E-BANKING

Electronic Banking means electronic system for banking transaction(Front office computerization) and/or internal accounting and book keeping(Back Office computerization), instead of using the traditional manual system of banking. E-banking also covers the provision of information about a bank and its services via home page on the World Wide Web(WWW). More sophisticated e-banking service provide different accounts, and making payments or applying for loans via e-channels. It may also include the decision support system for various levels of mangement and marketing.cross selling through electronic medium. Electronic Banking is an umbrella term for  the process bt which a customer may perform banking transaction electronically without visiting banks. The term refer to one for or another of electronic banking like; personal computer (PC) banking, Internet Banking, Virtual banking, online banking, home banking, remote electronic banking, anywhere/anytime/any branch banking, phone banking and e-remittance.  Electronic Banking is one of the latest trends in World banking scenario. Many banks and ther FIS have laredy implemented or are planning to implement e-banking because of the numerous potential benefits associated with it. Electronic banking has enabled banks to improve their customer service quality by speeding up mist the routine banking transaction and by provding anywhere and anytime bankng. New banking channel have opened up in the form of ATM's Tele-Banking.

ATM( AUTOMATED TELLER MACHINE)

The growth of technology has changed the payment systems world over during the past decades. The introduction of Automated Teller Machine has given facility to the bank customers for beyond the banking hours. ATM is cash rending teller machine. This helps a bank customer to withdraw moaney fro his account without having to go the bank. ATM is a user friendly, computer driven system, which operate 24 hours a day and seven days in a week. ATM is a computerized telecommunications device thet provide the clients of a financial institution with acess to financial transactions in public spece without the need for a cashier, human clerk or bank teller. ATMs eliminate the need to enter a bank for basic transactions and allow access to accounts at machines. A totally menu driven system, it plays easy to follow step by step instruction for the customer. ATM can be accessed by the customer by using of ATM Cards.

ATM CARDS:- ATM card is small palstic card around 8.5 cm by 5.5 cm. It has The name and the account number of the honder ans sepcimen signature panel con the reserve.

                     

DEBIT CARD:- Card holder can enjoy the withdrawl facility up to the balance available on   his account.

CREDIT CARD:- Card holder can purchase goods and serviced up to specified limit and it must be repaid with in the specified period generelly 30 to 45 days. Many

card issuer(banks)also allow withdrawals of cash for emergency purpose and levy a  service charge for such withdrawals.

BANK GURANTEE

In commercial transaction, bank guarantees are required as a security for due fulfillment of a contract by the obligor, in favour of the benificiary. The obligor's financial standing and credentials may be unknown to the beneficiary of a commercial contract and bank's guarantee on behalf of the obligor support for the transaction. These financial instruments are often used in trsde financing when suppliers or vendors are purchasing and selling goods to and from overseas customers with whom they don't have established business relationship. The instruments are designed to reduce the risk taken by each party.

A guarantee is a promise to answer for the debt, default or miscarriage of another, if that person fails to meet the obligation. Guarantees are given by banks. A bank guarantee enables the cuatomer to acquire goods, buy equipment or draw down loans, and thereby expand business activity. The quarantors incurs secondary liablity that is, the quaranter becomes liable to the bank is void, the guaranter will not be liable. Bank guarantees are given in the form of tender bonds, performance guarantees and repayment gurantees in relation to projects in the same country or another country which involves supply of goods o services or the performance of work. these gurantees are currently an important tools of international trade.

Bank gurantee is an undertaking by the bank at the request of a party, whereby the bank in the event of default by the principal in the fulfillment of his obligations has to make payment to the beneficiary within the limits of specified sum of money and within the specified period of time. So, bank guranteee are usually limited with respect to amount and time. As for as the time is concerned, usually a grace period is granted to the beneficiary to claim under the gurantee. This is basically given for the time taken by the beneficiary to present his claim. The bank issues the required gurantee on behalf of the obligor after making a proper assessment of his financial standing and ability to fulfull his part of the contract.

      NEGOTIABLE INSTRUMENT                                               

Exchange of goods and services is the basic of every business activity. Goods are bought and sold for cash as well as on credit. All these transactions require flow of cash either immediately or after a certain period. In modern business, large numbers of transactions with huge sum of money are transcated. It is quite inconvenient as well as sometimes risky for either party to make and receive payments in cash. Therefore, it is a common practice for businessman to make use of certain documents as means of making payments. Some of these documents are called  negaotiable instruments.

