CU-BCOM-SEM-V-Banking Theory and Practice-Second Draft

certain individual or to the conveyor of instrument. A check book contains various limitless tickets to ride printed with the name and record subtleties of the record holder. They are a sort of bill of trade and were created as an approach to make instalments without the need to convey a lot of money. Figure 7.2: Model of Cheque book 3. Pass book Pass book is a book given by bank to a record holder. It is a duplicate of the record of the client in the books of bank. The bank keeps the client educated regarding the sections made in his record through pass book. It is the client's obligation to check the passages and promptly Notes illuminate the bank regarding any mistake that he might have taken note. Figure 7.3: The format of the Pass Book Cash book is a beneficial book which records the receipts and instalment of money. With the assistance of Cash book money and bank equilibrium can be checked anytime of time. 151 CU IDOL SELF LEARNING MATERIAL (SLM)

Distinction between Pass Book and Cash Book Any exchange must be recorded in both the books for example cash book and pass book. In any case, now and then, it happens that a bank exchange is recorded uniquely in one book and not recorded at the same time in other book. This causes contrast in the two adjusts. Figure 7.4: Difference between Pass Book and Cash Book 4. ATM cum debit card A card utilized in an Automated Teller Machine (ATM) to get to a credit or a charge record to finish banking requests and asset moves between accounts. How Does an ATM card Work? At the point when a charge card is utilized, the exchange charges the measure of the exchange from the financial records, by and large around the same time. A check card can be utilized to get cash from ATM machines or have it swiped like a Mastercard at shops or cafés or swipe it through a visit telephone to make. Details on an ATM Card Figure 7.5:Front of card 152 Front of card contains following. CU IDOL SELF LEARNING MATERIAL (SLM)

i. Name - Name of person authorized to use ATM card. ii. Card No - This is a unique 16-digit number embossed on card. iii. Validity - Card is valid for use from the day one receives it till the last day of the month/year (MM/YY) indicated in the card. iv. Visa Logo/Master Card Logo. Figure 7.6: Reverse of card Reverse of card contains i. Signature panel: Panel with card holder signature. ii. Contact information / Help line Numbers. iii. Magnetic stripe: The most important and secured part of the card. It is made up of tiny iron-based magnetic particles in a plastic-like film. It stores card holder’s name, and thecard number, the expiry date, along with other bank-specific information. Advantages of Debit Cards i. Prepaid card: Debit card goes about as a kind of pre-loaded card. It is in this way, since it as of now has an adequate measure of money balance in its holder's financial balance. It licenses to carry on the worth of the exchange (for example buys) to the degree of accessible equilibrium in its holder's financial balance. ii. Nominal fee: Bank giving a check card charges a yearly expense for the issuance and support of card. This expense charged is extremely ostensible in nature. For the most part, bank charges the expense on a for every annum or yearly premise. Such a charge gets consequently charged (deducted) from the charge cardholder's financial balance. iii. Alternative to cash: Debit card goes about as an elective method of instalment for executing different money related monetary exchanges. It very well may be utilized for the acquisition of products and receipt of administrations. In its 153 CU IDOL SELF LEARNING MATERIAL (SLM)

quality, there is no compelling reason to convey a lot of money. Subsequently, it assists with trying not to convey immense measure of money while voyaging and limit hazard of misfortune because of burglary, harm, and so forth. iv. Immediate transfer of funds: Debit card guarantees quick exchange of assets in the shipper's or alternately seller's financial balance. Such an exchange of assets happens quickly right now of acquisition of merchandise and receipts of administrations. With its utilization, there is no compelling reason to visit bank's office commence and do a manual exchange of money in the vendor's or alternately seller's financial balance. Hence, it saves valuable time and gives simplicity, security, and solace to its holder in their money related exercises. v. Instant withdrawal of cash: The charge card works with moment withdrawal of money from any closest ATM. This assists its holder with keeping away from an individual visit to bank's office reason and stand by in a long-lasting devouring line. To put it plainly, it additionally goes about as an ATM card to meet its holder's money related necessities, whenever and anyplace. vi. Easy to manage: Debit card is extremely simple to convey, deal with and oversee while venturing out to outstations or abroad. Being little, flimsy, level and having an insignificant weight it effectively fits in any pocket. It very well may be taken care of uninhibitedly even with only two fingers. Overseeing it is additionally not a major issue. A cardholder should simply take sufficient consideration to make sure that a. Debit card is constantly covered with a thick plastic cover to try not to scratch of its delicate surface. b. It doesn't interact with polluted water and warmth. c. It doesn't get collapsed coincidentally; this assists with forestalling its breakage. d. It is put securely in an advantageous area which one recalls. This assists with keeping away from it getting lost and lost because of carelessness. vii. Earns bonus points: Now-a-days, the opposition among check card suppliers (banks) is testing. Today, most banks offer extra focuses to empower their cardholders (clients) to make buys utilizing their check cards. Banks can offer such focuses to their cardholders as it's shippers and not them who really run the award program. After each effective deal, a dealer gives the bank a little cut-off or rate as a commission. This commission is additionally shared or isolated by the keep money with its holder (as) the first award buy. In this way, consequently, it at last additionally assists the cardholder with acquiring extra focuses on chosen monetary exchanges executed by that person by means of a check card. In this 154 CU IDOL SELF LEARNING MATERIAL (SLM)

cycle, all, viz., bank, shipper, and cardholder are straightforwardly profited. Bank offers a motivator like this to work on the offer of the items in the customary course of business and contribute in the monetary development. viii. Gifts on reclaiming focuses: As we have seen above, charge card assists with collecting extra focuses through an award program. These focuses can be recovered by the cardholder (inside card's termination date) at any trader site or potentially outlet that bank has effectively approved. While recovering occurred focuses, cardholder finds out about its value as far as sum, thus he/she continues to guarantee gifts almost equivalent to that sum. ix. Free protection inclusion: Debit-cardholders additionally gets free protection inclusion. The financiers give such protection offices to draw in new clients and to keep up with their present client strength. They give different kinds of protections to free to their cardholders. a. Insurance on loss of debit card b. Purchase insurance c. Personal insurance d. Accidental insurance, e. Travel insurance and so on However, these types of insurances are given freely to cardholders depending on which type of debit card they have possessed. The cost of insurance premium is borne by the bankers who provide debit cards to their customers. Disadvantages of Debit Cards A few disadvantages are also associated with debit cards. These are as follows: i. Unprotected against fraud: Debit cards are ensured simply by a scrambled number, known as PIN. This PIN can't give security against data fraud. Anybody conveying the card can get to the record fi the PIN is known. ii. Incapable of business transactions: In many cases, the responsible banks limit the most extreme sum that can be removed or moved by the client. This ruins deals where the volume and the worth of the sum included are significantly high. iii. Terminal dependent: Only shippers having an electronic terminal can perform exchanges through charge cards. In addition, a client can get to account just from where the responsible bank's outlet terminal exists. 5. Credit card A plastic card gave by a bank, business, and so on, for the acquisition of products or administrations on layaway is known as a Visa. Mastercard guarantors as a rule eliminate 155 CU IDOL SELF LEARNING MATERIAL (SLM)

interest charges if the equilibrium is settled completely every month, except ordinarily will charge full interest on the whole remarkable equilibrium from the date of each buy if the all- out balance isn't paid. 6. No frills account In 2005-06, the RBI called upon Indian banks to plan a 'straightforward record', low 'least equilibrium support' account with worked on KYC (Know Your Customer) standards. Low pay bunches having no admittance to formal financial frameworks can well be brought under the umbrella of investment funds and credit – key variables which structure the premise of monetary incorporation. While there is no deficiency of credit programs, the similarly significant reserve funds viewpoint can properly be nicknamed as the 'failed to remember half of microfinance'. 'Nitty gritty's bank accounts seem competent, basically on paper, to oblige the little and unpredictable pay streams of poor people. 7.4 SUMMARY  A ledger is a monetary record kept up with by a bank or other monetary establishment where the monetary exchanges between the bank and a client are recorded. Each monetary foundation sets the agreements for each sort of record it offers, which are characterized in regularly got types, for example, store accounts, Visa accounts, current records, advance records or numerous different kinds of record. A client might have more than one record. When a record is opened, reserves endowed by the client to the monetary organization on store are recorded in the record assigned by the client. Assets can be removed from advance loaders.  On the other hand, a bank can loan a few or the entirety of the cash it hosts on store to a third gathering/s. Such records, for the most part called advance or credit accounts, are dependent upon comparable however switch standards of a store account. In bookkeeping terms, a credit account is a resource of the bank and an obligation of the borrower. Credit records might be unstable or gotten by the borrower, and they might be ensured by a third individual, with or without security.  One of the essential capacity of a business bank is tolerating stores from public and consequently, bank will give revenue income for the saved cash to the record holder relying upon the sort of store accounts. It is a three section article, which will investigate different parts of store accounts, its tasks, and kinds of store accounts, offered our business banks in India. Opening viewpoints and KYC is the initial segment that everyone should know before they get into the bank for having relationship with bank and their store accounts.  In 2002, RBI gave a request to all banks to follow the system of \"Know Your Customer\" with all their new and existing Domestic clients and Non-occupant clients. 156 CU IDOL SELF LEARNING MATERIAL (SLM)

