Banker and customer

BANKER CUSTOMER RELATIONSHIP











































PRINCIPLES OF LENDING ‡ SAFETY ‡ LIQUIDITY ‡ PROFITABLE ‡ PURPOSE ‡ DIVERSIFICATION OF RISK ‡ SECURITY

SAFETY THE REPAYMENT DEPENDS UPON : i) CAPACITY TO PAY ii) WILLINGNESS TO PAY iii) INCOME GENERATION THE THREE µC¶s ARE CHARACTER, CAPACITY AND CAPITAL THE THREE µR¶s ARE RELIABLITY,RESPONSIBILITY AND RESOURCES

LIQUIDITY 70% OF THE DEPOSITS ARE DEPOSITS REPAYABLE WITHIN ONE YEAR.SO THE AMOUNT LENT IS TO BE AVAILABLE FOR REPAYMENT OF DEPOSITS. LIQUIDITY IS THE NATURE OF THE ASSEST TO GET COVERTED INTO CASH.

PROFITABILITY IN ORDER TO CASRRY ON THE OPERATIONS, TO RUN THWE MACHINERY OF BUSINESS AND AT THE END TO EARN SOMETHING OUT OF THE BUSINESS ACTIVITY IN RETURN FOR THE EFFORTS PUT IN PROFIT IS AIMED AT. IN VIEW OF VARIOUS LENDING ACTIVITIES AND VARIOUS OBLIGATIONS , A CLEAR CUT PATH IS ENVISIGED KEEPING IN VIEW THE PROFIT FACTOR.

PURPOSE WHILE LENDING THE PURPOSE OF THE ACTIVITY FOR WHICH THE LOAN IS EXTENDED IS TO BE GIVEN PRIORITY. LOANS FOR UNDESIREABLE AND SPECULATIVE PURPOSES CANNOT BE GRANTED.

DIVERSIFICATION OF RISK SHOULD NOT LAY ALL THE EGGS IN ONE BASKET. THE LOAN PORTFOLIO SHOULD BE DISTRUBUTED TO DIFFERENT SECTORS, DIFFERENT GEOGRAPHICAL AREAS AND DIFFERENT SPECTRUM OF PEOPLE.

SECURITY SINCE THE FUNDS THAT ARE LENT TO PUBLIC ARE THE BORROWED FUNDS AND SINCE THEY ARE TO BE PAID ON DEMAND OR OTHERWISE, THE MAIN PRIORITY OF THE BANKER IS THE RELISABILITY OF THE FUNDS LENT. IN ORDER TO SECURE THE FUNDS, IN CASE OF ANY EVENTUALITY, CERTAIN PRECAUTIONS AS REGARDS TO SECURITY ARE TAKEN. THEY ARE KEEP IN MARGIN, RELISABILITY OF SECURITY, ADEQUACY OF THE SECURITY AND FREE FROM ANY ENCUMBERENCE.

CREDIT CARDS A CREDIT CARD IS BASICALLY A PAYMENT MECHANISM WHICH ALLOWS THE HOLDER OF THE CARD TO MAKE PURCHASES WITH OUT ANY IMMIDIET CASH PAYMENT. THE ISSUING BANK MAKES PAYMENT TO THE MERCHANT ESTABLISHMENTS THE CREDIT IS EXTENDED BY THE MERCHANT ESTABLISHMENTS ON THE GUARENTEE OF ISSUING BANK SERVICE CHARGES AND INTEREST ARE CHAGED ON THE OVERDUE BALANCE TO THE CARD HOLDER

CREDIT CARDS PARTYS TO THE OPERATION OF CREDIT CARD: 1) THE CREDIT CARD HOLDER 2) THE ISSUING BANK 3) MERCHANT ESTABLISHMENT 4) PAYMENT BRAND PAYMENT BRAND IS THE ONE WHICH PROVIDES PAYMENT PRODUCTS AND TECHNOLOGY ± VISA AND MASTERS ETC. THE BANK ISSUING THE CARD IS MEMBER OF THE PAYMENT BRAND. THE PAYMENT BRAND DOES NOT PROVIDE ANY SERVICES OR ISSUE CARDS TO THE CUSTOMERS.

CREDIT CARDS ADVANTAGES : 1) PURCHASE OF GOODS UPTO THE LIMIT OF CARD CAN BE MADE. 2) HAS A PERIOD OF INTEREST FREE CREDIT 3) CAN DRAW CASH TO A LIMIT FROM BRANCHES OR ATM. DISADVANTAGES: 1) TENDS TO SPEND MORE 2) FRAUDS DUE TO LOSS OF CARDS

DEBIT CARDS ‡ IN CASE OF CREDIT CARDS , THE CARD HOLDER MAKES PAYMENT AT A LATER POINT OF TIME. ‡ IN CASE OF DEBIT CARDS, THE BALANCE IN THE DEPOSIT ACCOUNT OF THE CARD HOLDER IS RUN DOWN. ‡ IN CASE OF DEBIT CARD ONES OWN MONEY IN HIS BANK ACCOUNT IS USED. ‡ IF THE CARD IS LOST OR STOLEN THE ENTIRE BALANCE IN THE ACCOUNT IS SUSCEPTIBLE TO BE DRAWN.

