FINANCIAL LITERACY

Module 3– Bank, Types of Banks, Banking operations

SERVICES OFFERED BY BANKS
 WHAT IS A BANK?

B - Business
A - Accepting Deposit It borrows money from customers
A Bank is a business that borrows
N - Negotiation called Depositors. It lends money to
and lends money.
K - Keeping the confidentiality of other customers called Borrowers.
Customers’ Account
FINANCIAL INSTITUTION OF INDIA
❖ The first banking institution in India was the Bank of Bengal.
❖ The Government of India started the Imperial Bank of India in 1921 and
nationalized all large banks in 1969.
❖ State Bank of India is the largest bank in India.
 TYPES OF BANKS

❖ The Reserve Bank of India (RBI) is the highest banking regulatory authority in India. It was
established by the RBI Act, 1934. Indian banks are basically divided into two groups:

1) Scheduled Banks
2) Non-Scheduled Banks

❖ Banks which have been included in the second schedule of the RBI Act, 1934 are called the
Scheduled Banks, like Public & Private banks.

❖ Non-Scheduled Banks are not included in the second schedule of the RBI Act,1934. For
example: Capital Local Area Bank Ltd., Phagwara
 TYPES OF SCHEDULED BANKS IN INDIA

Given below are the types of Scheduled Banks in India:-

• Public sector banks like Bank of Baroda, Bank of India, Canara
Bank etc.
• Private sector banks like Axis Bank, ICICI Bank, HDFC Bank
etc.
• Foreign banks like Bank of America, Barclays Bank etc.
• Co-operative banks like Andhra Pradesh State Co- operative
Bank etc.
• Regional rural banks like Kaveri Gramin Bank, Punjab Gramin
Bank etc.
 BANKING OPERATIONS
Banks perform various types of transactions and activities to support their banking business. These transactions may
include making or accepting payments, trading, clearing and settlement of accounts, and custody etc.
The key operational activities are listed below:

Acceptance Lending of Clearing of Remittance

of Deposits Funds Cheques of Funds

Lockers & Overseas

Online Credit &
Safe Banking
Banking Debit Cards
Deposits Services

Wealth Investment
Management Banking
 BANKING OPERATIONS

Acceptance of Deposits- People can deposit funds in their bank account and bans pay interest on that deposit.

Lending of Funds- If an account holder needs money over and above his savings for buying a house, a car or to open a new
business, then bank also lends money to him. This is called a loan. An interest has to be paid for the loan. The interest is the
amount paid by the borrower to the bank for availing the loan and is usually a fixed percentage of the amount borrowed.

Clearing of Cheques- Cheque clearing is simply a process whereby funds move from one account to another to settle
a payment. The amount is usually credited to the bank account of deposit and an equivalent amount debited at
the bank from which it is drawn.
 BANKING OPERATIONS

Lockers & Safe Deposits - Bank lockers & safes are considered to be the
safest place to store valuables like jewellery, important documents,
certificates, or the things precious to you.

Online Banking - Online banking, also known as internet banking or web

banking, is an electronic payment system that enables customers of a bank
to conduct a range of financial transactions through its website.

Credit & Debit Cards- Debit cards allow you to spend money by
drawing on funds you have deposited at the bank. Credit cards allow you
to borrow money from the card issuer up to a certain limit in order to
purchase items or withdraw cash.
BANKING OPERATIONS

❖ Wealth Management : Wealth management is

designed specifically to help high-net-worth clients
continue to grow their wealth, protect their assets and
reduce their financial risks

❖ Investment Banking: Investment banking is a special

segment of banking operation that helps individuals or
organizations raise capital and provide financial
consultancy services to them.

❖ The RBI is responsible for controlling the overall

operations of the banks.
 HOW TO OPEN A BANK ACCOUNT

Provide your information,

Visit the bank or its
Choose an account type. documents and fill the
website
bank form.