It assists with confirming the personality and private location of the clients with the assistance of explicit documental proof. Henceforth legitimate KYC forestalls abuse of the financial framework for tax evasion and financing of fear monger exercises.  A card utilized in an Automated Teller Machine (ATM) to get to a credit or a charge record to finish banking requests and asset moves between accounts. How Does an ATM card Work? At the point when a charge card is utilized, the exchange charges the measure of the exchange from the financial records, by and large around the same time. A check card can be utilized to get cash from ATM machines or have it swiped like a Visa at shops or cafés or swipe it through a visit telephone to make.  A plastic card gave by a bank, business, and so forth, for the acquisition of merchandise or administrations using a credit card is known as a Mastercard. Visa backers generally eliminate interest charges if the equilibrium is settled completely every month, except commonly will charge full interest on the whole extraordinary equilibrium from the date of each buy if the all-out balance isn't paid. 7.5 KEYWORDS  No Frills Account – It is an essential financial record. Such record requires either nil least equilibrium or exceptionally low least equilibrium. Charges appropriate to such records are low.  Pay in Slip – It is a fall through which an individual can store his cash or check in his financial balance. It is likewise called as Deposit Slip.  Prime Lending Rate (PLR) - The financing cost that business banks charge their most credit commendable clients on Customers on transient advance.  Repo Rate - The rate at which the RBI loans cash to business banks is called repo rate. It is an instrument of money related approach. At whatever point banks have any lack of assets they can acquire from the RBI.  Specimen Signature - An example mark is an authority \"duplicate\" of your unique that is kept on document and if necessary in the future can be utilized to check if a mark is veritable. 7.6 LEARNING ACTIVITY 1. Create a net banking account in your new bank account or create a net banking account to your friend. ___________________________________________________________________________ __________________________________________________________________ 157 CU IDOL SELF LEARNING MATERIAL (SLM)

2. Find what safety measurementsare taken by bank to control fraud. ___________________________________________________________________________ _________________________________________________________________________ 7.7 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Explain opening accounts of various types of customers. 2. What do you understand operational aspects of opening? 3. What is debit card? 4. What is credit card? 5. What are the difference between pass book and cash book? Long Questions 1. What are the steps are necessary to opening accounts of various types of customers? 2. Explain operational aspects of opening. 3. What are the advantages and dis-advantages of debit card? 4. Explain opening of deposit accounts with commercial banks in India. 5. What is the procedure for opening a bank account? Explain. B. Multiple Choice Questions 1. What does timely repayment of loans result? a. Good reputation b. No tension c. Easily availability of loan in future d. All of these 2. Who does defaulter of loan mean? a. Not paying loan instalments b. Bad reputation c. Illegal activities d. None of these 3. What does life insurance mean? 158 CU IDOL SELF LEARNING MATERIAL (SLM)

a. Insurance of human b. Insurance of life of human and Cattle c. Insurance of Life of Machines d. All of these 4. What does general insurance relates to insurance against? a. Fire b. Theft c. Burglary d. All of these 5. What does Aadhaar include a. 12-digit number card b. Identity proof issued by UIDAI c. Both (a) & (b) d. None of these Answers 1-d, 2-a, 3-a, 4-d, 5-c. 7.8 REFERENCES References  Ian, Whyte. Liz, Croft&Ann, Norton. (1999). Management in the Financial Services Industry, Financial World Publishing.  Bharti, Pathak. (2003). “The Indian Financial System”.  Shekhar, K, C. (2009). “Banking Theory and Practice”, Vikas Publishing House Pvt. Ltd. Textbooks  Hajols, T, N. (2009). “Money and Banking”, Gopaljee Enterprises.  Rajesh, R&Sivagnanansithi, T. (2009). “Banking Theory: Law and Practice”. Tata McGraw Hill Publishing Company Ltd.  Shekhar, K, C. (2009).“Banking Theory and Practice”. Vikas Publishing House Pvt. Ltd. 159 CU IDOL SELF LEARNING MATERIAL (SLM)

Websites  http://www.thehindubusinessline.com/  http://wiki.answers.com/Q/Explain_each_qualitative_credit_control_  http://www.cidap.gov.in/ 160 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 8 – MAINTAINING ACCOUNTS STRUCTURE 8.0 Learning Objectives 8.1 Introduction 8.2 Maintaining Accounts of Different Types of Customers including Aadhar 8.3 SB Rate 8.4 Deregulation 8.5 Credit Cards 8.5.1 What Is A Credit Card? 8.5.2 Advantages and Disadvantages 8.5.3 Types of Credit Cards 8.5.4 Choosing a Credit Card 8.5.5 Where can I Get a Credit Card? 8.5.6 Using Your Credit Card Wisely 8.6 Summary 8.7 Keywords 8.8 Learning Activity 8.9 Unit End Questions 8.10 References 8.0 LEARNING OBJECTIVES After studying this unit, you will be able to  Explain the SB rate.  Explain the maintaining accounts of different types of customers including Aadhar.  Describe the deregulation.  Describe the credit cards. 161 CU IDOL SELF LEARNING MATERIAL (SLM)

8.1 INTRODUCTION A ledger is a monetary record kept up with by a bank or other monetary establishment wherein the monetary exchanges between the bank and a client are recorded. Each monetary foundation sets the agreements for each sort of record it offers, which are characterized in usually got types, for example, store accounts, charge card accounts, current records, advance records or numerous different kinds of record. A client might have more than one record. When a record is opened, reserves endowed by the client to the monetary establishment on store are recorded in the record assigned by the client. Assets can be removed from credit loaders. The monetary exchanges which have happened on a ledger inside a given timeframe are accounted for to the client on a bank explanation, and the equilibrium of the records of a client anytime is their monetary situation with the foundation. Aadhaar is a 12-digit extraordinary distinguishing proof number gave by the Indian government to each individual occupant of India. The Unique Identification Authority of India (UDAI), what capacities under the Planning Commission of India, is answerable for overseeing Aadhaar numbers and Aadhaar distinguishing proof cards. The Aadhaar project was started as an endeavour towards having a solitary, one of a kind distinguishing proof record or number that would catch every one of the subtleties, including segment and biometric data, of each inhabitant Indian person. Right now there are a plenty of character records in India including international IDs, lasting record numbers (PANs), driving licenses and apportion cards. The Aadhaar card/UID won't supplant these ID reports however can be utilized as the sole ID evidence while applying for different things. It will likewise fill in as the reason for Know Your Customer (KYC) standards utilized by banks, monetary organizations, telecom firms and different organizations that keep up with client profiles. Aadhaar numbers will ultimately fill in as the reason for an information base with which hindered Indian occupants can get to administrations that have been denied to them because of absence of ID records. Investment account is one of the fundamental monetary items that everybody should have and utilize. An investment account will allow you to set aside cash, move reserves, pull out cash and furthermore will give you premium on the assets that you have in your record. Very few speculation items in the market give you the double advantage of liquidity and premium. Yet, an investment account won't just assistance you set aside some cash yet will likewise allow you to pull out cash at whatever point you need it. Liberation is the way toward eliminating or decreasing state guidelines, normally in the monetary circle. It is the cancelation of administrative guideline of the economy. It became normal in cutting edge mechanical economies during the 1970s and 1980s, because of recent fads in financial pondering the shortcomings of unofficial law, and the danger that administrative offices would be constrained by the directed business to its advantage, and in this way harmed customers and the more extensive economy. 162 CU IDOL SELF LEARNING MATERIAL (SLM)

A Visa is not quite the same as a charge card, which requires the equilibrium to be reimbursed in full every month or toward the finish of every assertion cycle. Conversely, Visas permit the buyers to assemble a proceeding with equilibrium of obligation, subject to intrigue being charged. A Visa varies from a charge card additionally in that a Visa commonly includes an outsider element that pays the dealer and is repaid by the purchaser, though a charge card essentially concedes instalment by the purchaser until a later date. 8.2 MAINTAINING ACCOUNTS OF DIFFERENT TYPES OF CUSTOMERS INCLUDING AADHAR Banking relationship is an agreement between the Bank and the Customer. Accordingly, for setting up relationship with the client, Bank needs to guarantee that the client is lawfully equipped for going into a substantial agreement and he has applied to the Bank in the appropriate structure (Indian Contract Act, 1872). For Maintain various records, bank ought to acquire certain Information and archives as follows:: Natural Persons For natural persons the following information should be obtained, where applicable:  Legal name and any other names used (such as maiden name)  Correct permanent address (the full address should be obtained; a Post Office box number is not sufficient)  Telephone number, fax number, and e-mail address  Date and place of birth  Nationality  Occupation, public position held and/or name of employer  An official personal identification number or other unique identifier contained in an unexpired official document (e.g. passport, identification card, residence permit, social security records, driving licence) that bears a photograph of the customer  Type of account and nature of the banking relationship  Signature The bank should verify this information by at least one of the following methods:  Confirming the date of birth from an official document (e.g. birth certificate, passport, identity card, social security records).  Confirming the permanent address (e.g. utility bill, tax assessment, bank statement, a letter from a public authority). 163 CU IDOL SELF LEARNING MATERIAL (SLM)

 Contacting the customer by telephone, by letter or by e-mail to confirm the information supplied after an account has been opened (e.g. a disconnected phone, returned mail, or incorrect e-mail address should warrant further investigation).  Confirming the validity of the official documentation provided through certification by an authorised person (e.g. embassy official, notary public). Institutions The basic standards of client ID for normal people have equivalent application to client ID for all establishments. Where in the accompanying the distinguishing proof and confirmation of normal people is included, the previous direction in regard of such people ought to have equivalent application. The term foundation incorporates any element that is certifiably not a characteristic individual. In considering the client recognizable proof direction for the various kinds of establishments, specific consideration ought to be given to the various degrees of hazard implied. Corporate Entities For corporate entities (i.e. corporations and partnerships), the following information should be obtained.  Name of institution  Principal place of institution's business operations  Mailing address of institution  Contact telephone and fax numbers  Some form of official identification number, if available (e.g. tax identification number)  The original or certified copy of the Certificate of Incorporation and Memorandum and Articles of Association  The resolution of the Board of Directors to open an account and identification of those who have authority to operate the account  Nature and purpose of business and its legitimacy The bank should verify this information by at least one of the following methods.  For established corporate entities - reviewing a copy of the latest report and accounts (audited, if available). 164 CU IDOL SELF LEARNING MATERIAL (SLM)