ATM AUTOMATIC TELLER MACHINE- THE ATM CAME INTO BEING ON THE RECOMMENDATIONS OF DR. C. RANGARAJAN¶S COMMITTEE. THE STAND ALONE ATM FIRST APPEARED IN INDIA IN EARLY 1990¶S. THE CUSTOMER IS GIVEN THE PERSONAL IDENTIFICATION NUMBER ± PIN. THE CUSTOMER CAN DRAW CASH FROM THE MACHINE ( ATM) BY PUNCHING THE PIN AND OTHER REQUIRED DETAILS.

ATM ‡ BENEFITS OF THE ATM FOR THE CUSTOMER 1) 24X7-AVAILABILITY 2) LESS TIME FOR TRANSACTION 3) PRIVACY OF TRANSACTION BENEFITS FOR THE BANK 1) COST OF SETTING UP OF ATM IS LOWER THAN SETTING UP A BRANCH 2) LESS MANPOWER 3) LESS HASSELS IN HANDLING CASH 4) ENABLES BANK TO DISPLAY PRODUCTS ON ATM SCREENS- PUBLICITY

ATM ‡ ATM MODELS 1) ONLINE-THE ATM IS CONNECTED TO THE BANK¶S DATABASE AND PROVIDES ONLINE REAL TIME ACCESS TO THE CUSTOMER ACCOUNT. THE LIMIT IS MONITORED BY ATM¶S SWITCH CENTRE 2) OFFLINE-THE ATM IS NOT CONNECTED TO BANK¶S DATABASE.WITHDRAWALS ARE PERMITTED TO A PRE-FIXED LIMIT ONLY. 3) STAND ALONE- NOT CONNECTED TO ANY ATM NETWORK. IN THIS CASE TRANSACTIONS AT A AN ATM ARE RESTRICTED TO CUSTOMERS OF THE ATM BRANCH AND ITS LINK BRANCHES.

ATM ‡ NETWORKING OF ATMS BANKS JOINING TOGETHER TO SHARE THEIR ATM NETWORKS.THEY JOIN IN MANY SMALL CLUSTERS. THERE ARE MANY SUCH ATM CLUSTERS IN INDIA. IN ORDER TO FECILITATE INTER-OPERABILITY OF THESE CLUSTERS AT NATIONAL LEVEL THE PROCESS OF SETTING UP NATIONAL FINANCIAL SWITCH FOR APEX LEVEL CONNECTIVITY OF SWITCHES OF DIFFERENT BANKS INITIATED. IT HAD A BEGINNING IN 1997 BY IBA IN MUMBAI CONNECTING THE MEMBER BANKS ATM IS CALLED SHARED PAYMENT NETWORK SYSTEMS.

ATM ‡ COMPONENTS OF ATM 1) VIDEO DISPLAY MONITOR 2) KEYBOARD/ KEYPAD 3) TOUCH SCREEN 4) SLOTS FOR CARD READER, CASH DISPENSER ETC.

ATM ‡ BIOMETRIC ATMS PHYSICAL, BIOLOGICAL ATTRIBUTES ARE USED TO PROCESS THE VARASITY OF TRANSACTION INSTEAD OF USING A PIN. THE ATTRIBUTES THAT ARE CONSIDERED FOR IDENTIFICATION ACT AS PIN-A KIND OF PASSWORD.

Payment of cheques ‡ Section 31 NI ± the banker is supposed and obliged statutorily to pay the cheques of his customer if it is other wise in order, on demand. What is a cheque? Section 6 of NI ±it is a bill of exchange drawn on a specified banker not expressed to be payable otherwise on demand. bill of exchange-section 5of NI-a bill of exchange is a instrument in writing containing an unconditional order signed by the maker, directing a certain person ,to pay ascertain sum of money only ,to or to the order of a certain person or to the bearer of the instrument.









PAYMENT OF CHEQUES ‡ when can a banker refuse payment ? ‡ 1)-notice from the customer countermanding payment ‡ 2)-notice of customer¶s death ‡ 3)-notice of customer¶s insanity ‡ 4)-notice of customer¶s bankruptcy. ‡ 5)-doubts regarding the person presenting the cheque. ‡ 6)-notice of attachment. ‡ 7)-notice of garnishee order