Negotiable Instrument is a piece of paper representing ownership of debts and obligations. The ownership is passed on with the delivery of endorsement and delivery of the piece of paper. Negotiable  Instruments traded in the money market includes bills of exchange, promissionary note and which are written orders promising to pay a specified sum of money at predetermined time to the order of a specified person of bearer. Bills of echange, Promissionary note, Cheques, Drafts, Shares warrants, Dividend Warrants and Debentures are the examples of Negotiable Instrument. All Negotiable Instrument are transferable but all transferable items are not negotiable eg. a bearer cheque can be negotiated and transferred by mere deaivery, but a title certificate of a property can not be transferred by mere delivery, therefore Title Certificates of a physical property is not negotiable. For transfer of titles of properties certain established rules are followed i.e a sale deed must be there....

LETTER OF CREDIT

The English name “letter of credit” derives from the French word “accreditation”, a power to do something, which in turn is derivative of the Latin word “accreditivus”, meaning trust. This applies to any defense relating to the underlying contract of sale. This is as long as the seller performs their duties to an extent that meets the requirements contained in the letter of credit.

In international trade, the buyer and the seller who are located in different countries may not know each other. As a result buyer's creditworthiness becomes inknown to the seller. Intentions of the buyer and the seller in any trade are contrsdictory in terms that buyers always tries to delay the payment while the seller would like to receive funds at the earliest. Therefore trade between the buyer and the seller becomes beyond one's imagination. Letter of credit is that instrument which makes the trade possible between the importer and exporter. There are several methods of payments in International trade. Trade can take place when buyers pays inadvance and wait for the seller to forward the goods. This method is known asa advance payment. Where the supplier ships the goods and waits for the buyer to remit the bill proceeds the its known as an open account method. Bothe of the methods have many drawbacks. In advance payment seller is in secure position and in open account buyers becomes secure. Letter of credit overcomes the problem of secutity for one party only. Its regarded as more secure for the seller as well as buyers. A Letter of credit is the letter form one banker to another authorizing the payment of a sepcified sum to the person named in the letter on specified conditions.

Commercial Letter of credit are widely used in the international import and export trade as means of payment. In an export contract the exporter may requires the foreign importer to open a letter of credit at the importer's local bank( the issuing bank) for the amount of the goods. This will state that it is to be negotiable at a bank(the negotiating bank) in the exporter's country in favour of exporter; often the exporter(who is called beneficiary of the credit) will give the name negotiating bank. On presentating of the shipping documents(which are listed in the letter of credit) the benificiary will receive payments from the negotiating bank

TREASURY MANAGEMENT

Tresaury management function includes planning and controlling of profit and the balance sheet structure of the bank within the constraints of liquidity requirements. Assets of the bank and financial institutions include cash at vault as well as cash in other national and foreign institutions, loans and advance, investment, fixed assets and other assets. Liablilities includes deposits, borrowed funds and other liabilities. Assets and liabilities of the bank can be caterogized according to the maturity. Ideally, long- term assets should be financed by long-term liabilities and short term liabilities should be matched with short- term assets.

Treasury management involves the management of sources and uses of funds. The management of total available resources / funds in the banks is known as treasury management. The scope of treasury management  is very wide and covers every types of organization be it charitable,government or corporate. It is very specilized function. In essence treasury management as all about handling the banking requirements , the funding for the business and managing financial risk. It therefore incorporates raising and managing money, currency, commodity and interest rate risk and dealing with the market. In some organization, the realted areas of insurance, pensions, property and taxation aslo fall under the functions of  treasury management. It includes the management of the enterprise holding in and trading government and corporate bonds, currencies, financial futures, options and derivatives, payments system and the associated financial risk management. Managing treasury is to plan , organize and control cash and borrowings sa as to optimize interest and currency flows and minimize the cost of funds. It is investors' confidence in the business.

CREDIT MANAGEMENT

Historically banks have prefered to make short-term loans to busness for non permanent addition to theirs working capital. These loans usually were used to finance the inventory-raw materials or finished goods to sell. Such loans take advanntage of normal cash cycle in a business firm. While  banks today make a far wider array of business loans that hust simple liquiditing credits, the short-term load- frequently displaying, may of the features of self liquidiation-continuous  to account for over half of bank loans to business firms. the extension of credit is one of the major fucntions of banking business. Major source of income for the banks and financial institutions comes from their Loans and Advances. Credit Management is the management of loans and advances. Success of banking business depends on the efficient and effective managemanet of credit. Poor credit management has proved to be one of the major cause os bank failures throughout the world. Loan uncollectible due to mismanagement, illegal manipulation of loan, misguided lending policies or unexpected economic downturn are main reasons for a bank getting into serious problem.

