, and other
purposes.
Processing payments: Commercial
banks process a wide range of payment transactions, including checks, credit
card transactions, and electronic transfers. They also provide services such as
bill payment and foreign currency exchange.
Managing investments: Commercial
banks may also manage investments on behalf of their clients. This can include
managing investment portfolios, providing investment advice, and offering other
investment-related services.
Issuing credit cards: Many
commercial banks issue credit cards, which allow consumers to make purchases on
credit and pay back the balance over time.
Providing financial advice: Commercial
banks may provide financial advice and planning services to individuals and
businesses. This can include help with budgeting, debt management, and
retirement planning.
Facilitating international trade: Commercial
banks play an important role in facilitating international trade by providing
trade finance services, such as letters of credit and export financing.
Offering other financial services: Commercial
banks may also offer a range of other financial services, such as insurance,
wealth management, and investment banking.
Overall, commercial banks are essential to the functioning
of the economy and provide a wide range of services that help individuals and
businesses manage their finances and achieve their financial goals.
FUNCTIONS
OF COMMERCIAL BANKS
Commercial banks perform a variety of functions that
are essential to the functioning of the economy. Here are some of the main
functions of commercial banks:
Accepting deposits: One
of the primary functions of commercial banks is to accept deposits from
individuals, businesses, and other organizations. These deposits can take the
form of savings accounts, checking accounts, time deposits, and other types of
accounts.
Lending money: Commercial
banks also lend money to individuals, businesses, and other organizations. This
can include loans for consumer purchases, business investments, and other
purposes.
Processing payments: Commercial
banks process a wide range of payment transactions, including checks, credit
card transactions, and electronic transfers. They also provide services such as
bill payment and foreign currency exchange.
Managing investments: Commercial
banks may also manage investments on behalf of their clients. This can include
managing investment portfolios, providing investment advice, and offering other
investment-related services.
Issuing credit cards: Many
commercial banks issue credit cards, which allow consumers to make purchases on
credit and pay back the balance over time.
Providing financial advice: Commercial
banks may provide financial advice and planning services to individuals and
businesses. This can include help with budgeting, debt management, and
retirement planning.
Facilitating international trade: Commercial
banks play an important role in facilitating international trade by providing
trade finance services, such as letters of credit and export financing.
Offering other financial services: Commercial
banks may also offer a range of other financial services, such as insurance,
wealth management, and investment banking.
Overall, commercial banks are essential to the
functioning of the economy and provide a wide range of services that help
individuals and businesses manage their finances and achieve their financial
goals.
1.
Primary functions
The primary
functions of commercial banks include:
Accepting deposits: Commercial
banks accept deposits from individuals, businesses, and other organizations,
which they use to generate income through lending and investments.
Granting loans and advances: Commercial
banks lend money to individuals, businesses, and other organizations for
various purposes, such as purchasing homes, financing businesses, and funding
other investments.
Credit creation: Commercial
banks have the ability to create credit by lending money that they don't
necessarily have in their reserves. This allows banks to expand the amount of
credit available in the economy, which can stimulate economic growth.
Clearing and settling payments: Commercial
banks facilitate payments between individuals and organizations by providing
services such as check clearing, electronic funds transfers, and credit card
processing.
Providing safety and security for deposits: Commercial banks insure deposits up to a certain
amount, which helps to protect depositors against losses in the event of a bank
failure.
Issuing and managing payment instruments: Commercial banks issue payment instruments such as
checks, credit cards, and debit cards, which enable individuals and
organizations to make payments and manage their finances.
Providing financial advice and services: Commercial banks offer a wide range of financial advice
and services, including investment advice, insurance, and retirement planning.
These primary functions of commercial banks are
critical to the functioning of the economy, as they enable individuals and
organizations to manage their finances and invest in businesses and other
ventures that drive economic growth.
2. Secondary Functions
The secondary
functions of commercial banks include:
Providing locker facilities: Commercial
banks offer safe deposit boxes or locker facilities for customers to store valuable
items such as jewelry, documents, and other important possessions.
Issuing letters of credit and guarantees: Commercial banks issue letters of credit and
guarantees on behalf of their customers to facilitate international trade
transactions.
Acting as trustees and executors: Commercial
banks can act as trustees and executors for their customers, managing their
estates and assets after they pass away.
Providing foreign exchange services: Commercial banks offer foreign exchange services, such
as buying and selling foreign currency, facilitating international money
transfers, and providing currency exchange services for travelers.
Offering investment services: Commercial
banks provide a range of investment services, including mutual funds,
securities trading, and portfolio management.
Providing payroll services: Commercial
banks offer payroll services to businesses, processing employee salaries and
distributing payments.
Issuing debit and credit cards: Commercial
banks issue debit and credit cards that customers can use for purchases, cash
withdrawals, and other transactions.
These secondary functions of commercial banks add
value to the services they provide and help to differentiate them from other
financial institutions. By offering a wide range of services beyond their
primary functions, commercial banks can attract and retain customers and
strengthen their position in the financial services industry.
General
utility functions
In addition to their primary and secondary functions,
commercial banks also perform general utility functions that benefit both the
economy and society as a whole. These general utility functions include:
Encouraging savings: Commercial
banks promote savings by offering interest on deposits, which incentivizes
individuals and businesses to save their money instead of spending it
immediately.
Mobilizing savings: Commercial banks
mobilize savings by collecting funds from depositors and channeling them into
investments and loans, which can stimulate economic growth and create jobs.
Providing liquidity: Commercial
banks provide liquidity to the economy by making funds available to businesses
and individuals through loans, which can help to stimulate economic activity
and growth.
Supporting economic growth: Commercial
banks play a crucial role in supporting economic growth by providing financing
to businesses and individuals, which can help to create jobs and stimulate
economic activity.
Facilitating monetary policy: Commercial
banks facilitate monetary policy by working closely with central banks to
manage the money supply and ensure price stability.
Overall, the general utility functions of commercial
banks are critical to the functioning of the economy, as they help to promote
savings, mobilize funds, and support economic growth. By providing liquidity,
supporting monetary policy, and facilitating investment, commercial banks play
a vital role in driving economic activity and ensuring the stability and growth
of the financial system.
TYPES
OF BANK ACCOUNTS
There are several types of bank accounts offered by
commercial banks, each with its own unique features and benefits. Here are some
of the most common types of bank accounts:
Savings accounts: Savings
accounts are designed for individuals to deposit money and earn interest on
their deposits. They typically have low or no monthly fees and allow for easy
access to funds.
Checking accounts: Checking
accounts are designed for everyday transactions, such as paying bills and
making purchases. They usually come with checks and debit cards for easy access
to funds, and may have monthly fees depending on the account type.
Money market accounts: Money
market accounts are similar to savings accounts but typically offer higher
interest rates in exchange for a higher minimum balance requirement.
Certificate of deposit (CD) accounts: CD accounts require a deposit for a fixed period of
time, usually ranging from a few months to several years. In exchange for
keeping the funds in the account for the agreed-upon term, the account holder
earns a higher interest rate than they would with a savings account.
Individual retirement accounts (IRAs): IRAs are a type of savings account designed
specifically for retirement savings. They offer tax benefits and may have
higher interest rates than regular savings accounts.
Joint accounts: Joint accounts are bank accounts
shared by two or more people, such as spouses or business partners. All account
holders have equal access to the funds in the account.
Trust accounts: Trust
accounts are bank accounts held in trust for someone else, such as a child or
elderly family member. The account holder manages the funds on behalf of the
beneficiary, who may have restricted access to the funds.
These are just a few examples of the many types of
bank accounts available to consumers. When choosing a bank account, it's
important to consider factors such as fees, interest rates, and access to funds
in order to find an account that meets your financial needs.
1.
Fixed deposit Account
A fixed deposit account is a type of savings account
offered by banks that requires the account holder to deposit a fixed amount of
money for a fixed period of time, usually ranging from a few months to several
years. In exchange for keeping the funds in the account for the agreed-upon
term, the account holder earns a higher interest rate than they would with a
regular savings account.
Fixed deposit accounts are often considered a low-risk
investment option because the interest rate is guaranteed and the funds are
FDIC insured, which means they are protected up to a certain amount by the
government in the event of bank failure. The interest rate offered on a fixed
deposit account varies depending on the bank, the amount of the deposit, and
the length of the term.
One key feature of fixed deposit accounts is that the
funds are not typically accessible during the term of the deposit without
penalty. This means that if the account holder needs to withdraw the funds
before the agreed-upon term, they may have to pay a penalty or forfeit some of
the interest earned.
Overall, fixed deposit accounts can be a good option
for individuals who want to earn a guaranteed return on their savings and are
willing to lock up their funds for a fixed period of time. It's important to
compare interest rates and terms from different banks before opening a fixed
deposit account to ensure you're getting the best deal.
2.
Savings Bank Account
A savings bank account is a type of bank account
offered by commercial banks and other financial institutions that allows
individuals to deposit their money and earn interest on their deposits. These
accounts are designed for individuals who want to save money for a future goal
or build an emergency fund.