 Conducting an enquiry by a business information service, or an undertaking from a reputable and known firm of lawyers or accountants confirming the documents submitted.  Undertaking a company search and/or other commercial enquiries to see that the institution has not been, or is not in the process of being, dissolved, struck off, wound up or terminated.  Utilising an independent information verification process, such as by accessing public and private databases.  Obtaining prior bank references.  Contacting the corporate entity by telephone, mail or e-mail. The bank ought to likewise find sensible ways to check the personality and notoriety of any specialist that opens a record in the interest of a corporate client, if that specialist isn't an official of the corporate client. Corporations / Partnerships For enterprises/associations, the chief direction is to look behind the establishment to distinguish the individuals who have authority over the business and the organization's/organization's resources, including the individuals who have extreme control. For enterprises, specific consideration ought to be paid to investors, signatories, or other people who infuse a huge extent of the capital or monetary help or in any case practice control. Other Types of Institution For the account categories referred to paragraphs 26 to 34, be obtained in addition to that required to verify the identity of the principals:  Name of account  Mailing address  Contact telephone and fax numbers  Some form of official identification number, if available (e.g. tax identification number)  Description of the purpose/activities of the account holder (e.g. in a formal constitution)  Copy of documentation confirming the legal existence of the account holder (e.g. register of charities) The bank should verify this information by at least one of the following. 165 CU IDOL SELF LEARNING MATERIAL (SLM)

 Obtaining an independent undertaking from a reputable and known firm of lawyers or accountants confirming the documents submitted.  Obtaining prior bank references.  Accessing public and private databases or official sources. Retirement Benefit Programs Where a word related annuity program, worker advantage trust or offer choice arrangement is a candidate for a record the trustee and whatever other individual who has command over the relationship (for example director, program administrator, and record signatories) ought to be considered as chiefs and the bank should find ways to confirm their personalities. Mutual/Friendly Societies, Cooperatives and Provident Societies Where these elements are a candidate for a record, the directors to be distinguished ought to be viewed as those people practicing control or critical impact over the association's resources. This will frequently incorporate board individuals in addition to chiefs and record signatories. Charities, Clubs and Associations On account of records to be opened for good cause, clubs, and social orders, the bank should find sensible ways to distinguish and confirm something like two signatories alongside the actual organization. The directors who ought to be distinguished ought to be viewed as those people practicing control or critical impact over the association's resources. This will frequently incorporate individuals from an administering body or advisory group, the President, any board individuals, the financier, and all signatories. In all cases free confirmation ought to be acquired that the people included are valid agents of the organization. Free affirmation ought to likewise be acquired of the motivation behind the foundation. Trusts and Foundations When opening a record for a trust, the bank should find sensible ways to check the trustee(s), the settlor(s) of the trust (counting any people settling resources into the trust) any protector(s), beneficiary(ies), and signatories. Recipients ought to be distinguished when they are characterized. On account of an establishment, steps ought to be taken to confirm the organizer, the supervisors/chiefs and the recipients. Professional Intermediaries At the point when an expert mediator opens a customer account in the interest of a solitary customer that customer should be distinguished. Proficient middle people will regularly open \"pooled\" accounts for the benefit of various elements. Where assets held by the go-between are not mixed together but rather where there are \"sub-accounts\" which can be inferable from 166 CU IDOL SELF LEARNING MATERIAL (SLM)

each valuable proprietor, all gainful proprietors of the record held by the delegate ought to be recognized. Where the assets are mixed together, the bank should glance through to the advantageous proprietors; in any case, there might be conditions which ought to be set out in administrative direction where the bank will not have to look past the middle person (for example at the point when the go-between is dependent upon the equivalent due constancy norms in regard of its customer base as the bank). Is Aadhaar Mandatory? In a decision by the Supreme Court of India, the zenith court has made obviously Aadhar card can't be made required as of now by the Government of India. Sometimes, Government can make Aadhaar card obligatory like opening of the financial balance, recording of IT returns, check of versatile numbers and utilization of PAN number. After different fights in court, Aadhar is being made obligatory for the majority of the public authority plans to plug abuse of assets and defilement. Today a scope of government conspires obligatorily need recipients to outfit their Aadhar to confirm their authenticity. Most endowments are dispensed straightforwardly into the financial balance of recipients connected with Aadhar. Out of the Indian populace of roughly 135 Crores, around 1.12 Billion Aadhar numbers have been given. This implies that despite the fact that Aadhar has become a critical personality evidence to have, it has still not been given for various individuals. They can in any case utilize PAN card, driving permit or identification as a substitute for Aadhar card for photograph character or address verification. 8.3 SB RATE As a piece of monetary area changes, the Reserve Bank has liberated financing costs on stores, other than investment funds bank stores. The loan fee on investment funds bank stores has stayed unaltered at 3.5 percent per annum since March 1, 2003. Keeping in see reformist liberation of loan fees, it was proposed in the Second Quarter Review of Monetary Policy 2010-11 reported on November 2, 2010 to set up a Discussion Paper to outline the upsides and downsides of liberating the reserve funds bank stores financing cost. It was proposed to put a Discussion Paper on the Reserve Bank's site for input from overall population. In like manner, this Discussion Paper is an endeavour to manage upsides and downsides of liberating reserve funds store financing cost and accept the ideas of different partners for either keeping up with the norm or liberating the investment funds store loan fee. The cycle of liberation of store loan costs had started during the 1980s. In April 1985, banks were permitted to set loan fees for developments between 15 days and as long as 1 year, subject to a roof of 8%. It was normal that with sensible paces of revenue on developments, banks would have the option to accomplish a superior circulation of term stores as opposed to 167 CU IDOL SELF LEARNING MATERIAL (SLM)

exceptionally slanted appropriation around longer developments at generally greater expenses. Nonetheless, when a couple of banks began offering the roof pace of 8% in any event, for developments of 15 days, different banks took action accordingly regardless of thought of benefit and set a solitary pace of 8% for developments beginning from 15 days and as long as one year. The result was a shift of stores from current records and, less significantly, from bank accounts to 15-day stores. Because of value battle among banks, the opportunity to set loan costs subject to a roof was removed in May 1985. The interaction of liberation continued in April 1992 when the current development insightful solutions were supplanted by a solitary roof pace of 13% for all stores over 46 days. The roof rate was brought down to 10 percent in November 1994, yet was raised to 12 percent in April 1995. Banks were permitted to fix the financing costs on stores with development of more than 2 years in October 1995, which was additionally loose to development of more than 1 year in July 1996. The roof rate for stores of '30 days as long as 1 year' was connected to the Bank Rate less 200 premise focuses in April 1997. In October 1997, store rates were completely liberated by eliminating the linkage to the Bank Rate. Subsequently, the Reserve Bank gave the opportunity to business banks to fix their own loan fees on homegrown term stores of different developments with the earlier endorsement of their individual Board of Directors/Asset Liability Management Committee (ALCO). Banks were allowed to decide their own punitive loan fees for untimely withdrawal of homegrown term stores and the limitation on banks that they should offer similar rate on stores of a similar development independent of the size of stores was eliminated in regard of stores of ' 15 lakh or more in April 1998. Presently banks have total opportunity in fixing their homegrown store rates, with the exception of financing cost on reserve funds stores, which keeps on being controlled and is right now specified at 3.5 percent. The Credit Policy of May 27, 1977 interestingly drew a differentiation inside investment funds store accounts in that a section was considered as practically exchanges situated versus the excess part that had highlights much the same as reserve funds. Appropriately, the Reserve Bank, with impact from July 1, 1977, fixed the financing cost on investment funds stores with check offices, considered as exchanges arranged records, at 3.0 percent and the loan fee on investment funds stores without check offices, considered as unadulterated investment accounts, at 5.0 percent. Be that as it may, the Credit Policy of March 2, 1978 blended these two records into a solitary investment account, by virtue of numerous contributors opening different records. In like manner, the Credit Policy fixed the financing cost on reserve funds store at 4.5 percent. In April 24, 1992, the loan cost on investment funds store was fixed most elevated at 6.0 percent per annum. The limitations forced by the Reserve Bank on the activity of investment funds ledger were removed and banks were given the adaptability to specify such limitations. The loan cost on investment funds bank store has been logically decreased by the Reserve Bank. It presently remains at 3.5 percent that has stayed fixed since March 2003. 168 CU IDOL SELF LEARNING MATERIAL (SLM)

Broad Features The activity of an investment funds ledger contrasts from one bank to another. Notwithstanding, still some expansive highlights could be distinguished.  One, number of free withdrawals are for the most part specified on a half- yearly/quarterly premise. All out quantities of withdrawals fluctuate somewhere in the range of 30 and 120 each half year.  Two, no roof has been specified on the greatest sum that can be drawn per exchange.  Three, there is by and large no restriction on the quantity of watches that can be drawn each month. In any case, some PSBs have confined the quantity of watches that can be attracted on around 20 to 25.  Four, least equilibrium is specified, independent of whether the record holder is with or without check office. The public area banks have specified the base equilibrium sum at1000 for metro, metropolitan and semi-metropolitan regions, and500 for provincial regions with check book office. The base equilibrium sum specified without check book office is500 for metro/metropolitan/semi-metropolitan regions and250 for rustic regions. The base equilibrium needed to be kept up with by private area and unfamiliar banks is for the most part a lot higher than those by open area banks. The support of reserve funds bank store accounts, nonetheless, involves exchange costs for banks. Albeit the specific expense construction of keeping up with reserve funds ledger isn't promptly accessible, some thought of this could be had from the charge structure forced by banks for non-adherence to the specified conditions by the reserve funds bank contributors. The charges for non-support of least equilibrium by select public area banks change between 20 and225 for metropolitan regions and 20 and100 for rustic regions for each quarter. The charges for select private area banks fluctuate around750 for metropolitan regions and500 to750 for rustic regions for each quarter. While a few banks charge1 to3 for each leaf for extra checks past the specified number of checks per quarter; some open area banks have no restriction on the quantity of watches that can be removed each month. Concerning the quantity of free exchanges for utilizing other banks' ATM for cash withdrawal and equilibrium enquiry up to a limit of five every monthselect banks charge 18 to20, subject to the limit of ' 20 for each exchange as specified by the Reserve Bank. 8.4 DEREGULATION India sought after monetary area changes as a piece of primary changes started in the mid- 1990s. A significant segment of the monetary area change measure was liberation of a perplexing design of store and loaning financing costs. The regulated financing cost structure 169 CU IDOL SELF LEARNING MATERIAL (SLM)