Credit  can be offered in variety of types/ categories as per the need of potential market. Credit management  is always a challenging task in the banking business because there are several environmental influences and risks associated with the credit operation and admininstration. Credit riskis the risk which arises the borrower fails to meet the obligation on aggred terms. The volume and impact of credit risk is very high among the various types of risk asscoicted in the banking business. lending fucntion is significant for every as it yields substantial income by means of interest on loan and advances and fee on non- fund based credit activities. Bank lending facilitates the economic development  of a country by extending financial support to industry, agriculture, trade, commerce and other sectors. Bank also invest certain part of their loan in social development in the form of deprived sector lending. Banks lending activities are generally governed by certain principles since the lending activities involve depositors money which is repayable on demand or on specified maturities, Bank adhers to the principle of liguidity, safety and profitability in their lending policies and standard guidelines for the operation. Central Bank bas also stipulates mandatory maintenance of Cash Reserve Ratio (CRR)&; Satutory Liquidity Ratio(SLR) to reinforce liquidity and safety principles. Banks also diversify their loan protfolio across a spectrum of borrowers, industries, sectors, securities as per the prudential norms and also follows other risk management practices.

DEPOSIT MANAGEMENT AND ACCOUNT OPERATION

Deposit management consists of acquitisions of stable and low cost depostit for the banking business. Banks are not only dealers in money but also manufacturers of credit money. It is in the sense of manufacturing that the concept of credit creation is used. Similarly deposit creation is an important function of commercial banks. Without deposit they cannot lend at all. When the banks receive cash from customers, deposit are created . Therse deposits may be current, saving or fixed. Depositors choose the types on the basis of their needs and requirements like; safety, convenience or earning. People deposit their income in commercial banks because bank vault are safer that home coffers. The bank attracts deposits from the people either by means of offering interests  or facilities. Business people want seek for facilities rather than interest. Non business people generelly select deposits having interests. The type and characteristics of deposits are constantly changing as banks are offering new product to attract new consumers. unlike the past, people are nowadays more aware and have confidence on banks on such the banking habit growing gradually. Deposit management involves the collection of adequate bank deposits required for the efficient and effective operation of banking business. Deposit management doesnot merely concern with the high volume but also with  low cost as well  and its stablility so as to produce competitive loans product.

TYPES OF DEPOSITS

General practice in the banking business shows that there are several deposit products in the market. These deposits can vary from one bank to other. Principally these can be categorized as;

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  CURRENT DEPOSIT:- It can be also knowned as Demand Deposit. These deposits are generally maintained by the traders and businessman who have to make a number of payments frequently and regularly.These deposits are withdrawable by the depositors at any time by means of cheque. Usually no interest is paid on them hence called non-interest bearing. Depositors may have to pay certain charges to the bank for the service rendered. Any amount of money may be deposited in this account.
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  SAVING DEPOSIT :- These Deposit stand midway between Current and Fixed deposits. Banks may impose certain restrictions on the depositors regarding the number of withdrawals and the amount to be deposited in a given period. Cheque facility is provided to the depositors. Rate of interest paid on these deposits is low as compared to that of fixed deposits. Saving account are offered by commercial banks and financial institutions.Obtaining funds in saving account may not be as profitable as demand deposit account because these deposits are generally paid interest. A bank may insist on receiving prior notice of a planned withdrawal from saving deposit. But this practice has been disappearing gradually due to the cut throat competition. However these deposits are less volatile and less concentrated in nature and are considered as the best type of depostits.
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  FIXED DEPOSIT :- A fixed deposit is a deposit at banking institution that cannot be withdrawn for a certain term or period time.  When the term is over it can be withdrawn or it can be held for another term. The longer the term the better the yield of interest on the deposit. In this type of deposit, a customer is required to keep fixed amount of money with the bank for a specific purpose and period of tme. Depositor is not allowed to withdrawl the amount before the maturity period. In case if depositor has to withdraw the amount the aggrement will be void and no/or less interest is paid.
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  CALL DEPOSIT :- Call deposit also known as hybrid deposit is a combination of current and fixed deposit invented for meeting customers financial needs in a flexible manner. Increasing competition has facilitated to introduce this deposit product. This deposit mainly serves the need of apprepriate asset liability mnagement of the banks and financial institutions. Generally the practice of inter-bank borrowing and lending activities conducted through this product.
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  MARGIN DEPOSIT :- This account is menat for holding margin money of the customers as deposit(non-interest bearing) to avail various facilities from the bank . Customers are not allowed to withdraw any amount from such accounts till the expiry of the  availed facilities. Margins are required for Guarantee, remittance and some other facilities.