Savings accounts typically have low or no monthly fees
and allow for easy access to funds through ATM withdrawals, online transfers,
and in-branch transactions. The interest rate offered on a savings account
varies depending on the bank and the balance in the account.
One key feature of savings accounts is that the funds
are generally accessible at any time, which makes them a good option for
individuals who need quick and easy access to their savings. However, there may
be limits on the number of transactions or withdrawals that can be made each
month without incurring fees or penalties.
Savings accounts can be a good option for individuals
who want to earn a modest amount of interest on their savings while keeping
their funds easily accessible. However, it's important to shop around and
compare interest rates and fees from different banks to ensure you're getting
the best deal. Additionally, it's important to remember that the interest
earned on a savings account may not keep pace with inflation, which means the
purchasing power of your savings could decrease over time.
3.
Current Account
A current account is a type of bank account offered by
commercial banks that allows individuals and businesses to deposit and withdraw
money as often as they like without restrictions on the number or amount of
transactions. Unlike savings accounts, current accounts typically do not pay
interest on the balance of funds in the account.
Current accounts are often used by businesses, as they
provide a range of banking services that are specifically designed for
commercial transactions. These services can include cash management tools,
overdraft facilities, and the ability to issue checks or make electronic
payments.
One key feature of a current account is that it allows
for flexibility in managing funds, as there are no restrictions on the number
or amount of transactions that can be made. However, current accounts often
have higher fees and charges than other types of bank accounts, and may require
a minimum balance or a monthly maintenance fee.
Overall, current accounts can be a good option for
businesses that require frequent and flexible access to their funds for
day-to-day transactions. However, it's important to carefully review the terms
and fees associated with a current account before opening one, to ensure it
meets your specific needs and is cost-effective for your business.
4.
Recurring Deposit Account
A recurring deposit account is a type of savings
account offered by banks and other financial institutions that allows
individuals to save a fixed amount of money each month for a predetermined
period of time, typically ranging from six months to ten years.
The account holder chooses the amount they wish to
deposit each month, and the bank calculates the total amount that will be
available at the end of the term based on the interest rate offered and the
deposit amount. The interest rate on a recurring deposit account is generally
higher than that of a regular savings account, as the bank has a guaranteed
deposit amount for a fixed period of time.
Recurring deposit accounts are often considered a good
option for individuals who want to save money regularly but may not have a lump
sum to deposit upfront. They also offer a disciplined approach to saving, as
the account holder commits to a fixed monthly deposit amount.
One key feature of recurring deposit accounts is that
the funds are not generally accessible during the term of the deposit without
penalty. If the account holder needs to withdraw the funds before the end of
the term, they may have to pay a penalty or forfeit some of the interest
earned.
Overall, recurring deposit accounts can be a good
option for individuals who want to earn a guaranteed return on their savings
over a fixed period of time and are willing to commit to a regular monthly
deposit amount. However, it's important to compare interest rates and terms
from different banks before opening a recurring deposit account to ensure
you're getting the best deal.
5.
Home safe Account
I apologize for the confusion earlier, but there is no
specific banking product known as a "Home Safe Account." However, there
are various types of bank accounts and financial products available for
homeowners that can help them manage their finances and protect their home and assets.
Here are some examples:
Home Equity Line of Credit (HELOC) - A HELOC is a type of loan that allows homeowners to
borrow money against the equity in their home. The equity is the difference
between the current market value of the home and the outstanding mortgage
balance. A HELOC usually has a variable interest rate and a revolving credit
line, which means that the borrower can borrow and repay funds as needed,
similar to a credit card.
Home Insurance -
Homeowners can purchase insurance policies to protect their home and belongings
from damage or loss due to events like theft, fire, or natural disasters. Home
insurance policies can also cover liability for accidents that occur on the
property.
Mortgage Accounts - Homeowners
can also have a mortgage account with a bank or lender where they make regular
payments towards the loan used to purchase their home. Mortgage accounts may
offer different payment options and terms depending on the borrower's needs.
Savings Accounts - Homeowners
may also have savings accounts to save for future expenses related to the home,
such as renovations or repairs. They can also save for other goals like college
tuition, retirement, or emergency funds.
Safe Deposit Boxes - As
mentioned earlier, some banks offer safe deposit boxes for customers to store
important documents and valuables in a secure location. These boxes are available
for rent and can provide peace of mind for homeowners who want to protect their
valuable possessions from theft or damage.
In summary, while there is no specific banking product
known as a "Home Safe Account," there are various types of accounts and
financial products available for homeowners to manage their finances and
protect their homes and assets. Homeowners can work with their bank or
financial advisor to determine the best options for their needs and financial
goals.
ADVANTAGES
OF BANK ACCOUNT
There are several
advantages of having a bank account, including:
Safe storage of money: Banks
offer a safe and secure place to keep your money. You don't have to worry about
losing your cash or having it stolen if you keep it in a bank account.
Convenience: Having
a bank account provides a convenient way to make transactions and manage your
finances. You can withdraw money, deposit checks, and transfer funds
electronically.
Access to credit: Banks
offer loans and credit cards to customers who have a good credit history and
meet certain eligibility criteria. This can be useful for making big purchases
or emergencies.
Interest earnings: Some types of bank
accounts, such as savings accounts and fixed deposits, offer interest on the
balance. This can help your money grow over time.
Financial management: A
bank account allows you to track your spending and income, which can be helpful
in managing your finances and creating a budget.
Online banking: Many
banks offer online banking services, which allow you to access your account and
perform transactions from the comfort of your home or office.
Security: Banks have
security measures in place to protect your money, such as encryption and fraud
detection systems.
FDIC insurance: Bank
deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to
a certain amount, providing an additional layer of protection for your money.
Overall, having a bank account can provide a sense of
security, convenience, and financial management. It can also open up opportunities
for credit and interest earnings.
DIFFERENCE
BETWEEN FIXED DEPOSITS ACCOUNT, SAVINGS ACCOUNTS AND CURRENT ACCOUNTS
Fixed Deposits (FDs) Accounts, Savings Accounts, and
Current Accounts are three types of bank accounts that cater to different needs
and objectives. Here are some key differences between them:
Fixed Deposits
(FDs) Accounts:
Fixed Deposits are investment options that allow you
to invest a lump sum of money for a fixed period of time, typically ranging
from a few months to several years. The interest rate offered on FDs is
generally higher than that of a savings account. The interest rate on FDs is
fixed for the entire tenure of the investment, and the amount invested cannot
be withdrawn before the maturity date without incurring a penalty.
Savings Accounts:
Savings Accounts are the most common type of bank
account used by individuals to store and save their money. These accounts offer
lower interest rates than fixed deposits, but they are highly liquid, meaning
you can withdraw your money at any time without any penalty. Savings accounts
generally have a limit on the number of withdrawals allowed per month.
Current Accounts:
Current Accounts are mainly used by businesses and
companies to conduct day-to-day transactions. These accounts have higher
transaction limits than savings accounts and typically do not offer interest on
the balance. Unlike savings accounts, current accounts do not have a limit on
the number of transactions that can be made per month.
In summary, Fixed Deposits are a good investment
option for those who want to earn higher interest rates and are willing to lock
in their money for a fixed period of time. Savings Accounts are suitable for
those who need easy access to their money and want to earn some interest on
their balance. Current Accounts are ideal for businesses that need to make a
large number of transactions on a regular basis.
BANKING
SERVICES
Banking services are financial products and services
offered by banks and financial institutions to individuals and businesses. Here
are some of the common banking services:
Deposits:
Banks accept deposits from customers in the form of
savings accounts, current accounts, fixed deposits, recurring deposits, and
other deposit schemes.
Loans:
Banks offer various types of loans to individuals and
businesses, including personal loans, home loans, vehicle loans, business
loans, and others.
Credit Cards:
Credit cards allow customers to borrow money from the
bank and make purchases or payments. Customers have to pay interest on the outstanding
balance on the credit card.
Debit Cards:
Debit cards allow customers to withdraw cash and make
purchases using the funds in their bank account. The funds are deducted from
the account immediately.
Online Banking:
Banks offer online banking services that allow
customers to access their accounts, transfer funds, pay bills, and perform
other transactions using the internet.
Mobile Banking:
Mobile banking allows customers to access their
accounts and perform transactions using their smartphones or mobile devices.
Investment
Services:
Banks offer various investment services, such as
mutual funds, stock trading, and other investment products.
Insurance Services:
Banks offer insurance products, such as life
insurance, health insurance, and other insurance services.
Wealth Management:
Banks offer wealth management services that help
customers manage their wealth and investments.
These are some of the common banking services offered
by banks and financial institutions. Customers can choose the services based on
their financial needs and goals.
E-BANKING/NET
BANKING
E-Banking or Net Banking is a service offered by banks
and financial institutions that allows customers to access their accounts and
perform transactions online using the internet. Here are some key features of
E-Banking/Net Banking:
Account Access:
E-Banking allows customers to access their accounts
online using a computer or mobile device. Customers can check their account
balances, view transaction history, and download account statements.
