Pls....explain this
Dear Student,
Explanation to the above functions of banks are as follows:
1 Transferring of funds- Banks help to transfer of funds safely and conveniently from one place to another with help of various credit instruments. like cheques, drafts etc.
2.Providing cheque facility- Banks provide a convenient system of payment through cheques. It is convenient, cheap and safe mode of payment. It has reduced the risk of carrying cash.
3. Discounting of Bills of Exchange- A bill of exchange is drawn by creditor on debtor stating the amount of debt and the date when it becomes payable. However if a creditor needs money before maturity of bill he can get it discount from banks. The banks deduct its commission and make payment to the creditor and on maturirty of bill the bank gets payment from the debtor.. Discounting is one form of bank lending. In case of dishonour bank recover amount from customer.
4. Execution of standing instruction- The banks collect funds through cheques, drafts and other instruments on behalf of customers and make and collect payments like insurance premium, dividend, taxes etc on behalf of customers. Banks also act as trustee and executor for example they keep wills of customers and execute them after their death.
5.Underwriting- Banks act as agent for their customers for buying and selling of securities. They act as underwriters for company by providing them investment functions and also act as banker for new issue of securities.
6.RTGS (Real Time Gross Settlement)- It is an online system of inter bank transfer of funds of amount involving Rs.2 Lacs or more. In this the transaction is settled as soon as it is processed. It is a fastest system of transfer of funds. This facility is provided only by CBS enabled bank branches.
7.NEFT- National Electronic Funds Transfer-It is a system of inter bank transfer of funds electronically. To be a part of NEFT funds transfer network a bank branch must be NEFT enabled.These transactions are settled in batches. There is no minimum transaction prescribed for NEFT transactions.
8.Bank Draft- It is a type of cheque drawn by a bank either on its own branch or in another bank in favour of the person named in draft. It is payable on demand. There is no risk of dishonour of draft. The issuing bank charge some commission for draft.
9.Cash Credit- In this the bank opens an account in name of borrower and allows him to withdraw the amount as and when required. The bank charges interest on actual amount withdrawn from bank.
Regards
Explanation to the above functions of banks are as follows:
1 Transferring of funds- Banks help to transfer of funds safely and conveniently from one place to another with help of various credit instruments. like cheques, drafts etc.
2.Providing cheque facility- Banks provide a convenient system of payment through cheques. It is convenient, cheap and safe mode of payment. It has reduced the risk of carrying cash.
3. Discounting of Bills of Exchange- A bill of exchange is drawn by creditor on debtor stating the amount of debt and the date when it becomes payable. However if a creditor needs money before maturity of bill he can get it discount from banks. The banks deduct its commission and make payment to the creditor and on maturirty of bill the bank gets payment from the debtor.. Discounting is one form of bank lending. In case of dishonour bank recover amount from customer.
4. Execution of standing instruction- The banks collect funds through cheques, drafts and other instruments on behalf of customers and make and collect payments like insurance premium, dividend, taxes etc on behalf of customers. Banks also act as trustee and executor for example they keep wills of customers and execute them after their death.
5.Underwriting- Banks act as agent for their customers for buying and selling of securities. They act as underwriters for company by providing them investment functions and also act as banker for new issue of securities.
6.RTGS (Real Time Gross Settlement)- It is an online system of inter bank transfer of funds of amount involving Rs.2 Lacs or more. In this the transaction is settled as soon as it is processed. It is a fastest system of transfer of funds. This facility is provided only by CBS enabled bank branches.
7.NEFT- National Electronic Funds Transfer-It is a system of inter bank transfer of funds electronically. To be a part of NEFT funds transfer network a bank branch must be NEFT enabled.These transactions are settled in batches. There is no minimum transaction prescribed for NEFT transactions.
8.Bank Draft- It is a type of cheque drawn by a bank either on its own branch or in another bank in favour of the person named in draft. It is payable on demand. There is no risk of dishonour of draft. The issuing bank charge some commission for draft.
9.Cash Credit- In this the bank opens an account in name of borrower and allows him to withdraw the amount as and when required. The bank charges interest on actual amount withdrawn from bank.
Regards