end up being wasteful. It, subsequently, became important to change the financing cost structure. Liberation of financing costs was expected to reinforce the cutthroat powers, work on allocative productivity of assets and fortify the transmission of money related arrangement. The cycle of liberation of loan costs, which started in the mid-1990s, was to a great extent finished by October 1997. A couple of classes of financing costs that kept on being managed on the loaning side were little advances up to2 lakh and rupee send out credit, and on the store side, the reserve funds bank store loan cost. The rates on little advances up to2 lakh and rupee send out credit were liberated in July 2010, when the Reserve Bank supplanted the Benchmark Prime Lending Rate (BPLR) framework with the Base Rate framework. With this, all rupee loaning rates were liberated. On the store side, the lone financing cost that keeps on being controlled now is the investment funds store loan fee. Deregulation of Interest Rates on Deposits Before the declaration was made, all banks in India used to pay-out a similar loan cost on your investment account. That was 4% and was fixed by RBI. This guideline presently implies that RBI will permit banks, viable November first 2011, to fix their own financing costs on stores or investment account. This has prompted the current conflict on higher loan costs – however let us go to that somewhat later. This accompanies an admonition for the banks however. They are The banks should offer a solitary pace of revenue on stores not as much as Rs 1 lakh. The banks are allowed to choose this rate yet they need to offer a similar rate to everyone whose store is not as much as Rs 1 lakh. For stores of more than Rs 1 lakh, the banks are allowed to settle on sections and loan fees for these chunks. Along these lines, for a chunk of Rs 1 lakh – Rs 3 lakh, the banks could offer say 6% pace of revenue and for pieces of Rs 3 lakh – Rs 5 lakh, it very well may be 7%. Thus, banks can choose the actual chunks and the loan costs for these pieces yet inside a section, a similar loan cost should be given to everybody. The Current Status Before long the declaration, three banks raised their loan costs. Indeed, hours after this news, Yes Bank made its goals noisy and understood. Then, at that point Kotak Mahindra bank has come out with a full-page advertisement in The Times of India advancing the new rates, so you can envision the significance banks are providing for this. Indeed Bank was quick to kick right into it with a financing cost of 6% for all stores. This was trailed by IndusInd bank. With a 6% rate on stores for more than Ra 1 lakh and 5.5% for not as much as Rs 1 lakh. The third was Kotak Bank with similar rates as IndusInd bank. It was normal that these banks will move first as these banks don't have a lot to show for the sake of retail stores. Huge banks like SBI, PNB, HDFC, whose bank account stores represent an enormous segment of absolute stores saw their offers lose esteem on the securities exchanges after the liberation of 170 CU IDOL SELF LEARNING MATERIAL (SLM)

loan costs declaration came in. In the coming days, anticipate that more smaller banks should get the temporary fad together with alluring loan costs on stores. Would it be a Good Idea for you to Move to a Keep Money with Higher Financing Cost? Before you leap to the bank which offers an exorbitant loan cost If it's not too much trouble, note that your bank account better has significantly less cash stopped in it when contrasted with other speculation roads. In case this isn't the situation and the greater part of your cash is in stores, then, at that point you are in pressing need of some a word of wisdom and monetary arranging. 8.5 CREDIT CARDS 8.5.1 What Is A Credit Card? A credit card is a helpful apparatus that permits you to purchase things now and pay for them later. On the off chance that you purchase something with credit, you are owing debtors. This implies that you owe cash to the organization that gave you the Visa. On the off chance that you don't pay the whole sum toward the finish of every month, you pay an expense for the MasterCard called interest. Whenever oversaw accurately, charge cards can be an incredible method to fabricate credit and deal with your cash. 8.5.2 Advantages and Disadvantages Benefits of Credit Card Once Bonuses There's nothing similar to an underlying reward opportunity while getting another MasterCard. Periodically, candidates with great credit or superb credit can get supported for charge cards that offer rewards worth $150 or more (in some cases substantially more) in return for spending a specific sum (somewhere in the range of $500 to a few large number of dollars) in the initial a while the record is open. Different cards captivate candidates with reward focuses or miles that can be reclaimed for movement, gifts cards, stock, explanation credits, or checks (more on those underneath). Interestingly, a standard charge card that accompanies a bank financial records by and large offers no underlying reward or progressing freedom to procure rewards. Money Back The money back MasterCard was first advocated in the United States by Discover, and the thought was straightforward: Use the card and get 1% of your buys discounted as money back. Today, the idea has developed and developed. Presently, a few cards currently offer 2%, 3% or even however much 6% money back on chosen buys, however such worthwhile 171 CU IDOL SELF LEARNING MATERIAL (SLM)

offers include quarterly or yearly spending covers. The best money back cards are those that charge insignificant expenses and premium, while offering a high rewards rate. A few cards, similar to the Fidelity Rewards card, offer a high 2% pace of money back remunerations on all going through however you should store your money straightforwardly into a Fidelity speculation account. Prizes Points Visas are set up to permit cardholders to procure at least one focuses per dollar in spending. Many award charge cards give extra focuses to specific classes of expenditure like cafés, food or gas. At the point when certain income limits are reached, focuses can be recovered for movement, gift vouchers from retailers and eateries, or for stock things through the charge card organization's online prizes entrance. Preferred Customer Credits This advantage originates before practically the remainder. Back in the mid-1980s, American Airlines started offering their shoppers a clever method to procure preferred customer credits in any event, when they weren't flying, by shaping an association with MasterCard goliath, Citibank. Presently, all home-grown and global aircrafts have something like one MasterCard offered, in a comparable association, by significant charge card backers. Wellbeing Paying with a charge card makes it simpler to keep away from misfortunes from extortion. At the point when your check card is utilized by a hoodlum, the cash is absent from your record in a flash. Authentic costs for which you've booked online instalments or sent checks might bob, setting off lacking assets expenses and influencing your credit. Regardless of whether not your flaw, these late or missed instalments can bring down your financial assessment. It can require some investment for false exchanges to be turned around and cash re-established to your record while the bank explores. Keeping Vendors Honest Let's assume you employ a tile setter to set some deck in your doorway. Laborers go through the end of the week cutting, estimating, grouting, setting the spacers and tiles and allowing the entire thing to set. They then, at that point charge you $4,000 for their difficulties. Beauty Period At the point when you make a charge card buy, your cash is gone immediately. At the point when you make a MasterCard buy, your cash stays in your financial records until you cover your charge card bill. Clinging to your assets for this additional time can be useful twoly. In the first place, the time worth of cash, anyway tiny, will set aside you cash. Postponing inevitable instalment makes 172 CU IDOL SELF LEARNING MATERIAL (SLM)

your buy a smidgen less expensive than it would be something else. Past that, by paying with a Visa versus your charge card, money, or check, your money will invest more energy in your financial balance. What's more, on the off chance that you pay your MasterCard from a premium bearing financial records, you will bring in cash during the elegance time frame. The additional money will ultimately amount to a significant sum. Second, when you reliably pay with a charge card you don't need to watch your ledger balance as intently. Protection Most Visas consequently accompany various customer securities that individuals don't understand they have, like rental vehicle protection (however regularly auxiliary to your own accident coverage), travel protection, and item guarantees that might surpass the producer's guarantee. Widespread Acceptance Certain buys are hard to make with a check card. At the point when you need to lease a vehicle or stay in a lodging, you'll in all likelihood make some simpler memories in the event that you have a charge card. Rental vehicle organizations and lodgings need clients to pay with MasterCard’s on the grounds that it makes it simpler to charge clients for any harm they cause to a room or a vehicle. Another explanation is that, except if you have paid ahead of time for your rental or inn stay, the trader doesn't have a clue about the last measure of your exchange. The dealer, in this way, requirements to shut out a specific measure of your accessible credit line to shield themselves from potential charges they didn't expect. Building Credit In the event that you have no credit or are attempting to further develop your financial assessment, utilizing a Visa mindfully will help since MasterCard organizations will report your instalment movement to the credit agencies. Notwithstanding, check card use doesn't show up anyplace on your credit report, so it can't help you fabricate or work on your credit. Regardless of whether you need to store a few assets to get a gotten Visa, this can help you assemble your record as a consumer and at last fit the bill for unstable cards or bigger credits. Disadvantages of Credit card 1. If you make a late instalment, don't cover the equilibrium, or surpass your credit limit, you should pay extra in expenses and interest. 2. Credit cards can prompt obligation and adversely influence your record of loan repayment in case it isn't overseen appropriately. 3. If you don't follow your buys, it tends to be hard to tell the amount you go through in one month until your assertion shows up. 173 CU IDOL SELF LEARNING MATERIAL (SLM)

4. The agreements can be befuddling and, now and again, they are just accessible in English. 8.5.3 Types of Credit Cards There are different types of credit cards. Find the details below. 1. Standard credit card i. Secured credit card – with a got Visa you store a specific measure of cash into your investment account and get a credit extension for a similar sum. Along these lines, on the off chance that you don't make your instalments, the charge card organization can keep the cash in your record. With this charge card, you can fabricate record of loan repayment. (Note! Be certain the Visa organization intends to report your record to the credit authority, so you start making a record of loan repayment.) If you make opportune instalments in full throughout a specific timeframe, regularly one year, the MasterCard backer may offer you an unstable Visa, or different kinds of credit you may require. ii. Unsecured credit card – This is the most well-known kind of Visa. You can get up to a specific cut-off as long as you pay essentially your base equilibrium consistently. To get a MasterCard, most charge card organizations audit your record of loan repayment and pay. An unstable MasterCard can be an advantageous instrument as long as you oversee it cautiously and make your instalments on schedule and settled completely. 2. Retail credit card - Retail Cards are utilized at a specific store or service station. Know that these cards frequently charge higher loan costs than a standard MasterCard. 3. Charge cards - These cards work like a standard Visa, however necessitate that you cover the equilibrium consistently. These cards regularly have higher credit limits, however in the event that you don't come up with all required funds each month, you are frequently charged late instalment expenses and exorbitant loan costs. 8.5.4 Choosing a Credit Card AnnualPercent This is the interest rate you pay on the balance you have not age Rate(Apr) paid off at the end ofthe month.Of course, it is best to pay your balance in full every month to avoidpaying interest, but in case there are times when you cannot, it is best to searchfor the lowest interest rate possible. Beware!Some credit card companies offeryoua lowinterest ratefora fewmonthsand then,increase itto amuchhigher rate. 174 CU IDOL SELF LEARNING MATERIAL (SLM)