After verification of
Submit the form and documents, you will be
You will receive a Pay-in
necessary documents like issued a Unique Account
Slip, Cheque book and
address proof, identity Number and you will
Passbook .
proof. become an account
holder.

You will also be issued an

Internet Banking
username & password for
Online Banking.
 ACCOUNT KIT

The account kit is a small comprehensive kit which every bank gives to its new customer after he/she
opens a bank account with them. An account kit normally contains:

Welcome letter Debit card Debit card PIN

Code of Bank’s
Cheque Book Pass Book commitment to
customers
CHEQUE
PASS BOOK
PAY-IN SLIP
 21st Century Norm-Internet Banking

Internet Banking, also known as net- This service gives online access to almost
banking or online banking, is an every banking service, traditionally
electronic payment system that enables available through a local branch including
the customer of a bank or a financial fund transfers, deposits, and online bill
institution to make financial or non- payments to the customers.
financial transactions online via the
internet.
 PROS OF INTERNET BANKING

Convenience; the internet is open 24/7.

Mobile capability: bank on-the-go via your smart phone or laptop.

Environmentally friendly: saves paper as you receive all your correspondence by email and text.

Saves time: bank whenever and wherever you want.

Saves money: e-banks often offer better savings and mortgage interest rates.
Several layers of security: password plus phone ID required to manage account
 CONS OF INTERNET BANKING

An uninterrupted internet Phishing scams; be wary of

No face-to-face contact; unexpected emails asking
connection is a foremost this is a more impersonal
requirement to use internet for password and other
service bank account details.
banking services

Every internet banking

No matter how much
account requires the
precautions banks take to If the password is revealed
password to be entered in
provide a secure network, to others, they may utilise
order to access the
online banking transactions the information to devise
services. Therefore, the
are still susceptible to some fraud
password plays a key role
hackers.
in maintaining integrity.
 DO’s

Always check the URL

Change your password
Keep your user-id and Memorize your user-id address on the address bar
assigned by the bank
password confidential and and password and do not of internet browser. This
immediately on accessing
do not reveal them to record them anywhere should begin with "https";
Internet Banking services
anyone else. else. the letter 's' at the end of
for the first time.
"https" means 'secure.

If you have to share your

Clear cache and temporary
personal computer or
files stored in the memory
laptop with anyone else or Clear the browsing
as they may contain
send it for history.
account numbers and
repair/maintenance, you
other sensitive information
should:
 Install a comprehensive firewall/antivirus/anti-spyware software package on your computer & update the same on
Install regular basis. These software suites help detect and remove viruses and spyware that can steal vital information.

Use the virtual keyboard (VKB) wherever available to prevent key-logger compromises as such malware can track
Use keystrokes in a physical keyboard.

Clear Always clear your browser cache after each session.

Log off Log off completely from your online banking website, close the browser and log off PC, when not in use

Register Register for SMS alerts to keep track of transactions in your account
 Don'ts
Don’t use link in an email message to log in. For logging in internet banking always use official website.

Don’t let any unauthorized person have access to your computer or leave the computer unattended while using Internet
Banking Services.

Don’t disclose/reveal your personal or confidential information to anyone over email/SMS/phone call.

Avoid accessing Internet banking accounts from cyber cafes or shared PCs.

Do not at any time provide to any person, with any details of the accounts held by you with the Bank including, IPIN,
account number, Card numbers and PIN which is assigned to you by the Bank from time to time.

Never use the ‘Remember Password’ feature provided by browsers to save your net banking password.
01 02 03 04
Don’t use the same user ID Don’t use mobile devices to Don’t open attachment or Don’t leave your internet
and password for financial store User ID, password install free software from banking session
accounts of other sites. and other account related unknown sources, this may unattended. Always logout
sensitive details. expose your computer and completely. Make sure: a)
information on it to Application is logged out by
unauthorized access. clicking on logout button. b)
All the browser windows are
closed.