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Banks

Banks play an important role in the field of


trade, commerce and industry.
They promote and mobilize savings by
providing safety, confidentiality and attractive
rate of interest.
Banks inspire confidence in people and help in
creating banking habits in them.
Bank services
Primary services: borrowing and lending of
money
Secondary services( or ancillary services):
Services offered by banks to help the customers
Such activities include collection of cheques,
dividend, warrants, etc. on behalf of customers as
well as effecting transfer of funds, remittances by
mail and telegram in order to attract customers
and make banking services effective.
Category of ancillary
services
Rendered to banks own customers

Available to general public
Services of bank to its
customers
Some of functions in this category are
enumerated below:
(a) Dealing in Bills of Exchange, Promissory Notes, Hundies and
Drafts.
(b) Issuing letter of credit, Travellers cheques and Circular notes.
(c) Buying, selling and dealing in bullion as well as foreign
exchange and foreign bank notes.
(d) Acting as agent for clients, buying and selling shares and
debentures, and acting as underwriter.
(e) Collection and remittance of money and extending guarantee
against loans raised by customers.
Services to the General
Public
(i) Providing facility of lockers for the safe custody of
valuables.
(ii) Financial assistance for the establishment of trusts,
association, clubs and charitable institutions.
(iii) Performing certain functions as are incidental or
conducive to the promotion and advancement of trade and
commerce.
(iv) extending financial help to the weaker sections of society
for self-employment.
(v) Issue of bank drafts, gift-cheques, banker's cheques, etc.
(vi) Providing financial assistance to the physically handicaped
to engage in gainful occupation and earn their livelihood.
Types of ancillary services
Remittance of funds
Safe custody of valuables
Safe deposit vaults
Merchant banking
Bid bonds and performance guarantees
Credit/Debit cards
Standing instruction
Gift cheques
Teller system
Stock invest


Remittance
With a network of their branches spread over
the entire country banks are eminently
suitable institutions for transfer of funds from
one place to another
Mail transfers
Telegraphic transefer
Banks Drafts
Traveller cheques


Safe custody of valuables
Banks render a valuable service by accepting
the valuables of their customers for safety
custody:
-By accepting the valuables
-By hiring out safe deposit vaults to the
customer
-By facility of nomination

Merchant Banking
Merchant banking comprises in rendering services of non-
banking nature to the industrial and business houses.
Divisions of merchant banking services
-project counseling
-preparation of feasibility Report
-term finances
-Obtaining government consent
-Working capital
-As managers to new issues
-Arranges foreign currency
-Joint venture abroad



Bid Bonds and Performance
Guarantees
Banks render valuable services to their customers
by providing guarantees on their behalf in favour
of third parties, specially the government
departments and foreign importers.
The bid bonds and performance guarantees are
also being issued in case of export of capital
goods and overseas construction contracts.
Dealing in Bills of Exchange, Promissory Notes,
letter of credit
Credit Cards Services
It is an instrument which provides
instantaneous credit facility to its holder
Called Plastic money
Parties involved
-the issuing bank
-the card holder
-the member establishments
Debit Cards Facility
Provides same facility as the credit card but
instead of providing credit facility it debits
money from the users account.
Standing Instructions
Payment of life insurance premium of L.I.C.
Payment of periodic membership fee, subscription to
clubs, libraries, professional associations or charitable
institutions.
Payment of other bills of the customers
Transfer of specified amounts from one account of the
customer to another account
Collection of dividends on behalf of customers
Collection of pension from government deposits
Collection of interest on government securities held in
safe custody.
Gift cheques
Banks issue gift cheques to the member of the
public to enable them to present a specified
amount to some friend or relation
These are payable on demand hence the
payee can claim the money at any branch of
the issuing bank
Teller System
Generally used to reduce the effort in
presenting a cheque for payments in terms of
number of persons involved and time
duration.
Generally a cashier is designated as Teller
who handles cash up to specified amounts
immediately on presentation of cheques etc.
Stock Invest
Reserve Bank of India has permitted 56 banks to issue
Stock Invest
Rule in stock invest:
1. Name of the capital issuing company has to be filled before
delivering to the applicant
2. Restricted to individual investors and mutual funds
3. Issued against term deposits and credit balances in saving and
current accounts
4. Effective ceiling of Rs.50000 per individual per capital (not
applicable for mutual funds)
5. Original stock invest should be enclosed
6. Banks lien on deposits account in respect of unused stock invest
shall not be lifted before 4 months

Conclusion
All these ancillary services are providing
competitive advantage to the banks in terms
of customer satisfaction and also customer
loyalty
But all these implementation requires a lot of
patience and conscious efforts.