Fees Carefully review them before selecting a card.Fees vary widely among credit cardcompanies and financial institutions, so find the best deal for you.The mostcommonfeesare: AnnualFee A fee that you pay every year to use your credit card.Some credit card companiesdonot chargean annual fee. ApplicationFee Costofapplying foracreditcard.Somecreditcardcompaniesdonotchargeanapplicati onfee. LateFee A fee charged when you do not pay off your balance by the due date. Making latepayments can also negatively affect yourcredit report. Over-The-LimitFee A fee charged when you spend more than your credit limit (this includes allpurchasesandfeeschargedtoyouraccount). PenaltyRates Avoidcardoffersthatincludepenaltyrates.Thisiswhenthecreditcard companycharges you a higher rate if you make a late payment or spend more than yourcardlimit, even justonetime. CreditLimit The total amount you can spend on your card.For example, if you have a creditlimit of $1,000, you cannot spend more than this amount.There is a fee if youexceedthis limit. GracePeriod The period of time you have to pay off the balance on your credit card before youare charged interest.Search for a credit card that offers a grace period. But,remember,peoplewhocarryabalanceontheircreditcardshaveno graceperiod. Perks Bonuses or awards that you receive for using your credit card, for example, arebate for spending a certain amount of money, or discounts on airline tickets.Thistypeofcreditcardmighthaveahigherinterestrate.Comp areoffersbefore deciding. Table 8.1: CHOOSING A CREDIT CARD 175 CU IDOL SELF LEARNING MATERIAL (SLM)

8.5.5 Where can I Get a Credit Card? There are several ways you can get a credit card. No matter where you get your credit card, look carefully at the credit card features before making a decision. You probably receive credit card offers in the mail. In the United States a huge number of offers are mailed to consumers. Don’t rush to apply for the first offer that you receive. Instead, try to find the card that is the best for you. Financial institutions, like credit unions and banks, usually offer credit cards. This could be your best option because you can meet with someone to help you choose the best card for you. Some department or chain stores offer credit cards that you can use to purchase products and services from their particular stores. These cards can be beneficial if you shop frequently at that chain because they give discounts or rewards if you pay off the entire balance at the end of each month. Be careful, some of these cards have high interest rates and extra fees. Table 8.2: Where Can I Get A Credit Card? 8.5.6 Using Your Credit Card Wisely Credit cards can be a very useful tool when they are used wisely. DO DON’T Payyourbillsontime. Payyourbillslate. Never spend up to or more than your Spendmorethanyourlimit. limit.Remember, credit cards are not extra cash!Applyforandusethree Apply for and use many credit orfewercreditcards. cards.Keep a high balance on your credit Onlychargetheamountyoucanpayattheend card.Constantlychangecreditcar ofthemonth.Payyour entirebalanceattheendofthe monthor 176 CU IDOL SELF LEARNING MATERIAL (SLM)

asmuchas possible. ds. Use your credit card over a long period of Forgettoreviewyourmonthlystateme time toshowconsistency. ntforerrors. Read your monthly statement carefully andnotifyyourcreditcardcompanyofanyerr orsrightaway. Table 8.3: Using Your Credit Card Wisely 8.6 SUMMARY  A bank account is a monetary record kept up with by a bank or other monetary foundation where the monetary exchanges between the bank and a client are recorded. Each monetary organization sets the agreements for each kind of record it offers, which are grouped in usually got types, for example, store accounts, Mastercard accounts, current records, advance records or numerous different sorts of record. A client might have more than one record. When a record is opened, reserves endowed by the client to the monetary establishment on store are recorded in the record assigned by the client. Assets can be removed from credit loaders.  Deregulation is the way toward eliminating or diminishing state guidelines, ordinarily in the financial circle. It is the nullification of legislative guideline of the economy. It became normal in cutting edge mechanical economies during the 1970s and 1980s, because of recent fads in monetary contemplating the shortcomings of unofficial law, and the danger that administrative offices would be constrained by the managed business to its advantage, and in this manner hurt customers and the more extensive economy.  For enterprises/organizations, the chief direction is to look behind the foundation to recognize the individuals who have authority over the business and the organization's/association's resources, including the individuals who have extreme control. For companies, specific consideration ought to be paid to investors, signatories, or other people who infuse a huge extent of the capital or monetary help or in any case practice control. Where the proprietor is another corporate substance or trust, the goal is to embrace sensible measures to look behind that organization or element and to check the personality of the directors. 177 CU IDOL SELF LEARNING MATERIAL (SLM)

 The venture of giving a character to each inhabitant in India was begun by the Indian Government in co-appointment with UIDAI in March 2006. This card was dispatched by the Indian Government with an intend to build up an extraordinary social personality for each Indian resident. Thus this card, at times additionally alluded to as UID card, was given by UIDAI under the undertaking called Aadhaar. This card can be utilized all around at all spots in India and is a generally useful card. According to the reports, 1.12 Billion Aadhar cards have been now given to the inhabitants of India.  As a piece of monetary area changes, the Reserve Bank has liberated loan costs on stores, other than investment funds bank stores. The loan fee on investment funds bank stores has stayed unaltered at 3.5 percent per annum since March 1, 2003. Keeping in see reformist liberation of loan costs, it was proposed in the Second Quarter Review of Monetary Policy 2010-11 declared on November 2, 2010 to set up a Discussion Paper to portray the upsides and downsides of liberating the investment funds bank stores financing cost. It was proposed to put a Discussion Paper on the Reserve Bank's site for criticism from overall population. In like manner, this Discussion Paper is an endeavour to manage upsides and downsides of liberating reserve funds store loan fee and accept the ideas of different partners for either keeping up with the state of affairs or liberating the investment funds store financing cost.  A Visa is an advantageous device that permits you to purchase things now and pay for them later. In the event that you purchase something with credit, you are under water. This implies that you owe cash to the organization that gave you the charge card. In the event that you don't pay the whole sum toward the finish of every month, you pay a charge for the Mastercard called interest. Whenever oversaw effectively, Mastercard’s can be an extraordinary method to assemble credit and deal with your cash. 8.7 KEYWORDS  Accounts - Itis a class of individual property characterized by Article 9 of the UCC. Under the pre-2000 adaptation of Article 9, a record is an option to get instalment for products sold or rented, or for administrations delivered, where these rights are not confirmed by an instrument or by property paper. Under the reconsidered Article 9, the meaning of records is a lot more extensive. The reconsidered definition covers a lot more extensive assortment of instalment commitments, regardless of whether procured by execution, including permit charges payable for the utilization of programming, Visa receivables, and medical care protection receivables. 178 CU IDOL SELF LEARNING MATERIAL (SLM)

 Accounts Payable - is a class of liabilities that addresses assets because of leasers. As a rule, creditor liabilities is because of exchange loan bosses who have provided products or administrations without requiring prompt instalment. Records payable is in some cases just called payables. Records payable to exchange loan bosses are once in a while called creditor liabilities exchange, because of exchange, or exchange payables.  Accounts Receivable - is a resource account that reflects sums due from private people or associations for labour and products outfitted. For enterprises, records of sales avoids assets due from divisions, however may incorporate assets due from associates. For governments and non-benefit associations utilizing store bookkeeping, it does exclude assets due from different assets possessed by a similar substance. A class of individual property characterized by Article 9 of the UCC. Records receivable is the option to get instalment for merchandise sold or rented or for administrations delivered where those rights are not proven by an instrument or by property paper.  Accounts Receivable Trade - is additionally called exchange receivables. Sums due from the credit deals of merchandise or administrations that are not confirmed by promissory notes.  Accreting Swap - is a loan cost trade with an expanding notional sum. 8.8 LEARNING ACTIVITY 1. What, according to you, are the finer aspects of need analysis in Axis Bank? ___________________________________________________________________________ _________________________________________________________________________ 2. If you were to work as an manager in bank of Axis Bank, how would you manage loan applications? ___________________________________________________________________________ _________________________________________________________________________ 8.9 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. Explain the deregulation. 2. Write a note on SB Rate. 3. What is anAadhar? 179 CU IDOL SELF LEARNING MATERIAL (SLM)

4. What is acredit card? 180 5. What is natural person in banking? Long Questions 1. Explain maintaining accounts of different types of customers. 2. What Aadhar? Explain. 3. Explain SB rate. 4. Discuss deregulation. 5. Explain the types of credit cards. B. Multiple Choice Questions 1. Which is prohibited for writing on currency notes? a. Political message b. Religious message c. Personal message d. All of these 2. What does PPF means? a. Pension Planning Funds b. Person having Pension Facilities c. Public Provident Fund d. Permanent Practitioner’s Forum 3. What does highest denomination of currency notes issued by RBI is? a. Rs.100/- b. Rs.500/- c. Rs.1,000/- d. Rs.10,000/- 4. What does NRI mean? a. Non-Rural Individuals b. Non-Rural Immigrants c. Non-Resident Indian d. None of these CU IDOL SELF LEARNING MATERIAL (SLM)

