Financial Literacy Unit 5 Banking Services and Types of Banks

Flashcards for reviewing banking services and types of banks.

Banks

Financial institutions that accept deposits and lend funds.

Encourage savings

Encouraging people's saving habits, making money available for productive usage.

Connect savers & borrowers

Banks serve as a link between those who have surplus assets and those who need funds for a variety of commercial purposes.

Facilitate business transactions

Business transactions are facilitated by banks using cheques instead of money for receipts and payments.

Source to funds

Banks make short- and long-term loans and advances to individuals and businesses.

Consultancy

Banks increase their activities while also providing customers with advisory services related to industry, income, trade, and investment.

Bank

A financial institution that can legally accept deposits and make loans.

Types of banks

Retail banks, commercial/corporate banks, and investment banks are all distinct subsets of the banking industry.

Commercial Banks

They are governed by the Banking Regulation Act of 1949, and their business model is profit-oriented.

Public Sector Banks

More than 75% of the country's banking industry is owned and operated by nationalised banks.

Private Sector Banks

Private shareholders own most of the company.

Foreign Banks

Foreign banks with headquarters abroad have branches in India.

Regional Rural Banks

Operate in many Indian states to serve remote customers and loan to rural small farmers.

Small Finance Banks

Reaching out to the unbanked population in distant and underdeveloped locations.

Payments Bank

Accept a limited deposit, which is now capped at Rs. 200,000 per person but could be raised in the future. These banks are unable to provide loans or credit cards.

Co-operative Banks

Governed by the Cooperative Societies Act of 1912, controlled by an elected managing committee, and cater to its members' financial requirements on a mutual basis.

Urban Co-operative Banks

fundamental cooperative banks in urban and semi-urban areas. Small borrowers and enterprises oriented around towns, neighbourhoods, and workplace groupings

State Co-operative Banks

included in the short-term cooperative credit framework.State governments register and regulate these organisations

Retail banking

Everyday banking between people and their banks, typically includes a central office and many branches in various locations.

Savings account

Encourage the general population to save money with a low interest rate.

Deposits

Accept deposits from the general population.

Loans

Banks employ deposits from the public to make loans to businesses and individuals to pay their financial responsibilities.

Investments

Helps banks invest and trade stocks.

Insurance

Insurance products offered to customers either directly or through a partnership known as Bancassurance.

Cards

Credit, debit, and prepaid cards that use secure PINs and OTPs for secure payments.

Forex

Foreign Exchange (forex or FX) is the trading of one currency for another, handled mostly by retail banks.

Payments

Mechanisms to enable the exchange of money, which supports the expansion of trade, aids economic development, and allows for greater flexibility with lower transaction costs and security.

Business Banking

Banking services that are exclusively customised for businesses.

Business financing

Banks provide fixed-term loans, long-term loans, asset-based loans, and short-term loans based on the firm's capital requirements.

Cash management

This includes services like professional management of receivables, payables, and cash on hand.

Wholesale Banking

Sale of banking services to institutional clients such as banks, financial institutions, government agencies, companies, and international trade finance businesses.

Underwriting

A transaction in which banks enter into a contract with a firm to take on the entire or a portion of the offered shares or debentures that are not subscribed for by the public.

Merger and acquisition (M&A)

Merger and acquisition (M&A) consulting services offer advice to other businesses looking to buy, sell, or restructure their businesses

Advisory Services

Wholesale bankers provide tailored solutions to their clients' financial matters.

Wealth Management

A subset of financial services that focuses on the investment needs of wealthy clients.

Agency Services

The bank acts as a go-between for its customers and government and business organisations.

Periodic Payments

Banks make recurring payments on behalf of their customers, such as power bills, water bills, insurance premiums, monthly installments, school fees, and so on.

Periodic Collection

Banks are also paid on a regular basis on behalf of their clients, who include government agencies, individuals, and corporations.

Fund Transfer

Banks assist consumers move payments via checks, drafts, and other methods.

Cheques Negotiation

Banks mediates as an agent between two parties for the clearance of cheques.

Portfolio Management

Portfolio management helps banks trade stocks.

Advisory Services

Banks will occasionally facilitate as trustee, advisor, or agent for their high-profile clients.

Utility Services

Commercial banks provide a wide range of general utility services.

Safe deposit locker

The general public can use a safe deposit box to store their valuables such as securities, gold, silver jewellery, and so on.

Letters of credit

Commercial banks issue letters of credit to traders for credit purchases.

Social welfare programs

Banks also help to implement several government initiatives and participate in a variety of social activities, literacy drives, and awareness campaigns.

Modern services

current services are e-banking services that do not follow the old conventional approach but rather the new current technological way

Private banking

A banking business that provides investing, banking, and other financial services to extremely affluent individuals and their families.

Online banking

Lets clients view their account information online.

Mobile Banking

Uses a mobile phone to check balances, make payments, apply for credit, and other financial tasks.

Priority banking

Privilege Banking, is a new concept in Indian banking which provide specific services to a restricted group of clients known as priority customers

Bank Deposit Accounts

Convenient for people who have excess money and savings to deposit it with a bank.

Saving Bank Account

Individuals who desire to save little amounts of money from their current earnings should open

Fixed Deposit

Repayable after a certain time and best for banks

Current Account

Can be used to withdraw balances at any time.

Recurring Deposit

A recurring deposit (RD) account is one in which the depositor is obligated to deposit money on a regular basis

Public Provident Fund Account (PPF)

Formed in India in 1968 with the purpose of mobilizing small deposits through investment with a return.

National Savings Certificates (NSC)

fixed-income investment instrument that may be obtained from any post office branch.