Banking Services Video Lecture - Grade 11

banking a bank is a financial
intermediary it is a place where people
deposit their money to keep it safe
this is just one of the functions of a
bank in fact banking is a business by
itself just like any other business bank
also needs to make enough money to pay
the people whom it employs it also needs
enough money for its administrative
expenses besides salary to sustain
itself in the market so let us have a
quick look at various functions that a
bank carries out
the most important function banks
perform is to borrow and lend let us
understand it with an example first and
foremost banks need a lot of people to
deposit their money in it for this
purpose they try to offer services to
build up their client äj--
also they pay an additional amount over
and above the deposits kept with them at
maturity this additional component is
known as interest
but what do banks do with all the money
they accept from its customers small and
big they pull these smaller deposits to
create a large fund which is then lent
to individuals to meet their individual
needs also corporate houses industries
infrastructure manufacturing as well as
service borrow money for their growth
and expansion banks thus mobilize the
savings of people and make funds
available to business to finance their
capital and revenue expenditure these
could be in the form of overdraft cash
credit discounting trade bills and other
form of advances thus banks play a very
important role in the growth of an
economy
a check is the most convenient and
inexpensive medium of exchange on this
front
banks render a very important service to
their customers they collect checks
drawn on other banks
this in turn assists in development of
trade manifold also issue of pay orders
demand draft and mail transfers for a
very nominal fee direct debit of monthly
expenses collection of dividend through
ECS our other services provided by the
bank types of banks there are various
kinds of banks to cater to various
complexities of the economy in general
one central bank this is a banker to the
bank's the central bank of any country
supervises controls and regulates the
activities of all the commercial banks
of a country it also acts as a
government banker it controls and
coordinates currency and credit policies
of any country the Reserve Bank of India
or RBI is the central bank of our
country it was established in April 1935
but it was nationalized in the year 1949
since then it has been playing a very
important role for the growth of the
Indian economy
functions of the Reserve Bank of India
Bank of issue Bank has the sole right to
issue banknotes of all denominations the
distribution of one rupee notes and
coins and small coins all over the
country is undertaken by the Reserve
Bank as agent of the government since
1957 the Reserve Bank of India is
required to maintain gold and foreign
exchange reserves of rupees 200 crores
of which at least rupees 115 crores
should be in gold the system as it
exists today is known as the minimum
reserve system banker to government the
second important function of the Reserve
Bank of India is to act as government
banker agent and advisor it acts as
advisor to the government on all
monetary and banking matters
functions of Reserve Bank of India
bankers Bank and lender of the last
resort the Reserve Bank of India acts as
the bankers bank banks have been asked
to keep cash reserves with the RBI the
minimum cash requirements can be changed
by the Reserve Bank of India if
necessary controller of credit the
Reserve Bank of India is the controller
of credit that is it has the power to
influence the volume of credit created
by banks in India every bank has to get
a license from the Reserve Bank of India
to do banking business within India the
same can be canceled by the RBI if
certain stipulated conditions are not
fulfilled every bank will have to get
the permission of the reserve bank
before it can open a new branch
custodian of foreign reserves the
Reserve Bank of India has the
responsibility to maintain the official
rate of exchange it acts as the
custodian of India's reserve of
international currencies to commercial
banks commercial banks are institutions
dealing in money
these are governed by Indian banking
Regulation Act 1949 banking means
accepting deposits of money from the
public for the purpose of lending or
investment they can be further
classified as public sector banks
government has a major stake in these
social objectives and not only
profitability is emphasized SBI PNB IOB
belong in this category private sector
banks owned managed and controlled by
private promoters and they are free to
operate as per market forces HDFC Bank
ICICI Bank gotit Mahindra Bank and Jammu
and Kashmir Bank belong in this category
three cooperative banks cooperative
banks are governed by the provisions of
state cooperative societies Act they are
meant for providing cheap credit to
their members for specialized banks
specialized banks are foreign exchange
banks industrial banks Development
Bank's export-import banks these banks
provide financial aid to industries
heavy turnkey projects and foreign trade
Ebanks
internet banking or a banking means any
user with a personal computer and a
browser can get connected to his bank's
website to perform any of the virtual
banking functions in internet banking
system the bank has a centralized
database that is web enabled all the
services that the bank has permitted on
the Internet are displayed in the menu
any service can be selected and further
interaction is dictated by the nature of
the service
there are many advantages of online
banking it is convenient it isn't bound
by operational timings there are no
geographical barriers and the services
can be offered at a miniscule cost
through internet banking one can check
transactions at any time of the day and
as many times as required security
precautions related to e banking
customers should never share personal
information like pin numbers passwords
etc with anyone including employees of
the bank it is important that documents
that contain confidential information
are safeguarded to sum up banking plays
a very important role in the development
of a nation no doubt the state of
banking indicates the financial state of
a country