Fund Transfers:
Customers can transfer funds between their own
accounts or to other accounts within the same bank or to accounts in other
banks.
Bill Payment:
E-Banking allows customers to pay their utility bills,
credit card bills, and other bills online. Customers can set up automatic
payments for recurring bills.
Online Shopping:
Customers can use their E-Banking account to make
online purchases and payments.
Investment Services:
E-Banking provides access to various investment
products, such as mutual funds, stock trading, and other investment products.
Security:
E-Banking is secured with multi-factor authentication,
encryption, and other security measures to protect customer information and
transactions.
Customer Service:
E-Banking provides 24/7 customer support through chat,
email, or phone.
E-Banking has made banking more convenient and
accessible for customers. It allows customers to perform transactions from
anywhere at any time without having to visit the bank. However, customers
should take precautions to protect their online accounts from fraud and other
security threats.
E
BANKING SERVICES
E-Banking services are financial services provided by
banks and financial institutions through electronic channels, such as the
internet, mobile devices, or ATMs. Here are some of the common E-Banking
services:
Account Access:
E-Banking allows customers to access their bank
accounts online using a computer or mobile device. Customers can check their
account balances, view transaction history, and download account statements.
Fund Transfers:
E-Banking enables customers to transfer funds between
their own accounts or to other accounts within the same bank or to accounts in
other banks.
Bill Payment:
E-Banking provides customers with the ability to pay
their utility bills, credit card bills, and other bills online. Customers can
set up automatic payments for recurring bills.
Online Shopping:
E-Banking offers customers the ability to use their
bank account to make online purchases and payments.
Investment Services:
E-Banking provides access to various investment
products, such as mutual funds, stock trading, and other investment products.
Loan Services:
E-Banking allows customers to apply for loans and
other credit products online. Customers can check their eligibility, submit
applications, and track the status of their applications.
Customer Service:
E-Banking provides 24/7 customer support through chat,
email, or phone.
E-Banking services offer convenience, accessibility,
and speed to customers. Customers can perform transactions from anywhere and at
any time without visiting the bank. E-Banking also helps banks to reduce costs
and improve efficiency by automating routine transactions. However, customers
should take precautions to protect their online accounts from fraud and other
security threats.
Benefits
of E-Banking to the banks
E-Banking offers several benefits to banks and
financial institutions. Here are some of the benefits of E-Banking to banks:
Cost Savings:
E-Banking reduces the cost of handling paper-based
transactions and reduces the need for physical infrastructure and staff. This
leads to significant cost savings for banks.
Improved Efficiency:
E-Banking automates routine transactions, reducing the
need for manual processing and improving the speed and accuracy of
transactions. This leads to improved efficiency for banks.
Increased Revenue:
E-Banking offers banks the opportunity to generate new
revenue streams through online payment services, investment products, and other
value-added services.
Enhanced Customer Service:
E-Banking offers 24/7 access to banking services,
allowing customers to perform transactions at their convenience. This leads to
enhanced customer satisfaction and loyalty.
Improved Risk Management:
E-Banking offers banks the ability to monitor transactions
in real-time, reducing the risk of fraud and other security threats.
Competitive Advantage:
E-Banking offers banks a competitive advantage in the
market by offering innovative and convenient services to customers.
In conclusion, E-Banking offers several benefits to
banks, including cost savings, improved efficiency, increased revenue, enhanced
customer service, improved risk
management, and a competitive advantage. These
benefits help banks to remain competitive and profitable in the digital age.
Benefits
of E-Banking to the Customers
E-Banking offers several benefits to customers. Here
are some of the benefits of E-Banking to customers:
Convenience:
E-Banking offers 24/7 access to banking services,
allowing customers to perform transactions at their convenience from anywhere
with an internet connection.
Cost Savings:
E-Banking reduces the need for customers to visit
physical bank branches, saving time and transportation costs.
Increased Security:
E-Banking uses multi-factor authentication, encryption,
and other security measures to protect customer information and transactions,
reducing the risk of fraud and other security threats.
Real-time Transactions:
E-Banking allows customers to perform transactions in
real-time, providing immediate access to funds and reducing the time it takes
for transactions to be processed.
Access to Information:
E-Banking allows customers to access their account
information, transaction history, and account statements online, providing a
transparent view of their finances.
Enhanced Customer Service:
E-Banking provides 24/7 customer support through chat,
email, or phone, allowing customers to get help quickly and easily.
Value-Added Services:
E-Banking offers customers access to value-added
services such as investment products, online bill payment, and online shopping.
In conclusion, E-Banking offers several benefits to
customers, including convenience, cost savings, increased security, real-time
transactions, access to information, enhanced customer service, and value-added
services. These benefits make banking more accessible, efficient, and
convenient for customers, improving their overall banking experience.
DIGITAL
PAYMENTS
Digital payments are electronic transactions that
involve the exchange of money between two parties without the need for cash or
physical exchange. Here are some of the common types of digital payments:
Mobile Payments:
Mobile payments allow customers to use their
smartphones to pay for goods and services. Mobile payments can be made using
mobile apps, QR codes, or NFC technology.
Online Payments:
Online payments allow customers to make payments for
goods and services through a website or mobile app. Online payments can be made
using debit cards, credit cards, or digital wallets.
Digital Wallets:
Digital wallets are mobile apps that allow customers
to store their payment information and make payments using their smartphones.
Digital wallets can also be used to store loyalty cards and other personal
information.
Contactless Payments:
Contactless payments allow customers to make payments
using NFC technology. Contactless payments can be made using debit cards,
credit cards, or mobile phones
Cryptocurrencies:
Cryptocurrencies are digital currencies that use
cryptography for security. Cryptocurrencies can be used for payments and
transfers of value without the need for intermediaries such as banks.
Digital payments offer several benefits over
traditional payment methods, including convenience, speed, security, and
cost-effectiveness. Digital payments also help to reduce the need for physical
contact and improve financial inclusion by providing access to financial
services for individuals who may not have access to traditional banking
services.
TYPES
PF DIGITEL PAYMENT METHODS IN INDIA
Digitel payment methods are becoming increasingly
popular in India due to the convenience and security they offer. Here are some
of the most common types of digital payment methods used in India:
UPI (Unified Payments Interface): UPI is a
payment system that enables money transfers between bank accounts instantly. It
allows users to link multiple bank accounts to a single mobile application and
make transactions in real-time.
Mobile Wallets: Mobile
wallets are digital wallets that allow users to store money and make payments using
their mobile phones. Examples of popular mobile wallets in India include Paytm,
PhonePe, and Google Pay.
Debit and Credit Cards: Debit
and credit cards are widely used in India for online and offline transactions. They are accepted at most merchants and
can be linked to mobile payment apps for added convenience.
Net Banking: Net
banking is an online payment system that allows users to transfer funds, pay
bills, and perform other banking transactions from their computer or mobile
device.
Aadhaar Enabled Payment System (AEPS): AEPS is a payment system that uses biometric
authentication to enable transactions. It allows users to make payments using
their Aadhaar card and fingerprint.
Bharat QR: Bharat QR is a
payment system that enables merchants to accept payments using QR codes.
Customers can simply scan the code using their mobile phone and make the
payment.
These are some of the most common types of digital
payment methods used in India. Each method has its own advantages and
disadvantages, so users should choose the one that best suits their needs.
Steps
to get Banking cards
The steps to get a banking card depend on the type of
card you want and the bank you are dealing with. Here are the general steps
that are typically involved in getting a banking card:
Choose the type of card: You need to decide
which type of banking card you want, such as debit card, credit card, prepaid
card, or ATM card.
Find a bank: You
should choose a bank that offers the type of card you need. Research different
banks and their card offerings to find one that suits your requirements.
Fill out an application form: Once
you have selected a bank, you need to fill out an application form for the type
of card you want. You may be able to fill out the form online or you may need
to visit the bank branch.
Submit the required documents: You
will need to submit certain documents such as proof of identity, address, and
income to the bank along with your application form.
Wait for approval: After
you have submitted your application and documents, the bank will review your
application and may conduct a credit check. Once your application is approved,
the bank will issue your card.
Activate your card: You
will need to activate your card before you can use it. This may involve calling
a toll-free number or using an online activation process.
Set up a PIN: You
will need to set up a Personal Identification Number (PIN) for your card. This
will be required for all transactions using the card.
These are the general steps involved in getting a banking
card. The specific steps and requirements may vary depending on the bank and
the type of card you are applying for.
1.
Banking cards
Banking cards are plastic cards issued by banks that
allow customers to access their financial accounts for a variety of purposes.
Here are some of the most common types of banking cards:
Debit Cards: Debit
cards are linked to a customer's bank account and allow them to withdraw cash,
make purchases, and transfer funds electronically.
Credit Cards: Credit
cards allow customers to borrow money from the bank up to a certain limit and
pay it back later with interest. They are often used for making purchases,
paying bills, and booking travel.
Prepaid Cards: Prepaid
cards are similar to debit cards, but they are not linked to a bank account.