5. What does PAN mean a. A kind of utensil b. Primary Account Number c. Permanent Account Number d. None of these Answers 1-d, 2-c, 3-c, 4-c, 5-c. 8.10 REFERENCES References  Auerbach, Robert, D. (1990). Finance Markets and Institutions. New York. Macmillan Publishing Co. Inc.  Bhole, M, K. (2009). Financial Markets and Institutions. New York. Macmillan Publishing Co. Inc.  Hajols, T, N. (2009). “Money and Banking”, Gopaljee Enterprises. Textbooks  Taxmann (2010). “Practitioners’ Book on Trade Finance by Taxmann”, Taxman Publication Pt. Ltd.  Rajesh, R&Sivagnanansithi, T. (2009), “Banking Theory: Law and Practice”. Tata McGraw Hill Publishing Company Ltd.  Shekhar, K, C. (2009). “Banking Theory and Practice”. Vikas Publishing House Pvt. Ltd. Websites  http://www.rbi.org.in/ /  http://wiki.answers.com/  http://www.bankingindiaupdate.com/car.htm 181 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 9 – LOANS PART I STRUCTURE 9.0 Learning Objectives 9.1 Introduction 9.2 Home Loans 9.3 Personal Loans 9.4 Consumer Loans 9.5 Operational Aspects 9.6 Advantages and Disadvantages 9.7 Summary 9.8 Keywords 9.9 Learning Activity 9.10 Unit End Questions 9.11 References 9.0 LEARNING OBJECTIVES After studying this unit, you will be able to  Learn the operational aspects of loans.  Explain different types of home loans.  Describe the personal loans.  Explain the consumer loans. 9.1 INTRODUCTION Home is a necessary piece of, his individual youth, dreams to have living space of his own. Once in a blue moon venture expects credit to do it and that is the means by which the home advance comes into plan of things. Purchasing a house is dream for everybody. Because of the rising cost of properties, it has nearly gotten incomprehensible for a normal procuring individual to purchase a home through singular amount instalment. In this way, the idea of home advance has appeared. There are plenty of lodging finance organizations and banks both out in the open and private area which offer home advances. Picking one organization and one proposal for home advance in the midst of the large numbers accessible choices have 182 CU IDOL SELF LEARNING MATERIAL (SLM)

become an extremely unpredictable undertaking in our country. Aside from this, there are complex business languages and details that make this work more intense and troublesome. Through this examination, I propose to recognize the basic components affecting the development and recognizing the development design in home credit portfolio especially in open area banks in India. The lodging is one of the fundamental necessities of individuals as it positions close to food and dress. A specific least norm of lodging is fundamental for a sound and acculturated living. Consequently, the need must be given for the improvement of lodging in a country. The human settlements affect climate. It is a device for present day financial turn of events. The evaluation records of India show that there was no shortfall lodging issue in India till the principal half of the century. In 1901, there were 55.8 million houses for 54 million families showing an overflow of 1.8 million houses. This overflow circumstance proceeded till 1941. It was solely after 1951, the deficiency pattern has begun and is proceeding with a heightening extent. In 1971, absolute number of families was 100.4 million and the quantity of houses was 90.7 million, showing a shortfall of 9.7 million. The lodging lack in 1991 was around 31 million units. The lodging lack during 2001 was 41 million. The assessed lodging stock prerequisite in the country by 2021 is around 77 million in metropolitan regions and 63 million in rustic regions. An individual credit is a measure of cash you can acquire to use for an assortment of purposes. For example, you might utilize an individual advance to merge obligation, pay for home redesigns, or plan a fantasy wedding. Individual advances can be offered by banks, credit associations, or online moneylenders. The cash you acquire should be reimbursed over the long haul, regularly with premium. A few banks may likewise charge expenses for individual advances. A buyer advance is a credit given to purchasers to back explicit sorts of consumptions. At the end of the day, a customer advance is any kind of advance made to a purchaser by a leaser. The credit can be gotten (supported by the resources of the borrower) or unstable (not sponsored by the resources of the borrower). 9.2 HOME LOANS Evolution of Home Loan Home Loan assumes a crucial part as a motor of impartial financial development through the decrease of destitution and forestalls ghetto multiplication in economy. The interest for lodging is expanding quickly step by step. Thusly, to meet with the developing lodging request is the point of the public authority. To accomplish this point, it is needed to give the advance to lodging to individuals. The advancement of the monetary area of the economy has likewise gotten conceivable by the lodging finance. Home Loan is the assets purchaser needs 183 CU IDOL SELF LEARNING MATERIAL (SLM)

to acquire typically from a bank or other monetary organizations to buy a property, for the most part got, by an enrolled home loan to the bank over the property being bought. A home loan credit is an obligation owed on a home; the home loan rate is the financing cost charged to the mortgage holder for the utilization of the advance. Home credit is a wide theme, the idea of which might change across grounds, locales and nations, especially as far as the spaces it covers. For instance, what is perceived by the expression \"home advance\" in a created nation might be altogether different based on what is perceived by the term in an agricultural nation. Advantages of Home Loan 1. Makes Buying a Home Affordable For All The home credit makes it simpler for a normal working class salaried individual to bear the cost of purchasing their very own home. The banks in India authorization or reject the home advance application dependent on the FICO assessment of the candidate just as their ability to reimburse the sum On the off chance that you get a pay routinely and have the ability to reimburse the EMIs (compared regularly scheduled payment), the moneylenders will rapidly support the application. Furthermore, the home credits have a long residency, commonly it goes from 15-20 years, which implies the EMI is more modest and more moderate. Along these lines, by benefiting an advance, you can partake in the joy of being a property holder. 2. A cost-effective way of availing credit One of the significant home credit advances benefits is that it accompanies a lower financing cost than different types of getting like an individual advance or a gold advance. This is on the grounds that the loan specialist utilizes the property that you wish to buy as a protection from the sum you acquire. Home advances financing costs are the most reduced among different kinds of credits, albeit the premium reaches from one bank to another, it as a rule floats between 8% to 12%. Ensure that you pick a moneylender that is offering the advance at the wellbeing rate; even a slight contrast in the financing cost could save you a great many Rupees over the long haul. 3. Capitalgrowth Over the previous many years, the expense of the land properties in India has been on the ascent reliably. The enthusiasm for capital will help you deal with the costs but then addition benefit on the offer of the property. 4. Compulsory way of saving In case you are contemplating whether a home credit is fortunate or unfortunate, you should realize that it has the two sides. It is only dependent upon you how you manage it. 184 CU IDOL SELF LEARNING MATERIAL (SLM)

At the point when you have cash close by, it tends to be trying to oppose the allurement of expenditure. In case you are sure that you will have a constant flow of pay however can't set aside any cash, then, at that point taking a home advance is the most ideal approach to have saving. 5. Guarantees safety of the property Purchasing a house is once a lifetime cost, and you would unquestionably need to guarantee that the property you put resources into is liberated from any lawful issues. This is the place where profiting of a home advance can be an extraordinary shelter. At the point when you approach a moneylender for a lodging advance, the bank will do a full record verification of the validity of the developer just as the actual property. They will audit the paper related with the property and guarantee that the structure is legitimate and that the developer has gotten all the freedom authentications from the nearby specialists. 6. Increases the loan eligibility At the point when your home advance is as a result, and as you keep on reimbursing the sum steadily or on the other hand in the event that you have as of now reimbursed the advance in full, your CIBIL (Credit Information Bureau (India) Limited) score will naturally increment, and the moneylenders will characterize you as a protected and capable borrower. This will assist you with further developing your credit qualification. You can utilize this to benefit and profit credit at a more reasonable financing cost. 7. Tax benefits This is another critical advantage of profiting a home advance. On the off chance that you sold property against a credit; you could guarantee a duty allowance on the chief just as the interest part of the reimbursement. For the reimbursement of the primary segment of the home credit, you can guarantee a derivation under Section 80C. The most extreme breaking point for derivation in such manner is Rs. 1.5 lakhs. For the reimbursement of the interest segment, you can guarantee an allowance under Section 24B. The greatest allowance you can guarantee for the interest reimbursement is Rs. 2 lakhs. These derivations can be a monstrous sum as far as ascertaining your general yearly expense commitment. In the event that you purchase a house without a credit, you will pass up these tax break on home advance. Disadvantages of Home Loan 1. It is a big commitment When the bank supports your home credit application, you are making an immense responsibility for a significant stretch. The ordinary length of a home credit last between 10 to 30 years. This implies that you would have an obligation for a lot of time in your 185 CU IDOL SELF LEARNING MATERIAL (SLM)

life. When the advance is basically, you would need to be ready to control your costs and spotlight on the reimbursement. 2. Home loan may carry risks The length of the home credit normally ranges more than 10 to 30 years, which is a significant long time. During this period, a few unexpected conditions can happen. A portion of these occurrences can make it hard for you to reimburse the credit. Occasions like separation, abrupt ailment, loss of work, mishap, can place in a huge monetary strife and influence your capacity to adapt to the weight of the advance, which thusly can bring about the deficiency of the property. On the off chance that, on the off chance that you fall flat the reimburse the credit, the moneylender has the power to assume control over the property and offer it to recover the cash they loaned you as a home advance. 3. Loss of investment opportunity This is quite possibly the most neglected drawbacks of home credit. At the point when you apply for a credit, independent of enormous or little the advance sum is or how long or short the term is, as you keep on reimbursing the sum, you lose the chance to put a similar sum in a venture device that could yield you important returns. Envision, rather than paying the EMIs, in the event that you could utilize the sum to put resources into shared assets or in a fixed store, you would get significant returns over the long haul. 4. Loss of tax benefit on the HRA component The businesses pay lodging Rent Allowance or HRA to the workers as a feature of their compensation. The HRA permits the workers to guarantee a duty allowance for the lease they pay for the lodging. To guarantee the HRA tax reduction, you should meet the accompanying prerequisites: i. You should remain in a leased house in the city of business and own a home in an alternate city. ii. Your home is under development or is under re-improvement, and you have leased a house until the development work is finished. Consequently, in case you are living in your own home, you lose the chance to guarantee the HRA exclusion and the whole sum will be considered as an available pay. Types of Home Loan Various types of home loans are available in India. They are described below.  Home purchase loan - These are the essential home credits for the acquisition of another house. These advances are given for acquisition of another or effectively assembled level/home/line house. 186 CU IDOL SELF LEARNING MATERIAL (SLM)

