Banking Products & Operations for XI Class

A bank is a financial institution that deals with cash. Banks receive deposits and issue loans, profiting on the difference between the interest rates paid and charged, as well as providing other financial services.

In accordance with the BR Act. “Banking” is defined as “accepting deposits of money from the public for the purpose of lending or investing, repayable on demand or otherwise, and withdrawable by cheque, draught, order, or other means.” Any company that conducts banking business in India is referred to as a “banking company.”

Any firm, as defined in the Companies Act, 2013, including a foreign company within the meaning of that Act, is referred to as a company. A banking corporation is one that accepts money deposits from the public for the purpose of lending or investing that are receivable on demand (Savings Bank and Current Accounts) or after a period (Fixed Deposits) and withdrawable by check (Savings Bank and Current Accounts) or otherwise (byother instruments like fixed deposits).

Basic Functions of a Banker

 A banker is a financial advisor who provides clients with financial advise on loans, investments, stocks, and savings. Their financial guidance not only assists clients in resolving financial issues, but it also boosts the profitability of their company. Many bankers work for local financial institutions, while others work for multinational corporations and undertake a variety of roles and activities.

Keep Records 

Bankers keep track of all of their everyday financial dealings. Every day, this job entails going over paperwork including bank statements and loan application applications. Bankers can then notify the appropriate authorities if they observe any fraudulent actions at the bank. The banker is also in charge of correctly filing all of this paperwork in the appropriate locations. Proper documentation aids in the efficient operation of the bank and simplifies retrieval. To ensure the confidentiality of the information, bankers must retain these records in a secure location.

Advise Clients

One of a banker’s main responsibilities is to assist clients with their financial demands. They do it by responding to clients’ financial inquiries via face-to-face appointments or phone chats. A banker will also assess a client’s financial status and recommend the finest banking services and programmes to help them meet their financial objectives. A banker’s skill is determined by the success of the financial advice he provides to clients. Good advise aids in the development of a broad client base, which increases the financial institution’s profitability.

Gather Financial Information 

A banker’s other important task is to collect relevant financial information from both new and existing clients. A banker uses the information collected after conversing with clients about their financial needs to set up accounts and loans. To establish a client’s creditworthiness, a banker examines their financial history. This information is used by the banker to determine if the financial institution will be able to meet the client’s financial demands; this obligation of obtaining information allows the financial institution to make more informed judgments, increasing its profit margin. The bank, for example, utilises this information to make loans to clients who are creditworthy and have a lower risk of defaulting.

Disburse Funds 

People go to banks to withdraw and deposit money, as well as to apply for loans. Accepting deposits and disbursing monies necessitates a great deal of care and precision. Money counting machines may be used by bankers to perform this operation. This simplifies work, eliminates human mistake, enhances accuracy, and speeds up bill dispensing and counting.

Enforcing Security 

Accepting counterfeit money can result in significant losses for financial institutions. To prevent phoney dollars from reaching the cash register, bankers run the bills deposited by consumers using counterfeit money detectors. With the rise in fraud cases, lenders are also on the watch for fake checks that consumers may try to cash. To prevent fraudulent behaviour, the banker’s job is to ask clients withdrawing money to prove their identification. A banker also secures the bank vault, preventing unauthorised access to assets, money, documents, and records, as well as theft and damage from fire or natural catastrophes.

Various Transactions & Activities

Acceptance of Deposits

As banks are both borrowers and lenders of money, deposits are the foundation of loan operations. They pay interest as borrowers, and they receive interest as lenders. These funds are often deposited into a current account, a savings account, or a fixed deposit.

The lending of Funds

Banks’ second key operation is to issue loans and advances based on the money they receive from deposits. Overdrafts, cash credits, discounting trade bills, term loans, consumer credits, and other miscellaneous advances are all examples of these advances.

Clearing of Cheques

Cheque books are given to those who have bank accounts. The cheque is a negotiable instrument and the most common and convenient form of credit. Cheques are used to facilitate trade and business by allowing for endorsements and deposit withdrawals.

Lockers & Safe Deposits

Safe deposit boxes at banks are a good way to keep valuables and essential documents safe. Each locker is controlled by a combination of two keys: one for the consumer and one for the bank. Only both keys are required to operate the locker. Banks impose a small fee to use their locker rooms.

Bill Payment Services

Banks also provide services such as bill payment, insurance premium payment, dividend collection, and so on. Using the services provided by modern banks, recurring payments can be automated for payment. Account holders can pay their power, gas, landline, and mobile phone bills, among other things, straight from their account or using credit/debit cards.

Online Banking

The banking business has been changed by the advent of the Internet and e-commerce, and customers are rapidly migrating from branch banking to virtual banking. Users who have access to the internet via a PC or mobile device can access the bank’s website and take use of a number of banking services and functionalities. These services reduce transaction expenses while also improving the transaction flow’s convenience and speed.

Credit & Debit Cards

Bank-issued credit cards are another type of lending that not only benefit the bank but also the economy. Offering credit cards is a lucrative form of financing for banks that has grown significantly in recent years. Banks compete intensely for this business, offering a variety of credit-card accounts in various formats and sorts. Many banks offer special low-rate promotions and various forms of incentives to entice customers to use their cards and make purchases.

Overseas Banking Services

Banks provide overseas clientele with financial services such as payment accounts and loan options. These international clients might be individuals or businesses, and while each international bank has its own policies, the majority of them offer a variety of products and services to meet the demands of their international clients.

Wealth Management

Banks’ wealth management services encompass a broad variety of financial services and products, as well as expert advice from professionals. Affluent clients receive wealth management services, which might include any financial product.

Investment Banking

This umbrella covers a wide range of services, including investment needs analysis, asset structure analysis, and liability management requirements, managing financial asset portfolios, securities, fixed income, commodity, and currency trading, corporate advisory services for mergers and acquisitions, corporate finance, and debt and equity underwriting.

Conclusion

Banks carry out a wide range of activities, from fundamental or main duties such as day-to-day transactions at a branch to others such as agency or general utility services. The banking industry’s value chain includes transactions that are not related to revenue/sales or sustaining the firm.

To support their banking business, banks engage in a variety of transactions and activities. Making or accepting payments, trading, clearing and settlement of accounts, and custody are all examples of these transactions.