They are loaded with a specific amount of money that the customer can spend,
and once the balance is depleted, the card must be reloaded with additional
funds.
ATM Cards: ATM cards allow
customers to withdraw cash from an Automated Teller Machine (ATM) using their
Personal Identification Number (PIN).
Gift Cards: Gift
cards are prepaid cards that can be given as a gift and used to make purchases
at specific retailers.
Travel Cards: Travel
cards are prepaid cards that can be used to withdraw cash and make purchases while
traveling internationally.
Banking cards have become an essential part of modern
banking and are widely used by individuals and businesses for various financial
transactions.
2.
USSD
USSD stands for Unstructured Supplementary Service
Data, which is a communication technology used by mobile phones to communicate
with the service provider's computer system through a GSM network. It is a
simple way to access services provided by mobile network operators and is
widely used in banking and other financial transactions in countries where
smartphone penetration is low.
USSD technology allows users to interact with menus on
their mobile phones by dialing short codes that are specific to the service
they want to access. These menus provide options for the user to select and
input information to complete transactions, such as checking account balances,
transferring funds, or buying airtime.
Unlike SMS or mobile apps, USSD does not require an
internet connection, which makes it accessible to people who do not have
smartphones or cannot access the internet. USSD also provides a more secure way
to perform financial transactions as it uses a session-based model that is
encrypted, and the session ends when the transaction is completed, which reduces
the risk of fraud.
However, USSD has limitations, including a limited
number of characters that can be used in a session, making it difficult to
provide detailed information. USSD also has a slower response time compared to
mobile apps or internet banking, and users may need to remember the specific
codes for each service they want to access.
Overall, USSD is a useful communication technology
that provides an accessible and secure way for people to access banking and
other services on their mobile phones.
3.
AEPS
AEPS stands for Aadhaar Enabled Payment System, which
is a payment mechanism that allows people to use their Aadhaar number and
biometric data to access banking services and perform financial transactions.
Aadhaar is a unique identification number issued by the Indian government to
residents of India.
With AEPS, individuals can use their Aadhaar number
and biometric data to access their bank accounts, check their balance, and make
transactions such as cash withdrawals, fund transfers, and balance inquiries.
This eliminates the need for a physical debit card or other banking instrument.
The AEPS system works by linking a person's Aadhaar
number with their bank account, and the person's biometric data is used to
authenticate transactions. This provides a secure and convenient way for people
to access their banking services and perform transactions, especially for those
who may not have access to physical banking instruments.
AEPS has become a popular payment mechanism in India,
particularly in rural areas where banking infrastructure is limited. It has
also helped to promote financial inclusion by making banking services accessible
to a wider range of people.
Overall, AEPS is a secure and convenient payment
mechanism that provides a way for people to access banking services and perform
transactions using their Aadhaar number and biometric data.
4.
UPI
UPI stands for Unified Payments Interface, which is a
real-time payment system developed by the National Payments Corporation of
India (NPCI) that allows people to transfer money instantly between bank
accounts using a mobile device. UPI is a popular payment system in India and
has revolutionized the way people make transactions, particularly in the
digital space.
To use UPI, users need to link their bank account with
a mobile number, create a virtual payment address (VPA), and set up a UPI PIN.
With UPI, users can transfer funds to any bank account instantly, 24/7, without
the need for bank account details or IFSC codes. Users can also use UPI to pay bills,
make merchant payments, and buy products or services online.
UPI transactions are secure and use two-factor
authentication, where users need to enter their UPI PIN and a one-time password
(OTP) to complete a transaction. The UPI system also allows users to view their
transaction history and check their account balance using the mobile app.
UPI has transformed the way people make transactions
in India and has made digital payments more accessible and convenient for
everyone. It has also helped to promote financial inclusion by providing a
low-cost and easy-to-use payment system that can be used by people across all
levels of society.
Overall, UPI is a fast, secure, and convenient payment
system that has become an integral part of the digital payment ecosystem in
India.
5.
MOBLIE WALLETS/E-WALLETS
Mobile wallets, also known as e-wallets, are digital
payment systems that allow users to store and manage their financial
information, including bank account details, credit/debit card information, and
cash balances, on their mobile devices. These mobile wallets can be used to
make payments, transfer money, and perform other financial transactions without
the need for physical currency or payment instruments.
Mobile wallets work by linking a user's bank account
or debit/credit card to their mobile device. Once the account information is
verified, users can add money to their mobile wallet using various payment
methods such as bank transfers, credit/debit cards, or net banking. Users can
then use the mobile wallet to make payments to merchants, transfer money to
other users, pay bills, and buy products or services online.
Mobile wallets provide several benefits, including
convenience, security, and accessibility. They eliminate the need to carry cash
or physical payment instruments, making transactions more convenient and
quicker. Mobile wallets also provide an additional layer of security by
encrypting the user's financial information, and users need to authenticate
each transaction using a PIN or biometric data, such as a fingerprint.
Mobile wallets are becoming increasingly popular in
India, with several providers, including Paytm, PhonePe, Google Pay, and Amazon
Pay, offering mobile wallet services. The government of India has also launched
the BHIM app, which is a UPI-based mobile wallet that enables users to make
payments and transfer money using their mobile devices.
Overall, mobile wallets are a convenient and secure
way to manage finances and perform transactions using a mobile device. They are
rapidly gaining popularity in India and are expected to become an integral part
of the digital payment ecosystem in the future.
6.
BANK PRE-PAID CARDS
Bank prepaid cards are a type of payment card that is
loaded with a fixed amount of funds, which can be used to make purchases,
withdraw cash, and perform other financial transactions. Unlike credit or debit
cards, which are linked to a bank account, prepaid cards are not linked to any
bank account and do not require a credit check to obtain.
Bank prepaid cards can be used in the same way as
credit or debit cards, and they are accepted at most merchants that accept card
payments. Users can load funds onto the card through various channels, such as
bank transfers, direct deposit, or cash deposits at designated locations.
Bank prepaid cards provide several benefits, including
convenience, security, and budget control. They are a good option for people
who do not have a bank account or credit card and for those who want to control
their spending. Prepaid cards also provide an additional layer of security
since they are not linked to a bank account, and users can only spend the
amount loaded onto the card.
In India, several banks offer prepaid cards, including
Visa, Mastercard, and Rupay. Prepaid cards are also available for specific
purposes, such as travel cards, gift cards, and payroll cards.
Overall, bank prepaid cards are a useful financial
tool that provides a convenient, secure, and controlled way to make payments
and manage finances. They are an excellent option for people who do not have a
bank account or credit card and for those who want to control their spending.
7.
PoS TERMINALS
Point-of-sale (PoS) terminals are electronic devices
used by merchants to process card payments at the point of sale. These devices
are connected to a payment gateway, which authorizes and processes the
transaction.
PoS terminals can accept various types of payment
cards, including credit cards, debit cards, and prepaid cards. Customers can
make payments by inserting or swiping their card on the PoS terminal, and
entering their PIN or signing a receipt to authorize the transaction.
PoS terminals provide several benefits, including
convenience, security, and efficiency. They allow merchants to accept a wide
range of payment methods, making it easier for customers to make payments. PoS
terminals also provide an additional layer of security by encrypting the
cardholder's data and verifying the transaction with the card issuer.
In India, PoS terminals are widely used by merchants,
and several banks offer PoS terminals to their customers. PoS terminals can be
used in various industries, including retail, hospitality, healthcare, and
transportation.
Overall, PoS terminals are an essential part of the
digital payment ecosystem in India, providing a convenient, secure, and
efficient way for merchants to accept card payments at the point of sale.
8. INTERNET BANKING
Internet banking, also known as online banking, is a
digital banking service that allows customers to perform various financial transactions
using the internet. Internet banking enables customers to access their bank
account and perform transactions, such as checking account balances,
transferring funds, paying bills, and applying for loans or credit cards, from
anywhere with an internet connection.
Internet banking works by providing customers with
secure login credentials, which they use to access their account through a
bank's website or mobile application. Once logged in, customers can view their
account details, perform transactions, and manage their finances.
Internet banking provides several benefits, including
convenience, accessibility, and flexibility. Customers can access their bank
account and perform transactions at any time, from anywhere, without the need
to visit a bank branch. Internet banking also provides real-time account
updates, allowing customers to keep track of their finances and make informed
financial decisions.
In India, internet banking is widely used, and most
banks offer internet banking services to their customers. Internet banking is
an essential part of the digital payment ecosystem in India, providing
customers with a convenient and secure way to manage their finances.
Overall, internet banking is a useful financial tool
that provides customers with convenient, accessible, and flexible banking
services. It is an excellent option for people who want to manage their
finances remotely and for those who prefer digital banking services over
traditional banking methods.
BENEFITS
DIGTEL PAYMENT
Digital payment methods provide several benefits to
users, merchants, and the economy as a whole. Some of the benefits of digital
payments in India are:
Convenience: Digital
payments are convenient as they enable users to make payments anytime and
anywhere using their mobile phones or other digital devices. Users can pay
bills, transfer money, and make purchases with just a few clicks, eliminating
the need for cash transactions.