 Home improvement loan - These credits are given for executing fix works and redesigns in a home that has effectively been bought by the client. It could be mentioned for outer works like primary fixes, waterproofing or inward works like tiling and ground surface, plumbing, electrical work, painting, and so forth.  Home construction loan - These advances are accessible for the development of another home. The records needed by the banks for conceding client a home development advance are somewhat unique in relation to the home buy credits.Contingent on the way that when client purchased the land, the loaning gathering would or would exclude the land cost as a segment, to esteem the complete expense of the property.  Home extension loan - Home extension loans are given for growing or broadening a current home. For instance expansion of an additional room, and so forth For this sort of credit, client needs to have essential endorsements from the applicable city organization.  Land purchase loan – They are accessible for acquisition of land for both home development or speculation purposes. Accordingly, client can be conceded this credit regardless of whether client isn't intending to develop any structure on it soon. In any case, client needs to finish development inside residency of three years on a similar land.  Bridge loan bridge loans are intended for individuals who wish to sell the current home and buy another. The scaffold advance aides finance the new home, until a purchaser is found for the old home.  Balance transfer balance transfer credits assist client with taking care of a current home advance and profit the choice of an advance with a slower pace of interest. Client can move the equilibrium of the current home credit to any another bank.  NRI home loan This is an extraordinary home advance plan for the Non-Resident Indians (NRI) who wishes to construct or purchase a home or land property in India. They are offered appealing lodging finance plans with reasonable repayment choices by numerous banks in the country. 9.3 PERSONAL LOANS A personal loan doesn't need the borrower to give security thus it is an unstable advance. The reason or expectation of an individual advance is to subsidize quick monetary possibilities. It very well may be for business capital, marriage, clinical costs or even unfamiliar outings, however the end utilization of the capital truly relies upon the borrower, as long for what it's worth for a genuine monetary need. 187 CU IDOL SELF LEARNING MATERIAL (SLM)

A personal loan permits you to get cash to pay for individual costs and afterward reimburse those assets over the long run. Personal loan are a sort of portion obligation that permits you to get a singular amount of financing. For instance, you may utilize an individual credit to cover.  Moving expenses  Debt consolidation  Medical bills  Wedding expenses  Home renovations or repairs  Funeral costs  Vacation costs  Unexpected expenses These loans are not the same as other portion advances, for example, understudy loans, vehicle advances, and home loan advances—that are utilized to subsidize explicit costs (for example training, vehicle buy, and home buy). A personal loan is likewise not the same as an personal loan extension. The last isn't a single amount sum; all things considered; it works like a charge card. You have a credit line that you can go through cash against and, as you do as such, your accessible credit is decreased. You would then be able to let loose accessible credit by making an instalment toward your credit line. With a personal loan, there's normally a fixed end date by which the advance will be paid off. An individual credit extension, then again, may stay open and accessible to you endlessly as long as your record stays on favourable terms with your loan specialist.  Personal credits are advances that can cover various individual costs.  You can discover individual advances through banks, credit associations, and online loan specialists.  Personal advances can be gotten, which means you need insurance to get cash, or unstable, with no guarantee required.  Personal advances can differ incredibly with regards to their financing costs, expenses, sums, and reimbursement terms. Advantages of Personal Loans 1. Easily available – Getting an individual advance is certifiably not an intense undertaking. Individual credits are offered at sensible loan costs by practically all 188 CU IDOL SELF LEARNING MATERIAL (SLM)

banks and monetary organizations. It is simple and helpful to get these credits in contrast with different sorts of advances. 2. No agent or middleman involved – In request to get an individual credit you don't need to move toward a centre man or a specialist. This evades pointless postponements and costs. You can straightforwardly move toward the bank or monetary organization for the reason. 3. Unsecured loan – As expressed prior, individual advance is an unstable advance. There is no insurance security needed to get this credit. Everything necessary is your capacity to take care of the cash. You are not needed to contract any of your resources or accommodate any sort of assurance. One the loaning organization become sure of your re-instalmentcapacity; they measure the advance. 4. Less processing time – As close to home advances are accessible with no security or assurance the preparing time engaged with getting it is additionally exceptionally less. 5. All-purposeloan – Personal advance is such where it isn't obligatory for you to determine the reason for which you are to utilize the cash. You can utilize the sum credited in your name for any reason. It is at your watchfulness to choose what you have to do with the cash. 6. Minimum paperwork – Getting an individual advance doesn't need check of any resource or some other sort of verifications and testaments that include a ton of administrative work as none of your property is sold. 7. Schemes and offers – Number of banks and monetary organizations continue to report unique plans and offers of individual credits for experts like Chartered Accountants, Doctors and Architects and so on. 8. Amount and tenure – Personal advances are offered going from Rs15K to Rs 20 lakhs differing from one bank to another. The reimbursement can be made through EMIs which is an alternative accessible. Credits residency might rely on the sum acquired and might be from a year to 60 months. It is consistently fitting to select an individual advance as opposed to going in for acquiring cash from Mastercard as the financing cost is relatively low for the first. Disadvantages of Personal Loans Qualification Criteria - You need to meet all requirements for an individual credit according to the rules of the bank and when you do that there is no deferral. The rules shift from one bank to the next and the loan specialists do notice severe rules for this situation as there is no insurance security. 1. Credit history – It is required for you to have a decent record when you apply for an individual advance or probably your application might get dismissed. No moneylender 189 CU IDOL SELF LEARNING MATERIAL (SLM)

would need a terrible obligation for the sum he loans. So preceding applying for your own advance ensure you have a decent record as a consumer with no default in instalments. It is prudent to apply for an individual advance with the bank where you have a record or with which you share great compatibility. Applying for an individual advance with another bank or monetary establishment might bring about more administrative work as they might call for point by point documentation and references for check. 2. Bank account – It is compulsory for you to have a ledger in the event that you wish to benefit an individual credit. Not really with the bank you are applying for. 3. Lender's risk – As it is an unstable advance, the danger is very high for the bank on the grounds that there is no insurance security or assurance with them. On the off chance that the borrower defaults instalments, recuperation of these advances end up being over the top expensive and dreary. In case you are the person who possesses a decent record and have intends to reimburse the sum acquired with interest then you can without much of a stretch get an individual credit for any reason you require. On the off chance that you do a touch of exploration you might have the option to strike the best arrangement as far as financing costs while you apply for your own advance. Types of Personal Loans Personal Loans might be gotten or unstable. A got Personal Loans is one that requires some kind of guarantee as a state of getting. For example, you might protect an Personal Loans with cash resources, for example, a bank account or authentication of store (CD), or with an actual resource, like your vehicle or boat. On the off chance that you default on the credit, the moneylender could keep your insurance to fulfil the obligation. An unstable personal loans requires no insurance to acquire cash. Banks, credit associations, and online moneylenders can offer both got and unstable individual advances to qualified borrowers. Banks for the most part believe the last to be more dangerous than the previous on the grounds that there's no guarantee to gather. That can mean paying a higher financing cost for an individual credit. 9.4 CONSUMER LOANS Consumer loans are regularly called unstable credits. That implies that you don't need to give resources as guarantee or any type of safety as you regularly do while applying for a home loan. Numerous likewise apply for a customer advance to consolidate and take care of more modest advances concerning model Visa credits where the interest is higher than a shopper advance. Advantages of Consumer Advances 190 CU IDOL SELF LEARNING MATERIAL (SLM)

1. It permits customers to utilize the items and administrations, while as yet paying for them without delaying until they have set aside sufficient cash for a money buy. 2. Credit cards and retail cards permit purchasers to shop online without any problem. 3. Paying off financing effectively constructs a good record, permitting buyers to make the most of other financing openings. 4. Access financing moderately effectively and rapidly, without introducing archives as guarantee that you regularly don't have. 5. The assortment of things you can obtain with this sort of financing is extremely wide, going from family things to individual things. 6. The upfront instalment and the portions that are given obviously are not extremely high. Disadvantages 1. The last cost of the thing acquired through financing goes up extensively. 2. The loan cost can be high and is data that isn't given to the customer if the customer doesn't request it. 3. They likewise charge different expenses and commissions, for example, account the executives, annuity, protection, and so forth. 4. The instalments keep going so long that as a rule the instalment isn't done. 5. Since the instalments are not made, as a rule it is important to continue with the seizure. 6. One of the burdens of utilizing this kind of financing is that it decreases the capacity to set aside cash, which can leave families defenceless if monetary crises emerge. 7. A harmed FICO score on our credit authority because of neglected financing can contrarily influence a buyer's capacity to get new close to home or business financing. Types of Consumer Loans 1. Mortgages: Used by buyers to fund the acquisition of a house. 2. Credit cards: Used by buyers to fund regular buys. 3. Auto advances: Used by customers to fund the acquisition of a vehicle. 4. Student advances: Used by customers to fund training. 5. Personal advances: Used by customers for individual purposes. For qualified borrowers, customer advances fill a large number of needs and are fundamental in assisting them with financing their life. 191 CU IDOL SELF LEARNING MATERIAL (SLM)

9.5 OPERATIONAL ASPECTS 192 Types of Borrowers 1. An individual 2. Sole proprietary firm 3. Partnership firm and joint venture 4. HUF 5. Companies 6. Statutory corporations 7. Trusts and Co-op societies  Funded and non-funded credit facilities  Term loans  Demand loans  Bills purchased  Bills discounted  End use of funds  Primary securities  Collateral securities  Personal security of guarantor  Fixed charges  Floating charges  Margin  Priority sector Operational Process of Loans in the Banks  Receipt of loan application  Assessment of viability and credit worthiness  Sanction  Disbursement  Monitoring and supervision CU IDOL SELF LEARNING MATERIAL (SLM)

