BANKS and BANKINGUncategorized
Banks and Banking, the terms, we all are very familiar with, especially after govt run different plans for financial inclusions and transfer or credit of government subsidy directly to the beneficiary accounts. However, it is very hard to say how deeply we actually understand these terms of Banks and Banking. We all are much aware as Banks are the first place to reach for every person for performing the financial dealings. Any country in the world cannot survive without strong financial bodies. In, India, governments are mostly dependent on these financial institutions for collecting taxes (GST, Income tax etc.) , transfer of salaries of employees and also for implementing different govt schemes of People benefits like Jan Dhan Yojana, DBT Schemes, Mudra Yojana etc.
Banks are the basic entity which is a must thing for everyone in now days. However its use is less or more depends on different people, like it may be very less for a house wife who use it for doing saving, depositing children’s fee, using locker facility or it may be excessive for a business entity who use to transfer of funds on daily basis to run their business properly. Or one can say now a days, it is mandatory for any business to run as business need different daily financial transaction. People need it from investment to security, from interest earning to taking loan for business, vehicle, house purchase etc, transfer of salaries to do other business transaction.
Working of A Bank: Basically Banks are made for performing two duties:
- Depositing or taking money from the public or government.
- Lending money to the public or government.
However, in these days, banks are performing a lot more duties than they are actually meant for. For e.g. they are selling Third Party Products like insurance, mutual funds etc. for fixed commission income. But basically banks are made for performing above two functions only.
These days, we have following types of banking institutions which are allowed to deal with general public:
- Public Sector Banks (Where govt share is more than 51%) (SBI, BOB, PNB, Canara, Indian)
- Private Sector Bank (Old) (Federal, Karur, LVB, Nainital)
- Private Sector Banks (New) (HDFC, ICICI, YES, Axis, Kotak, IDFC).
- Cooperative Banks
- Payment Banks.
Banking Products from point of view of Saving/investment:
Deposit Products : Saving Bank Accounts, Term Deposit Receipts (RD/RIDS), Flexi /Gold or Diamond Account, Tax Saving Fixed Deposit Receipts etc.
Investment Products: Mutual Funds, PPF and Other Scheme.
Other Products: Lockers, Cash Currency Change, Insurance, NSC (not in Banks).
Banking Products from point of view of Business:
Transaction Products : Current Deposit Account, Gold Accounts, Salaried Account of Employees.
Loans Products: 1. For General People : Housing, Vehicle, Personal, Education.
2. For Business People : Cash Credit, Overdraft, Machinery Loan, Transporter, MSME & other Business Loan), New Schemes (Mudra, Stand up, Start Up), Bank Guarantee/Letter of Credit, Foreign remittance, Trading in stock market etc.
Banking Products from point of view of Business Government Point:
Collection of direct and indirect taxes e.g. Goods and Service Tax, Income Tax, Road Taxes etc, payment of salaries to the government employees, transfer of subsidy and other financial benefits under social schemes of the government to the people.