Security: Digital payments
are secure as they use encryption technology to protect users' data and prevent
fraud. Digital payment platforms also provide additional security features such
as two-factor authentication and biometric verification.
Speed: Digital payments
are faster than traditional payment methods such as cash or checks. Digital
payments are processed in real-time, and the funds are transferred immediately,
reducing the time and effort required for transactions.
Cost-effective: Digital
payments are cost-effective as they eliminate the need for physical
infrastructure such as bank branches, ATMs, and cash handling facilities. This
reduces the transaction costs and makes digital payments more affordable for
users and merchants.
Financial inclusion: Digital
payments promote financial inclusion as they enable people who do not have
access to traditional banking services to participate in the formal financial
system. Digital payment platforms provide a range of services, including
digital wallets and mobile banking, that allow people to access financial
services from anywhere.
Overall, digital payments offer several benefits to
users, merchants, and the economy as a whole. They provide convenience,
security, speed, cost-effectiveness, and promote financial inclusion.
Multiple
Choice Questions:
1. What are the advantages of business
services?
a) Access to specialized expertise
b) Cost savings
c) Improved efficiency and productivity
d) All of the above
2. What is the primary function of banks?
a) Accepting deposits from the public
b) Providing credit, loans, and other financial
services
c) Regulating financial institutions
d) Providing wealth management services
3. Which of the following is not a type of
bank?
a) Retail banks
b) Central banks
c) Engineering banks
d) Investment banks
4. What are business services?
a. Services provided to individual consumers by
businesses
b. Services provided to businesses by other businesses
c. Services provided by the government to businesses
d. Services provided by non-profit organizations to
businesses
5. Which of the following is NOT an example
of banking services provided to businesses?
a. Deposit accounts
b. Legal services
c. Loans
d. Credit cards
6. What are digital payments?
a. Payments made using tangible goods
b. Payments made using paper checks
c. Payments made using digital technologies
d. Payments made in person
7. What does it mean when business services
are heterogeneous?
a. No two services are the same
b. They cannot be stored or saved for future use
c. They are produced and consumed simultaneously
d. They require a high level of expertise and
knowledge in a specific field
8. What is the importance of business
services?
a. They provide tangible goods to businesses
b. They help businesses improve their operations
c. They are cheaper than hiring full-time staff
d. They allow businesses to focus on non-core competencies
9. How can outsourcing business services
give businesses a competitive advantage?
a. By reducing costs and improving efficiency
b. By providing access to specialized knowledge and
expertise
c. By automating processes and implementing best practices
d. By allowing businesses to focus on their core
competencies
10. Which of the following is a unique
feature of business services?
a. They are tangible
b. They are stored for future use
c. They are produced and consumed separately
d. They are customer-oriented
11. What does it mean when business services
are customizable?
a. They can be stored or saved for future use
b. They are produced and consumed simultaneously
c. They require a high level of expertise and
knowledge in a specific field
d. They can be tailored to meet the specific needs of
the client.
12. Which of the following is NOT a main
feature of commercial banks?
a) Accepting deposits
b) Making loans
c) Providing insurance services
d) Providing financial services
13. Which of the following statements is
true about industrial banks?
a) They are regulated by the Federal Reserve System
b) They primarily serve individuals by accepting
deposits
c) They specialize in making loans to businesses in
specific industries
d) They have a wider range of services than commercial
banks
14. What is the primary focus of savings
banks?
a. Accepting deposits
b. Providing credit cards
c. Providing mortgages and other loans for real estate
d. Offering investment products
15. What is the role of a central bank?
a. Issuing credit cards
b. Managing a country's monetary policy and regulating
its banking system
c. Promoting instability in financial markets
d. Regulating savings banks
16. What is the main function of indigenous
banks?
a. To serve primarily local customers
b. To issue currency
c. To promote instability in financial markets
d. To manage investments on behalf of their clients.
17. What are the advantages of having a bank
account?
A. Safe storage of money
B. Convenience
C. Access to credit
D. All of the above
18. Which type of bank account offers
interest on the balance?
A. Fixed deposits
B. Savings accounts
C. Current accounts
D. Both A and B
19. Which type of bank account is suitable
for businesses that need to make a large number of transactions on a regular
basis?
A. Fixed deposits
B. Savings accounts
C. Current accounts
D. Recurring deposits
20. Which of the following is a digital
payment method used in India?
a) Cash only
b) Online payments
c) Paper checks
d) None of the above
21. What is UPI?
a) A type of digital wallet
b) An online
payment system
c) A biometric authentication system
d) A contactless payment system
22. Which of the following is a disadvantage
of using mobile wallets in India?
a) Lack of convenience
b) Lack of security
c) Limited acceptance
d) All of the above
23. Which of the following is NOT a benefit
of E-Banking to banks?
a) Cost savings
b) Improved efficiency
c) Increased revenue
d) Decreased customer service
24. Which of the following is a type of
banking card that allows customers to borrow money from the bank up to a
certain limit and pay it back later with interest?
a. Debit Card
b. Prepaid Card
c. Credit Card
d. ATM Car
25. USSD is a communication technology used
by mobile phones to communicate with the service provider's computer system
through a ______ network.
a. Wi-Fi
b. Bluetooth
c. GSM
d. NFC
True/False
Questions:
1. Business services provide businesses with access to
specialized expertise in areas such as finance, accounting, marketing, and
information technology. (True/False)
2. Outsourcing business services is always more
expensive than hiring full-time staff. (True/False)
3. Banks are not regulated institutions. (True/False)
4. Investment banks provide financial services to
businesses and investors, such as underwriting securities offerings, assisting
with mergers and acquisitions, and providing financial advice. (True/False)
5. Retail banks primarily serve individual customers
by providing a range of financial services, such as checking and savings
accounts, credit cards, and personal loans. (True/False)
6. Commercial banks are financial institutions that
primarily serve businesses and individuals by accepting deposits, making loans,
and providing a range of other financial services. (True/False)
7. Industrial banks accept deposits from the public
like commercial banks. (True/False)
8. Exchange banks specialize in facilitating
international trade and currency exchange. (True/False)
9. Agriculture banks offer a range of services to
support agricultural development, such as financing for land purchases, farm
equipment, and livestock. (True/False)
10. Savings banks primarily focus on providing credit
cards. (False)
11. Central banks act as the lender of last resort for
commercial banks. (True)
12. Indigenous banks only serve indigenous
communities. (False)
13. Commercial banks only accept deposits. (False)
14. Fixed deposits are investment options that allow
you to invest a lump sum of money for an indefinite period of time. False
15. Savings accounts offer higher interest rates than
fixed deposits.:
False
16. E-Banking/Net Banking allows customers to access
their accounts and perform transactions online using the internet. True
17. True or False: Contactless payments can be made
using mobile phones. True
18. E-Banking reduces the need for physical infrastructure
and staff. True
19. USSD requires an internet connection to access
services provided by mobile network operators. False
20. AEPS eliminates the need for a physical debit card
or other banking instrument. True
21. UPI allows users to transfer funds to any bank
account instantly, 24/7, without the need for bank account details or IFSC
codes. True
22. Credit Cards are similar to Prepaid Cards, but
they are not linked to a bank account. False
VERY
SHORT ANSWER QUESTIONS
Q.1. Define
‘bank’?
Ans. A bank is a financial institution that accepts
deposits from customers and uses those funds to provide loans and other
financial services.
Q.2.
What is ‘overdraft’?
Ans.An overdraft is a financial facility provided by
banks that allows an account holder to withdraw more money than they have
available in their account, up to a pre-approved limit. Essentially, it allows
a person to borrow money from the bank using their checking account as
collateral. Interest is charged on the amount borrowed, and fees may also
apply.
Q.3.
Explain ‘cash credit’
Ans. Cash credit is a type of loan offered by banks to
their business customers that allows them to withdraw funds up to a certain
limit. It is typically secured by collateral such as inventory, accounts
receivable, or property. Interest is charged only on the amount borrowed and
for the duration it is borrowed, and the borrower can repay and redraw the
funds as needed within the credit limit.
Q.4.
What is discounting of bills?
Ans. Discounting of bills is a financial practice
where a seller or creditor can receive immediate payment for goods or services
sold by offering a discount to the buyer or debtor. The seller can present the
bill of exchange or promissory note to a bank or financial institution, who
will pay the seller the discounted value of the bill, minus a fee or interest
charge, before the bill's maturity date. The bank then collects the full value
of the bill from the buyer when it matures. Discounting of bills helps the
seller to improve their cash flow and reduce the risk of non-payment, while
providing the buyer with flexibility in payment.
Q.5.
What is a central bank?
Ans. A central bank is a financial institution that is
responsible for managing a country's monetary policy, currency issuance, and
banking system. Its main functions include regulating the money supply,
controlling inflation, and maintaining financial stability. Central banks also
act as a banker to the government and commercial banks, and often play a key
role in international financial markets. They have the power to set interest
rates, issue currency, supervise banks, and act as lender of last resort to
prevent bank runs or financial crises. Examples of central banks include the
Federal Reserve in the United States, the European Central Bank, and the Bank
of Japan.