 Inspections  Review of the conduct of the account  Renewal of advances  Methods of assessment of loans Assessment of Working CMA Formats Under the Credit Monitoring Arrangement (CMA), banks have been allowed for authorizing credit recommendations (of huge borrowers) after nitty gritty investigation of the past exhibition. There is another prerequisite for the Banks. They need to present the enormous credit proposition to the Reserve Bank of India for post-authorize investigation. These proposition include working capital restrictions of Rupees 500 lakhs (5 crores) or more as well as term credit in abundance of Rupees 200 lakhs (2 crores). CMA covers the following statements  Particulars of current & proposed limits  Operating statement  Analysis of balance sheet  Comparative statement of current asset &current liabilities  Calculation of Maximum Permissible Bank Finance (MPBF)  Fund flow statement Operating Manual for Loans and Advances The tasks Manual of a bank is expected to give rules to the working staff on the previously mentioned regions and some other regions considered significant by the bank. The functional rules in regards to credits and advances, contained in a bank's functional manual, depend basically on  Principles of credit  Bank’s loan policy  Regulatory and legal framework 9.6 ADVANTAGES AND DISADVANTAGES Advantages  Flexibility: A bank advance permits one to reimburse according to accommodation as long as the portions are normal and convenient. Dissimilar to an overdraft where all 193 CU IDOL SELF LEARNING MATERIAL (SLM)

the credit is deducted in go. Or on the other hand a purchaser charge card where as far as possible can't be used in one go.  Cost effectiveness: When it comes to loan fees, bank advances are normally the least expensive alternative contrasted with overdraft and charge card.  Profit retention: When you raise assets through value you need to impart benefits to investors. Nonetheless, in a bank credit raised money you don't need to impart benefits to the bank.  Benefit of tax: Government makes the interest payable on the advance an assessment deductible thing when the advance has been taken for business reason. Disadvantages Hard Prerequisite: Since huge money from a bank depends on security, most youthful organizations will think that it’s difficult to fund the activities dependent on bank credit.  Irregular payment amounts: Over a long span restitution through regularly scheduled payment may observer variety in the pace of interest. This implies that the EMI won't be steady, rather it will change according to the impact of the market on the premium appropriate. 9.7 SUMMARY  Home is a necessary piece of, his individual youth, dreams to have living space of his own. Once in a blue moon speculation expects advance to do it and that is the way the home credit comes into plan of things. Purchasing a house is dream for everybody. Because of the rising cost of properties, it has nearly gotten outlandish for a normal acquiring individual to purchase a home through single amount instalment. Subsequently, the idea of home advance has appeared. There are plenty of lodging finance establishments and banks both openly and private area which offer home advances.  A individual credit is a measure of cash you can acquire to use for an assortment of purposes. For example, you might utilize an individual advance to solidify obligation, pay for home redesigns, or plan a fantasy wedding. Individual advances can be offered by banks, credit associations, or online loan specialists. The cash you get should be reimbursed after some time, regularly with premium. A few moneylenders may likewise charge expenses for individual credits.  Consumer credits are regularly called unstable advances. That implies that you don't need to give resources as insurance or any type of safety as you regularly do while applying for a home loan. Numerous additionally apply for a purchaser advance to 194 CU IDOL SELF LEARNING MATERIAL (SLM)

consolidate and take care of more modest advances with respect to model Visa advances where the interest is higher than a buyer advance.  In the present economy, a great many people as often as possible use it as a component of their everyday shopping propensities. Customer credit emerged to cover the fulfilment of a utilization need of individuals who don't have monetary ability to take care of their expense in real money. This type of admittance to utilization is an advance conceded to buy a decent or administration for individual use in specific terms.  An open-end customer advance, otherwise called rotating credit, is an advance in that the borrower can use for a buys however should repay a base measure of the advance, in addition to intrigue, before a predefined date. Open-end advances are by and large unstable. In the event that a buyer can't take care of the advance in full before the predefined date, interest is charged.  A shut end shopper advance, otherwise called portion credit, is utilized to fund explicit buys. In shut end credits, the customer makes equivalent regularly scheduled instalments throughout some stretch of time. Such advances are for the most part gotten. On the off chance that a buyer can't pay the portion sums, the moneylender can hold onto the resources that were utilized as guarantee. 9.8 KEYWORDS  Advances: Prepayment got for merchandise or administrations to be delivered.  Acceptance: An assent given by the individual on whom a bill of trade is drawn, to pay it when due as per the details of the acknowledgment.  Education Loan: The instructive advance or understudy loan is a decent financial item for the youthful what's more, developing Indian masses.  Home Loan: An advance taken to buy or develop a home.  Liquidity/Marketability: How much a resource or security can be purchased or sold in the market without influencing the resource's cost. 9.9 LEARNING ACTIVITY 1. Find the best agriculture loan schemes among all bank. ___________________________________________________________________________ _________________________________________________________________________ 2. Find what are the documents required for an education loan. 195 CU IDOL SELF LEARNING MATERIAL (SLM)

___________________________________________________________________________ _________________________________________________________________________ 9.10 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What are home loans? 2. Write a short note on personal loans. 3. What are consumer loans? 4. Briefly explain operational aspects of loan. 5. What is open-end loan? Long Questions 1. Explain various types of home loans. 2. Discuss advantages and dis-advantages of home loan. 3. What are the advantages and dis-advantages of personal loans? 4. What are the advantages and dis-advantages of consumer loans? 5. What are the advantages and dis-advantages of loan? B. Multiple Choice Questions 1. Who does bank provides loans for? a. Home b. Car c. Education d. All of these 2. Which currency note has security thread? a. Rs.50/- b. Rs.100/- c. Rs.500/- d. All of these 3. What is the safest place for keeping money? 196 a. A pit dug in the ground CU IDOL SELF LEARNING MATERIAL (SLM)

b. An iron boxes c. Bank d. Money lender 4. What does Gold and silver ornaments should be kept in bank lockers? a. It is safe b. No risk of theft c. Both (a) & (b) d. None of these 5. What currency notes are issued by? a. RBI b. NABARD c. Public sector banks d. Central Government Answers 1-d, 2-d, 3-c, 4-c, 5-a. 9.11 REFERENCES References  Blinder, A, S. (1998). Central Banking in Theory and Practice, Cambridge, MIT Press.  Seshadri, R, K. (1989). The art of Central Banking and Essays, Bombay Bankers Training College RBI.  Shekhar, K,C. (2009). “Banking Theory and Practice”, Vikas Publishing House Pvt. Ltd. Textbooks  Rajesh, R&Sivagnanansithi, T. (2009). “Banking Theory: Law and Practice”. Tata McGraw Hill Publishing Company Ltd.  Decock, M, H. (1997). Central Banking, Fourth edition, New Delhi. UBSPO.  Nigam, B, M. (1997). Banking in India in Eighties. New Delhi. UBSPO Websites 197 CU IDOL SELF LEARNING MATERIAL (SLM)

 http://www.cidap.gov.in/  http://www.preservearticles.com/2012033129405/15-main-functions-of-commercial- banks.html  http://www.fraserfinancial.com// 198 CU IDOL SELF LEARNING MATERIAL (SLM)

UNIT 10 – LOANS PART II STRUCTURE 10.0 Learning Objectives 10.1 Introduction 10.2 Guidelines of Credit Cards 10.3 Procedure and Practice for Loans 10.3.1 Home Loans 10.3.2 Personal Loans 10.3.3 Consumer Loans 10.4 Summary 10.5 Keywords 10.6 Learning Activity 10.7 Unit End Questions 10.8 References 10.0 LEARNING OBJECTIVES After studying this unit, you will be able to  Explainguidelines of credit cards.  Define the home loans.  Explain the procedure and practice for loans.  Analyse the personal loans. 10.1 INTRODUCTION A credit card is an instalment card gave to clients (cardholders) to empower the cardholder to pay a trader for labour and products dependent on the cardholder's accumulated obligation (i.e., guarantee to the card backer to pay them for the sums in addition to the next concurred charges). The card guarantor (generally a bank) makes a spinning record and awards a credit extension to the cardholder, from which the cardholder can get cash for instalment to a trader or as a loan. A credit card is unique in relation to a charge card, which requires the equilibrium to be reimbursed in full every month or toward the finish of every assertion cycle. Conversely, credit cards permit the buyers to construct a proceeding with equilibrium 199 CU IDOL SELF LEARNING MATERIAL (SLM)

of obligation, subject to intrigue being charged. A credit card varies from a charge card likewise in that a credit card regularly includes an outsider element that pays the dealer and is repaid by the purchaser, though a charge card just concedes instalment by the purchaser until a later date. We may not generally have the cash we need to do certain things or to purchase certain things. In such circumstances, people and organizations/firms/establishments go for the alternative of acquiring cash from moneylenders. At the point when a moneylender offers cash to an individual or element with a specific assurance or in view of trust that the beneficiary will reimburse the acquired cash with certain additional advantages, for exa mple, a financing cost, the interaction is called loaning or taking a credit. A credit has three parts – head or the acquired sum, pace of interest and residency or span for which the advance is profited. A large portion has lean toward getting cash from a bank or a believed non-banking financing organization (NBFC) as they are bound to the public authority approaches and are reliable. Loaning is one of the essential monetary results of any bank or NBFC (Non-Banking Financial Company) offers. The term advance alludes to a kind of credit vehicle where an amount of cash is loaned to another gathering in return for future reimbursement of the worth or chief sum. By and large, the bank additionally adds revenue as well as money charges to the chief worth which the borrower should reimburse notwithstanding the chief equilibrium. Advances might be for a particular, once sum, or they might be accessible as a free finished credit extension up to a predefined limit. Advances come in various structures including got, unstable, business, and individual credits. Credits are progressed for various reasons including significant buys, contributing, redesigns, obligation solidification, and undertakings. Credits likewise assist existing organizations with growing their activities. Credits take into account development in the general cash supply in an economy and open up contest by loaning to new organizations. The premium and expenses from advances are an essential wellspring of income for some banks, just as certain retailers using credit offices and charge cards. 10.2 GUIDELINES OF CREDIT CARDS Credit cards can be a monstrous aid when you hit a truly difficult situation monetarily, giving you much required breathing space when you need your money for squeezing costs like lease, food or gas. That being said, charge cards can rapidly go from being an incredible monetary wellbeing net to something that gives you gigantic anguish later in the event that you don't utilize them admirably. Guidelines for Banks 1. Fair practices code Each bank should have a very much reported strategy and a Fair Practices Code for Visa tasks. In March 2005, the IBA has delivered a Fair Practices Code for Mastercard tasks, 200 CU IDOL SELF LEARNING MATERIAL (SLM)