Banking 1: Basics of Banking Video Lecture | General Knowledge (GK) for LIC AAO Exam (English) - Banking Exams

hello everyone this is uncle Chaudhary
from pit bulls i.com and in this lecture
I will be talking to you about the
banking sector in India first let us try
and understand what banking is all about
so banking can be defined as the
business activity of accepting and
safeguarding the money owned by other
individuals and entities and then
lending out this money in order to earn
a profit so this is a very basic
definition but one thing that you have
to always keep in mind that banks are in
the market to earn a profit now let's
try to understand how these bands on
this profit so there are savers in any
economy these savers include individuals
companies and the government itself
right they deposit their money in two
different banks right and banks are
giving out this money to borrowers right
and the borrower's also include the same
set of people that are the savers so
individuals companies and the government
borrows from the bags the bags have to
pay this money back to the savers with
some interests also borrowers pay back
the banks the principal plus interest
right but there is a difference between
the interest paid by the borrowers to
the banks and the banks to the sabres so
this interest is always greater for
borrowers as compared to savers right so
the difference due to the difference
between these two interest rates banks
make a profit which is also known as
spread so now that you understand how
banks make money let us take a look at
the primary and secondary functions of
bikes primary functions the broadheads
are accepting deposits and granting
loans and advances right so these are
the different accounts which we'll be
talking about in detail in subsequent
slides right and then there are cash
credit bank overdraft No
bill discounting etc right so these are
various instruments or various functions
that the banks are performing now let us
look at the secondary functions of banks
first are of course agency functions
then the utility functions so various
functions under agency function are
funds transfer check collection periodic
payment collection portfolio management
and some other miscellaneous functions
as well as far as utility functions are
concerned we have issue of drafts Locker
underwriting of shares for an exchange
forming our developing project reports
and various social reform welfare
programs as instructed by the Reserve
Bank of India or the government of India
so all these functions are important you
have to basically understand what they
are all about and these are important
for as far as your paper are is
concerned now let us look at the various
different types of accounts that can be
open in any bank in India first and very
popular one is the savings bank account
right as the name suggests the main
objective is to promote savings so far
as saving bank account is concerned
there are there is no restriction on the
number and amount of deposits that you
make in this account so you can put it
any amount of money any number of times
in this account and you will not be
charged for that however there are
limitations as far as withdrawal are
concerned so technically speaking any
bank can limit the number of withdrawals
that you can make in the saving bank
account but in India hardly any bank
does so because of very high level of
competition in the banking industry next
low no loan facilities is provided
against the saving account a special
type of saving bank account is a
no-frills account so in this account you
will not be charged anything by the bank
for opening such an account however you
will not be getting basic facilities
like maybe net banking of debit card
credit card itself as write so there are
no frills attached in this particular
type of saving bank account next type of
bank account is
the current account it is most liquid
account as there is no limit on the
number of transactions so you can amount
any amount of money for any any number
of times and also you can withdraw this
money any number of times without any
restrictions right however there is a
penalty charge if minimum balance is not
maintained in such an account right so
there is a minimum balance account that
you have to keep in this particular
account generally speaking bugs do not
pay any interest on the current account
however in today's market scenario a
very high level of competition some
banks have started paying some minimal
interest or nominal interest on current
account as well right and banks charge a
fee for current accounts right so
current account is most suitable for the
answerís businessman this is so because
businessman would want to deposit a lot
of money a large number of times perhaps
every single day at the end of the day
and also would want to continuously keep
withdrawing money from the account so
that is why they prefer current accounts
generally next type of account is a very
famous one of course is the fixed
deposit or f-d account the amount in
this particular type of account can be
deposited deposited only once
like premature withdrawal is allowed in
some banks without penalty however
certain other banks charge a penalty for
premature withdrawal of NFT this account
is very significant because customers
can avail loans against FDS up to 80 to
90 percent of the value of deposits so
how every function I am sure most of you
will be knowing but you deposit the
money once in an account for a maturity
period of let us say 5 to 10 years right
and after that you can withdraw this
amount which will include your principal
as well as interest as well right next
type of account is the recurring
posit account so in this particular
account you have to make a deposit after
a fixed interval of time so let us say
you put in 1,000 rupees every month or
4000 rupees every quarter right the
interest rate that you earn on a
recurring recurring deposit account is
the same as fixed deposit account right
so either you can fix now you can have a
fixed instalment that is 1,000 rupees
per month or you can have variable
installments as well so 1 month you put
in 1,000 next month you put in 2000 and
so on and so forth right however no
patrols are allowed but some banks do a
now closure of the accounts before the
maturity period these banks generally
charge the penalty rate for closing such
an account so during the course of this
video presentation we saw what banking
is all about secondly how banks earn
money
thirdly we understood the primary and
secondary functions of bands and lastly
we spoke about four very important types
of accounts as far as banking is
concerned thank you very much