Q.6.
What is the importance of commercial banks?
Ans. Commercial banks are important as they provide
financial services such as mobilizing savings, providing credit, payment and
settlement services, risk management, and promoting financial inclusion, which
are essential for promoting growth, stability, and development in the economy.
Q.7.
Explain ‘exchange bank’
Ans. An exchange bank is a financial institution that
specializes in foreign currency exchange and international trade finance. It
provides services such as currency conversion, money transfers, and trade
financing to facilitate cross-border transactions between businesses and
individuals. Exchange banks make their profits from the difference between the buying
and selling rates of currencies and may also charge fees for their services.
They play an important role in global trade and finance by providing access to
foreign currency and mitigating the risks associated with cross-border
transactions.
Q.8.
Explain ‘fixed deposit account?
Ans. A fixed deposit account is a type of savings
account offered by banks and financial institutions, where customers can
deposit a fixed amount of money for a specific period of time, usually ranging
from a few months to several years. The interest rate offered on fixed deposit
accounts is typically higher than regular savings accounts, and the rate is
fixed for the entire term of the deposit. The account holder cannot withdraw
the funds before the maturity date without incurring a penalty, but they earn
interest on the deposit. Fixed deposit accounts are a low-risk investment
option that offer guaranteed returns and are ideal for individuals looking to
save money for a specific financial goal or to earn a higher return on their
savings.
Q.9.
What is ‘savings bank account?
Ans. A savings bank account is a type of deposit
account offered by banks and financial institutions that allows individuals to
deposit and withdraw money, while earning a small amount of interest on their
balance. Unlike a current account, savings accounts are designed for
individuals who do not need to make frequent transactions and instead focus on
saving money. They typically have lower fees and require lower minimum balances
than current accounts. Savings accounts offer a safe and convenient way to save
money and earn a small amount of interest on the balance.
Q.10.
What is the purpose of ‘current account?
Ans. The purpose of a current account is to provide a
flexible deposit account for businesses, individuals, and organizations that
have frequent transactions, such as making payments, receiving deposits, and
issuing checks. Current accounts typically do not earn interest and may have
higher fees and minimum balance requirements than savings accounts. The main
purpose of a current account is to facilitate day-to-day transactions and
manage cash flow, with a focus on providing convenient and efficient banking
services for businesses and individuals.
Q.11.
What is a ‘pass book’?
Ans. A passbook is a small booklet provided by banks
to their customers, which records all the transactions made in their savings
account, such as deposits, withdrawals, interest earned, and account balance.
It serves as a physical record of the account holder's transactions and allows them
to keep track of their account activity without having to rely on digital
records or online banking. Passbooks may also include other details such as
account number, account holder's name, and date of account opening. Passbooks
are mainly used for savings accounts and are less common for current accounts.
Q.12.
How is the deposits mobilized by ‘home safe account?
Ans. A home safe account is not a common banking term
or product. However, if you are referring to a type of account that encourages
customers to save money at home, then the deposits mobilized by such an account
would be through the customer's own efforts to save and deposit money into the
account. The account may be provided by a bank or other financial institution
and could involve providing a safe or other secure storage for the customer's
savings at home. However, such an account may not be FDIC insured, meaning that
the money may not be protected in case of theft or loss. It is always
recommended to keep savings in a secure and insured bank account to ensure
their safety and protection.
Q.13.
Why is a cheque book issued?
Ans. A cheque book is issued by a bank to its account
holders to enable them to make payments or transfer money to other individuals
or organizations. Cheques are a type of negotiable instrument that allows the
account holder to make payments without the need for cash, providing a safe and
convenient method for making transactions. Cheques can be used for a variety of
payments, including bills, rent, and purchases, and they provide a record of
the payment made. Cheque books typically contain a number of cheques, which are
printed with the account holder's name, account number, and other relevant
details.
Q.14.
What is a mobile wallet?
Ans. A mobile wallet is a digital wallet or virtual
wallet that stores payment card information, such as credit or debit card
details, and allows users to make electronic transactions through their mobile
devices, such as smartphones or tablets. Mobile wallets can be used for a
variety of transactions, including online purchases, in-store payments, bill
payments, and money transfers. They are designed to be fast, secure, and
convenient, and may also offer additional features such as loyalty points and
rewards programs. Users can link their bank accounts or credit cards to their
mobile wallet to transfer money or top up their balance, and many mobile
wallets also use encryption and other security measures to protect the user's
financial information.
Q.15.
Explain the term UPI?
Ans. UPI stands for Unified Payments Interface, which
is a real-time payments system launched by the National Payments Corporation of
India (NPCI) in 2016. It is a platform that enables users to transfer money
instantly between bank accounts using a mobile device. UPI allows users to
create a virtual payment address, which is linked to their bank account and can
be used to send and receive money. Transactions can be initiated through a
mobile app or a mobile banking platform, and funds are transferred instantly
between bank accounts. UPI also supports the use of QR codes for payments,
allowing users to scan a code and make a payment without having to enter any
details manually. UPI has become a popular method of digital payments in India
and has helped to promote financial inclusion and reduce the use of cash in the
economy.
SHORT
ANSWER QUESTIONS
Q.1.
What are agency function of the banks?
Ans. In addition to their primary role of accepting
deposits and lending money, banks also perform several agency functions or
services on behalf of their customers. These agency functions include:
Collection of Cheques and Bills: Banks
collect cheques and bills on behalf of their customers and credit the proceeds
to their accounts.
Payment of Insurance Premiums: Banks
collect insurance premiums on behalf of insurance companies and credit the
premiums to the respective policyholders' accounts.
Sale and Purchase of Securities: Banks
act as intermediaries for the sale and purchase of securities such as shares,
bonds, and debentures.
Foreign Exchange Services: Banks
facilitate foreign exchange transactions, including currency exchange and
international fund transfers.
Income Tax Services: Banks
provide assistance in filing income tax returns and collecting taxes on behalf
of the government.
Utility Bill Payments: Banks
allow customers to pay their utility bills such as electricity, water, and gas
bills through their accounts.
These agency functions help to make banking services
more comprehensive and convenient for customers, while also generating additional
revenue for the banks.
Q.2.
Discuss the primary function of the banks?
Ans. The primary function of banks is to accept
deposits and provide loans to individuals, businesses, and other organizations.
This function is commonly referred to as the "credit creation"
function of banks, as banks are able to create credit by lending out the money
that they receive from deposits. The primary functions of banks can be further
explained as follows:
Accepting Deposits: Banks
accept deposits from their customers, including individuals, businesses, and
other organizations. Deposits can be in the form of savings accounts, current
accounts, fixed deposits, and other types of deposit accounts.
Providing Loans: Banks
provide loans to borrowers, including individuals, businesses, and other
organizations. Loans can be in the form of personal loans, home loans, business
loans, and other types of loans.
Providing Overdraft and Cash Credit Facilities: Banks provide overdraft and cash credit facilities to
their customers, which allow them to withdraw more money than they have in
their account, up to a pre-approved limit.
Issuing Credit and Debit Cards: Banks
issue credit and debit cards to their customers, which can be used to make
purchases and withdraw cash from ATMs.
Providing Foreign Exchange Services: Banks provide foreign exchange services, including
currency exchange and international fund transfers.
The primary function of banks is essential for the
smooth functioning of the economy, as it enables individuals and businesses to
access credit and other financial services that they need to grow and succeed.
Q.3.
Explain the utility functions of banks?
Ans. In addition to their primary functions of
accepting deposits and providing loans, banks also perform several utility
functions that are essential for the smooth functioning of the economy. These
utility functions include:
Issuing Letters of Credit: Banks
issue letters of credit to facilitate international trade by providing a
guarantee to the seller that they will be paid for their goods or services.
Providing Locker Facilities: Banks
provide locker facilities to their customers for the safekeeping of valuable
items such as jewellery, documents, and other important belongings.
Providing ATM Services: Banks
provide ATM services to allow customers to access their accounts and withdraw
cash at any time, even outside of bank hours.
Providing Internet Banking and Mobile Banking Services: Banks provide internet banking and mobile banking
services, which allow customers to access their accounts, make transactions,
and perform other banking functions online or through a mobile app.
Providing Credit Cards and Debit Cards: Banks issue credit cards and debit cards, which allow
customers to make purchases and access cash advances.
Providing Investment Advice: Banks
provide investment advice to customers, helping them to make informed decisions
about their investments.
Providing Insurance Services: Many
banks offer insurance services, including life insurance, health insurance, and
other types of insurance policies.
The utility functions of banks are designed to provide
convenience and flexibility to customers while also generating additional
revenue for the banks. These functions help to make banking services more
comprehensive and accessible to customers, thereby promoting financial
inclusion and economic growth.
Q.4.
Distinguish between fixed deposit accounts, savings account and current
account?
