Escolar Documentos
Profissional Documentos
Cultura Documentos
OUTLINES/LEARNING OBJECTIVES
What is Retail Banking Reasons for Shift of Focus from Wholesale/Corporate Banking to Retail Banking Different Retail Banking Operations Both on Liability Side as well as on Asset Side Banker Customer Relationships Different types of Customers Relationship Banking/Marketing & CRM Bankers duties/obligations and Rights and Customers Rights and Obligations Opening and Operation of Deposit Accounts - Formalities
OUTLINES/LEARNING OBJECTIVES
KYC-AML Guidelines for opening of Deposit or Loan Accounts
India
&
Deposit Insurance
Nomination facility of Bank Deposits, Safe Custody of Articles & Safe Deposit Lockers
- Gradual Financial Disintermediation : Loan demands from big corporates falling due to easy and cheap credit availability from domestic and international markets via CPs, public deposits, shares, bonds, ECBs leading lesser reliance on bank loans
- Advent of Economic Liberalisation : Banks loan focus shifted gradually from production oriented economic activities of Commercial & Industrial (C & I) loans to consumption oriented activities like retail loans. More & more no. of players including Banks, NBFCs, MFs, Insurance Companies, Brokerage houses leading to increased competition among players to tap the savings of the people and also to meet C & I loans resulting in thinning profit margin from corporate/wholesale loans. Rising NPA in C & I loans owing partly to liberalised lending policies due to competition and partly to increased business risks due to economic liberalisation and globalisation/economic slowdown etc.
- Changing Indian Culture & Philosophy (from saving to spending & consuming, from debt shy to debt savvy)
- Advent of Economic Liberalisation : Led to Branch expansion and increased competition among Banks to mobilise resources coupled with rising income of the people. Due to all this banks were flush with lot of liquidity. Due to falling loan demand from C & I, banks were desperately looking to augment their loan portfolio and diversify portfolio risk. Retail Banking fulfilled that need.
Definition of a Banker : According to the Negotiable Instruments (NI) Act, 1881, a Banker is A body of persons who carry on the business of banking.
Section 5 (c) of BR Act, 1949 defines the term banking company as A company which transacts the business of banking in India.
- Introduction/Introductory reference from an acceptable person (need for introduction & who can introduce ?)
- His/her 2 passport size Photographs
- Monitoring of Suspicious Txns in Customers accounts (Recording & Reporting of Suspicious/Unusual Txns) - Monitoring the activities of the Customer
A/c providing basic banking services like deposit and withdrawal and remittance facilities. Cheque Book, ATM/Debit Card and Credit Card are Not to be issued.
No frill a/cs can be opened in Rural, Semi-urban and also Urban/Metro Branches Banks may allow limited overdrafts in No-frill a/cs
Statutory obligation to Honour Customers Cheques (Sec. 31 of NI Act, 1881): The drawee of a cheque having sufficient funds of the drawer in his hands, properly applicable to payment of such cheque, must pay the cheque when duly required to do so and in default of such payment must compensate the drawer for any loss or damage caused by such default.
Exceptions: Bankers obligation to honour customers cheques extinguishes on receipt of Garnishee (Court Attachment) Order, IT/ST Attachment Order, on death, insolvency or lunancy of the customer.
- Right of Set-off (Right to combine/adjust 2 a/cs, one with credit balance and the other with debit balance of a Customer in same name and same capacity/ right/status)
- To draw his cheques with sufficient care so as not to mislead the banker or facilitate forgery or fraud - To bring to the banks notice any discrepancy in his a/c or any forgery of his cheques
- To pay interest on all debit accounts and a reasonable charge on all accounts - To safe-keep cheques to avoid forgery
- A customer has the right on the bank to honour his cheques provided there are sufficient funds in the account and duly applicable for payment of such cheques and cheques are in order
- In case the bank wrongfully dishonours a cheque, customer has right to get compensated for the damage such a dishonour would cause to his reputation
- Specific mandate/authority for accounts of Firms, Companies and other representative accounts
- Transaction Deposit Accounts/Chequable Accounts/Demand Deposits (Current Deposit Accounts and Savings Bank Accounts) - Term/Time Deposit Accounts :
1. Fixed Deposit Accounts (FD) : (a) Cumulative/ Reinvestment Deposits where interest is reinvested with the principal and (b) Noncumulative deposits providing periodical interest
- Nomination of Bank accounts are compulsory, Bank should educate their customers as to the advantages of nomination.
- A valid nomination ensures that in the event of death of the sole depositor or all depositors, bank will return the amount lying in the account to the nominee without any legal hassle. Note Nomination per se does not confer any legal heirship/absolute ownership to the nominee, it only authorises the nominee to collect the amount from the bank and payment to nominee gives a valid discharge to the bank.
- Nomination forms in SL1 for sole hirer, SL1A for joint hirers/ for cancellation of nomination form SL2/Variation by SL3 for sole hirer and SL3A for joint hirers.
1. Freely Transferable: The right/interest/ ownership/property in an NI passes from one person to another by mere delivery, in case of a bearer instrument, or by endorsement and delivery, in case of an order instrument. However, the transferability of the instrument may be restricted by the maker or the holder as under:
BoE is used in business and trade involving the seller and buyer of goods/services sold on credit terms. Seller is the Drawer/Maker, Buyer is the Drawee and to whom money is to be paid is the Payee (Beneficiary).
The drawee of the bill is not liable until he accepts the bill, indicating thereby his assent to the drawers order to pay. Demand bill is payable immediately on presentment to the drawee. Usance bill is presented twice to the drawee-first for its acceptance and thereafter for payment on the due date.
It also includes (i) electronic image of a Truncated Cheque and (ii) Cheque in electronic form (e-Cheque)
(3 parties: Drawer, Drawee/Bank and Payee).
- Drawers Signature
- Date of Cheque [Stale/Ante-dated (date > 3 m on date of presentation) and Post-dated cheques are Not to be paid]
Crossing of Cheques
- General Crossing : drawing on its face 2 parallel transverse lines - Special Crossing : addition of the name of a banker across the face of the cheque
Miscellaneous Topics
CASA Deposits, Importance of CASA and CASA ratio for a bank, Strategies for mobilising CASA Deposits
KEY WORDS/TERMINOLOGIES/GLOSSARY
Retail Banking vs- Wholesale/Corporate Banking; Banker, Customer, KYC-AML-CFT Guidelines, Customer Due Diligence, Money Laundering, Placement, Layering & Integration, AML, Suspicious Transactions, CASA & CASA Ratio, Deposit Insurance & DICGC, Nomination Negotiable Instruments (NI), Cheques, BoE, Promissory Notes, Negotiability, Transferability, Right of Action/Recovery, Holder & Holder in Due Course, Payment in due course, Crossing of Cheques General/Special, Endorsements
Topics for Next Class All of you Should get prepared before coming to the class
New Banking Technology/Electronic Banking : TBA, CBS, ATM, Credit, Debit & Smart/Charge/Stored Value Cards, Mechanics of Credit Card Transaction. Tele Banking, Internet Banking, Mobile Banking, Mobile Phone Banking. Payment and Settlement System : Different Clearing Systems of Cheques, MICR, Cheque Truncation System (CTS), e-Cheque; Electronic Transfer of Funds ECS, EFT, NEFT, RTGS, SWIFT etc.
Group Assignment for submission in the next class through the Class representative sharp before the start of the class. Assignment : Compare the SB, CA, Term Deposit Products along with value added services/freebies and Cash Management Solutions offered by the two banks allotted to your group. Suggest which bank gives better facility/low service charges/better value to customers product-wise.