Ans. Fixed deposit accounts, savings accounts, and
current accounts are all types of deposit accounts offered by banks, but they
differ in their features and usage. The main differences between these types of
accounts are as follows:
Fixed Deposit Accounts: Fixed
deposit accounts are deposit accounts in which the customer deposits a fixed
amount of money for a fixed period of time, typically ranging from 7 days to 10
years. The interest rate offered on fixed deposit accounts is generally higher
than that offered on savings accounts or current accounts. The customer cannot
withdraw the money before the maturity period without incurring a penalty.
Savings Accounts: Savings accounts are deposit
accounts that allow customers to deposit and withdraw money as needed. Savings
accounts usually offer lower interest rates than fixed deposit accounts but higher
than current accounts. Some savings accounts may have minimum balance
requirements or limit the number of withdrawals per month.
Current Accounts: Current accounts are deposit
accounts that are primarily used by businesses for their day-to-day transactions.
Current accounts generally do not offer interest on deposits, but they have
higher withdrawal limits and lower transaction fees. Current accounts do not
have any minimum balance requirements.
In summary, fixed deposit accounts are ideal for
customers who want to earn a higher interest rate on their deposits and can
afford to lock their money for a specific period of time. Savings accounts are
suitable for customers who need regular access to their funds and want to earn
some interest on their deposits. Current accounts are useful for businesses
that need to conduct frequent transactions without worrying about any
restrictions on withdrawals or minimum balance requirements.
Q.4.
Distinguish between fixed deposit accounts, savings account and current account?
Ans. Fixed deposit accounts, savings accounts, and
current accounts are three different types of deposit accounts offered by
banks. While they all share some similarities, there are some key differences
between them that set them apart.
Fixed Deposit Accounts: A fixed deposit account
is a type of savings account in which a customer deposits a lump sum of money
for a fixed period, usually ranging from one month to several years. The money
is locked in for the duration of the fixed term, and the interest rate offered
on the deposit is generally higher than that offered on savings accounts. The
customer cannot withdraw the money before the maturity period without incurring
a penalty.
Savings Accounts: Savings
accounts are deposit accounts that allow customers to deposit and withdraw
money as needed. They are typically used for regular transactions, and
customers can earn interest on their balances. Some savings accounts may have a
minimum balance requirement, and there may be restrictions on the number of
withdrawals that can be made per month.
Current Accounts: A
current account is a type of deposit account that is typically used by
businesses for day-to-day transactions. Unlike savings accounts, current
accounts generally do not pay any interest on balances, and there is usually no
minimum balance requirement. Current accounts typically offer higher withdrawal
limits and lower transaction fees than savings accounts.
In summary, fixed deposit accounts are suited for
customers who want to earn a higher interest rate on their deposits and are
willing to lock their funds for a fixed period of time. Savings accounts are
suitable for customers who need regular access to their funds and want to earn
interest on their balances. Current accounts are ideal for businesses that need
to conduct frequent transactions without worrying about any restrictions on
withdrawals or minimum balance requirements.
Q.5.
what is the purpose of savings accounts, savings account and current account?
Ans. The purpose of savings accounts is to provide a
safe and convenient place for individuals to save their money while earning
interest on their deposits. Savings accounts are typically offered by banks and
credit unions, and they usually offer higher interest rates than checking
accounts.
A savings account is a type of bank account that
allows individuals to deposit and withdraw money while earning interest on
their balance. Savings accounts often have restrictions on the number of
withdrawals or transfers that can be made each month, and they may require a
minimum balance to earn interest or avoid fees.
A current account, also known as a checking account,
is a type of bank account that is used for daily transactions such as
depositing and withdrawing money, paying bills, and making purchases. Unlike
savings accounts, current accounts usually do not pay interest on the balance
and may have monthly fees or minimum balance requirements. Current accounts
often come with a debit card or checkbook, allowing for easy access to funds.
In summary, the purpose of savings accounts is to
provide a safe and profitable way for individuals to save their money, while
current accounts are designed for day-to-day transactions and do not typically
offer interest on the balance.
Q.6.
Define e-banking? Also explain various online banking services?
Ans. E-banking, also known as online banking, is a
system that allows individuals and businesses to access and manage their bank
accounts through the internet. This electronic system allows customers to
perform various banking transactions such as checking account balances,
transferring funds between accounts, paying bills, and applying for loans or
credit cards.
Various online
banking services include:
Account Information: Customers
can view their account balances, transaction history, and account statements
online.
Fund Transfer: Online
banking allows customers to transfer funds between their own accounts or to
other accounts within the same bank or to other banks.
Bill Payment: Customers
can pay their bills online, either as a one-time payment or set up recurring
payments.
Mobile Banking: Many
banks offer mobile banking apps that allow customers to access their accounts
and perform transactions from their smartphones or tablets.
Online Loan and Credit Card Applications: Customers can apply for loans and credit cards online
and receive instant approvals in many cases.
Online Investment Services: Banks
also offer investment services such as buying and selling stocks, mutual funds,
and other investment products through online banking.
Account Alerts: Customers
can set up alerts for various account activities such as deposit notifications,
low balance alerts, and suspicious transaction alerts.
Overall, e-banking provides customers with convenient
and secure access to their accounts and allows them to manage their finances
from anywhere, at any time.
Q.6.
Distinguish between NEET and RTGS?
Ans. NEFT (National Electronic Fund Transfer) and RTGS
(Real-Time Gross Settlement) are two different electronic payment systems used
in India for interbank fund transfers.
NEFT is a payment system that allows individuals and
businesses to transfer funds from one bank account to another electronically.
NEFT transactions are processed in batches and settled in hourly intervals,
with transactions completed on the same day. The minimum amount for an NEFT
transaction is Rs. 1 and there is no upper limit on the amount that can be
transferred. NEFT transactions can be initiated through online banking, mobile
banking or by visiting a bank branch.
RTGS, on the other hand, is a real-time payment system
that allows for the instantaneous transfer of funds between bank accounts. RTGS
is used for high-value transactions of Rs. 2 lakhs or more and the transfer is
completed in real-time, meaning the funds are available in the beneficiary's
account immediately. RTGS transactions can only be initiated during the working
hours of the bank and require a minimum of Rs. 2 lakhs for each transaction.
In summary, NEFT is used for small to medium value
transactions and is processed in batches, while RTGS is used for high-value
transactions and is settled in real-time.
LONG
ANSWER QUESTIONS
Q.1. What
do you understand by banks ?Discuss the various functions of the banks.
Ans. Banks are
financial institutions that are primarily responsible for accepting deposits
from customers and lending money to individuals and businesses. Banks play a
vital role in the economy by providing a range of financial services, including
savings accounts, loans, credit cards, investment opportunities, and other
financial products.
The various functions of banks are as follows:
Accepting Deposits: Banks are responsible for accepting deposits
from customers, which can be withdrawn at a later time. Banks offer different
types of deposit accounts, including savings accounts, current accounts, fixed
deposits, and recurring deposits.
Lending: Banks lend money to individuals and businesses in the
form of loans, credit cards, and other financial products. Banks earn interest
on the loans they provide, which is their primary source of revenue.
Payment Services: Banks provide payment services, including
issuing and processing cheques, demand drafts, and electronic fund transfers,
to facilitate transactions between customers.
Investment Banking: Banks provide investment banking services,
including underwriting and selling securities, managing initial public
offerings (IPOs), and facilitating mergers and acquisitions.
Foreign Exchange Services: Banks provide foreign exchange services,
allowing customers to buy and sell foreign currencies.
Insurance: Some banks offer insurance services, including life
insurance, health insurance, and general insurance.
Safekeeping of Valuables: Banks provide safe deposit lockers to
customers for storing valuable items such as jewelry, documents, and other
important items.
Overall, the primary
functions of banks include accepting deposits, lending money, providing payment
services, investment banking, foreign exchange services, insurance, and
safekeeping of valuables. Banks play a crucial role in the economy by providing
financial services and facilitating economic growth.r
Q.3.
What do you understand by ‘Current Account’? How it can be opened in the bank?
Ans. A current
account, also known as a checking account, is a type of bank account that is
primarily used for day-to-day transactions such as depositing and withdrawing
money, paying bills, and making purchases. Unlike savings accounts, current
accounts typically do not pay interest on the balance and may have monthly fees
or minimum balance requirements. Current accounts often come with a debit card
or checkbook, allowing for easy access to funds.
To open a current account in a bank, the following steps
may be required:
Choose a Bank: The first step is to choose a bank where you
want to open a current account. Research different banks and compare their
features, fees, and interest rates to find the one that best fits your needs.
Fill out the Application Form: Once you have selected a bank, you will need
to fill out an application form to open a current account. The application form
will require personal information such as your name, address, phone number, and
email address
Provide Identity Proof: You will need to provide identity proof, such
as a passport, driving license, or Aadhar Card, to verify your identity and
address.
Submit Photographs: You will also need to submit photographs for
the bank's records.
Initial Deposit: You will need to make an initial deposit to
open a current account. The amount of the initial deposit may vary depending on
the bank.
Signature Verification: The bank may require you to verify your
signature to ensure that it matches the signature on your identity proof.
Activate the Account: Once the account is opened, you will need to
activate it by visiting the bank or through online banking, depending on the
bank's policies.
Overall, opening a
current account requires submitting an application form, providing identity
proof and photographs, making an initial deposit, and verifying your signature.
Q.4.
What are the important types of accounts? Discuss the advantages of bank
accounts?
Ans. The important types of accounts
offered by banks are:
Savings Accounts: A savings account is a type of deposit
account that allows individuals to deposit and withdraw money while earning
interest on the balance. These accounts are suitable for people who want to
save money for short-term goals or emergencies.
Current Accounts: A current account is a type of deposit
account that is primarily used for business transactions. These accounts do not
typically earn interest on the balance, but they offer features such as overdraft
facilities and cheque books.
Fixed Deposit Accounts: A fixed deposit account is a type of deposit
account in which a customer deposits a fixed amount of money for a fixed period
of time and earns interest on the balance. The interest rate on fixed deposits
is generally higher than that on savings accounts.
Recurring Deposit Accounts: A recurring deposit account is a type of
deposit account in which customers deposit a fixed amount of money every month
for a fixed period of time and earn interest on the balance. These accounts are
suitable for people who want to save money regularly for a specific purpose.
Demat Accounts: A demat account is a type of account used to
hold shares and other securities in electronic form. This account is necessary
for trading in the stock market.
The advantages of bank accounts are as follows:
Safety: Bank accounts are a safe place to keep your money as they
are insured by the government up to a certain amount.
Convenience: Bank accounts offer a range of services such
as online banking, mobile banking, and ATMs, making it easy for customers to
access their money.
Interest: Many types of bank accounts earn interest on the balance,
providing a source of passive income.
Credit Score: Maintaining a bank account and using it
responsibly can help build a good credit score, which is important for
obtaining loans and other forms of credit.
Budgeting: Bank accounts can help customers track their spending and
manage their finances effectively.
Overall, bank
accounts provide a range of benefits, including safety, convenience, interest,
credit score improvement, and budgeting assistance. It is important to choose
the right type of account that meets your financial needs and goals.
Q.5.
Explain the various methods used for making a digital payment in detail?
Ans. Digital payments
refer to the transfer of funds electronically from one account to another.
There are various methods of digital payments, including:
Debit/Credit Cards: Debit and credit cards are the most common
forms of digital payments. These cards are linked to a bank account or credit
line and can be used to make purchases at a point-of-sale (POS) terminal or
online. Card payments involve swiping or inserting the card into the terminal,
entering a PIN or providing a signature, and the transaction is complete.
Mobile Wallets: Mobile wallets are digital wallets that can
be used to store money, link bank accounts or credit/debit cards, and make
payments. Users can add money to the wallet from a bank account, and then use
the wallet to make payments at stores or online. Popular mobile wallets include
Paytm, Google Pay, PhonePe, and many more.
Internet Banking: Internet banking allows customers to access
their bank accounts online and make payments directly from their account. To
make a payment, the customer logs in to their bank's website or mobile app,
enters the details of the payee and the amount to be paid, and the transaction
is processed.
UPI: Unified Payment Interface (UPI) is a real-time payment
system developed by the National Payments Corporation of India (NPCI). UPI
enables users to transfer funds from one bank account to another instantly,
without the need for bank account details. Users can use a UPI ID or a mobile
number linked to their bank account to make payments.
NEFT/RTGS: National Electronic Funds Transfer (NEFT) and Real Time
Gross Settlement (RTGS) are electronic fund transfer systems operated by the
Reserve Bank of India (RBI). NEFT is used for transferring funds up to Rs 2
lakh, and RTGS is used for transferring large amounts. These systems require
the user to provide the bank account details of the payee and the transaction
is processed by the bank.
QR Code: Quick Response (QR) codes can be used to make payments by
scanning the code with a mobile phone camera. The code contains the details of
the payment and the user can complete the transaction using a mobile wallet or
UPI.
Overall, digital
payments offer a convenient and secure way to transfer funds electronically.
The choice of payment method depends on the user's preference, the amount to be
paid, and the payment platform available at the merchant's end.
A. One Word or One
Line Questions
Q. 1. What is
the full form of MNC?
Ans. Multinational Companies.
Q. 2. Name some
American MNCs.
Ans. Coca Cola, Pepsi, Ponds, General Motors, IBM.
Q. 3. Name some
British MNCs.
Ans. Lipton, Brook Bond, Hindustan Liver etc.
Q. 4. State two
features of multinational companies.
Ans. (i) Operation in number of countries.
(ii)
Centralised management.
Q. 5. State two
methods of operation of Multinational companies.
Ans. (i) Opening of Branches.
(ii) Giving
Franchise.
Q. 6. Give any
two disadvantages of MNCs to Host Countries?
Ans. Disregard for National Priorities, Creation of
monopolies.
Q. 7. State two
features of Joint Venture.
Ans. (i) Joint ownership and Management.
(ii)
Specified objectives.
Q. 8. State two
types of Joint Ventures.
(i) Contractual Joint Venture (CJV).
(ii) Equity Based Joint Venture (EJV).
Q. 9. State two
benifits of Joint Venture.
Ans. (i) Availability of more resources.
(ii)
Reduction of competition.
Q. 10. State
two drawbacks of Joint Venture.
Ans. (i) Conflicts among partners.
(ii) Problems
concerning control and management.
Q. 11. State
two benifits of Public Private Partnership.
Ans. (i) Improvement in efficiency.
(ii) Rapid
development of infrastructure.
Q. 12. Describe
one disadvantage of Public Private Partnership.
Ans. Project costs or the cost of the services
delivered under PPP model is high.
B. Fill in the
blanks
1. MNC's have their headquarters in ......... while
carry out business in.........
2. MNC's try to create ......... by eliminating local
competition in the market.
3. Multinational companies carry on their operation in
number of..........
4. There is ............... in MNCs.
5. There is ............ in MNCs.
6. ......... is the best example of Joint Venture
Company.
Ans.
1.home country, host countries, 2. Monopolies, 3.countries, 4.centeralised
5.management, 6. Maruti Udyog.
C. True or False
1. Adverse balance of trade is the major problem in
developing countries.
2. There is no need for franchise holder to follow all
the provisions mentioned in franchise agreement.
3. Multinational Corporations are also called as
multinational companies.
4. MNCs try to dominate the markets of host countries.
Ans.
1. True, 2. False, 3. True, 4. True.
D. MCQ
1. Which type
of corporation operates beyond the boundaries of its home country.
(a) Multinational Corporation
(b) Transnational Corporation
(c) International Corporation
(d) Global Corporation
2. The main
objective of multinational companies is to make use of
(a) Raw materials
(b) Capital
(c) Labour or market of foreign countries
(d) All of the above
3. Home country
is the country where MNC is
(a) Incorporated
(b) Selling Its Products
(c) Producing Goods
(d) All of the above
4. The home
country of 'Suzuki and Sony' is
(a) America (b) Italy
(c) Japan (d) France
Ans.
1. (b), 2. (d), 3. (a) 4. (c)
A. One Word to One
Sentence Questions
Q. 1. What are
business services?
Ans. Business Services consist of all those activities
which are concerned with
manufacturing
and distribution of goods.
Q. 2. Which are
two types of funds required by a businessman?
Ans. Every businessman requires two types of funds
i.e. long term and short term.
Q. 3. Write any
one point of importance of business service.
Ans. Business services enable a businessman to provide
better services to the customers.
Q. 4. Name any
four business services.
Ans. 1. Banking 2. Transportation 3. Insurance 4.
Underwriting.
B. Fill in the
blanks
1. Banking, transportation, insurance etc. are
............ services.
2. The commercial organisations which provide business
services are collectively called..............sector.
3. ................ funds are needed for the purchase
of fixed assets.
4. Specialised financial institutions which provide
long term finance are called ...............banks.
5. Business risks are covered with the help
of..................
Ans.
1.business 2.service 3. Long term 4.development 5.insurance
C. True or False
1. Short term funds are needed to meet day to day
expenses of business.
2. Storage and safety of goods does not come under
business services.
3. Business services help in increasing the sales.
4. Business services help in the removal of place
hindrance through transportation of goods.
5. Discounting of bills of exchange is not a business
service.
Ans.
1. True 2. False 3. True 4. True 5. False
D. MCQ
1. Which of the
following facts highlights need for business services?
(a) To fulfill financial requirements
(b) Storage and safety of goods
(c) Both (a) and (b)
(d) None of these.
2. Which
institutions provide long term finance to the businessmen?
(a) Development Banks
(b) Business Banks
(c) Both (a) and (b)
(d) None of these.
3. Which of the
following is a business service?
(a) Warehousing
(b) Advertising
(c) Installment of Credit
(d) All of these.
4. Which of the
following is a correct statement?
(a) Long term funds are needed for purchasing fixed
assets.
(b) Short term funds are needed for purchasing fixed
assets.
(c) Short term funds are needed for purchasing plant
and machinery.
(d) None of these.
Ans.
1. (c) 2. (a) 3. (d) 4. (a)