banking by rahul jain by rahul jain next slide. aim of lesson to understand the services provided by...

BankingBanking

By Rahul JainBy Rahul Jain

Next Slide

Aim of LessonAim of Lesson

To understand the services provided To understand the services provided by a bank. by a bank.

Previous Slide Next Slide

BanksBanks

Takes in ones savings

Gives out loans


Interest ratesInterest rates Banks normally talk about two types of Banks normally talk about two types of

interest, that they give people with money interest, that they give people with money in the bank and that they charge people in the bank and that they charge people who have loans from them.who have loans from them.

So banks borrow from savers and give So banks borrow from savers and give them a lower rate of interest, than they them a lower rate of interest, than they charge those who have taken out loans charge those who have taken out loans from them.from them.

This is how they make some of their profits.This is how they make some of their profits.


Parties of a chequeParties of a cheque The person, who writes the cheque is The person, who writes the cheque is

the Drawer.the Drawer. The person, to whom the cheque is The person, to whom the cheque is

written to is called the Payee.written to is called the Payee. The bank that the drawer has their The bank that the drawer has their

account in is called the Drawee.account in is called the Drawee.


Endorsed ChequeEndorsed Cheque One can pay their debts by endorsing One can pay their debts by endorsing

a cheque they have received from a a cheque they have received from a third party, but anyone receiving third party, but anyone receiving such a cheque needs to be careful such a cheque needs to be careful because the third party may not because the third party may not have the funds to pay or the cheque have the funds to pay or the cheque could be stolen.could be stolen.


When will a bank refuse to pay the When will a bank refuse to pay the money stated on the cheque? money stated on the cheque?

If there is insufficient funds in the account.If there is insufficient funds in the account. The drawer has stopped the cheque.The drawer has stopped the cheque. The drawer has died or been declared The drawer has died or been declared

bankrupt.bankrupt. The date on the cheque has not yet The date on the cheque has not yet

arrived.arrived. The cheque is stale, i.e. 6 months has The cheque is stale, i.e. 6 months has

passed since the date on the cheque.passed since the date on the cheque. Words and figures do not agree.Words and figures do not agree.


OverdraftOverdraft One cannot withdraw or write One cannot withdraw or write

cheques for more than they have in cheques for more than they have in their accounts unless they have their accounts unless they have special permission to do so called an special permission to do so called an Overdraft.Overdraft.

Special permission has to be sought Special permission has to be sought to get this privilege.to get this privilege.


Bank DraftBank Draft Sometimes a business is not prepared Sometimes a business is not prepared

to exchange goods for a personal to exchange goods for a personal cheque, so they demand a Bank Draft.cheque, so they demand a Bank Draft.

The buyer must go to the bank, give The buyer must go to the bank, give the bank the money, plus extra called the bank the money, plus extra called commission and in return the bank commission and in return the bank gives the customer a cheque from the gives the customer a cheque from the bank, known as a Bank Draft.bank, known as a Bank Draft.


Credit TransferCredit Transfer When someone puts money into your When someone puts money into your

account on your behalf, it is known as a account on your behalf, it is known as a credit transfer.credit transfer.

You can lodge money from another bank You can lodge money from another bank in this way into your own account.in this way into your own account.

Parents sometimes have to use this Parents sometimes have to use this method to put money into their children’s method to put money into their children’s accounts, if they are away from home and accounts, if they are away from home and are running out of money. are running out of money.


Direct DebitDirect Debit This is where you give permission for This is where you give permission for

your bank to pay different sums of your bank to pay different sums of money from your account on a money from your account on a regular basis to another named regular basis to another named account. account.

For example you can pay your ESB or For example you can pay your ESB or Phone bill in this way.Phone bill in this way.


Pay PathPay Path This is where an employer pays their This is where an employer pays their

employees wages into the employee’s employees wages into the employee’s account, rather than giving them cash.account, rather than giving them cash.

It is safer and cheaper, as the employer It is safer and cheaper, as the employer does not have to accumulate large does not have to accumulate large amounts of cash.amounts of cash.

The employee can take it out of the The employee can take it out of the account using an ATM, 24 hours per day, 7 account using an ATM, 24 hours per day, 7 day a week.day a week.


Bank ChargesBank ChargesIn addition to charging interest on loans In addition to charging interest on loans banks make their profits by charging their banks make their profits by charging their customers for each:customers for each:ChequeChequeATM withdrawalATM withdrawalOverdraft facilityOverdraft facilityCredit TransferCredit TransferPay Path TransactionPay Path TransactionDirect DebitDirect Debit


Bank StatementBank Statement Periodically banks sent out bank Periodically banks sent out bank

statements to current account statements to current account holders showing all the transactions holders showing all the transactions that has taken place through their that has taken place through their account in the last period.account in the last period.


Missing Items on Bank Missing Items on Bank StatementsStatements

However when a customer receives their bank statement, However when a customer receives their bank statement, there can be a difference in what they thought was in there can be a difference in what they thought was in their account and what the bank says they have, due to their account and what the bank says they have, due to one of the following reasons:one of the following reasons:Some cheques being lodged since the statement was Some cheques being lodged since the statement was printedprintedCheques were issued to people , but the people have not Cheques were issued to people , but the people have not yet cashed them.yet cashed them.People paid money into your account by credit transfer People paid money into your account by credit transfer and did not tell you.and did not tell you.You gave permission for Direct Debit .You gave permission for Direct Debit .The bank has charged you bank charges and did not tell The bank has charged you bank charges and did not tell you, although they normally send you a letter telling you you, although they normally send you a letter telling you they are charging you bank charges nowadays.they are charging you bank charges nowadays.


Bank Reconciliation StatementBank Reconciliation Statement It is recommended that all customers It is recommended that all customers

on receiving a bank statement, make on receiving a bank statement, make a list of all the difference that has a list of all the difference that has occurred between, what they thought occurred between, what they thought was in their bank account and what was in their bank account and what the bank says is in their bank account.the bank says is in their bank account.

They then start a Bank Reconciliation They then start a Bank Reconciliation Statement for themselves.Statement for themselves.


Bank Reconciliation Statement Bank Reconciliation Statement continuedcontinued

Balance as per Bank statement Balance as per Bank statement 12001200Add Cheques written not yet presentedAdd Cheques written not yet presented 600600

18001800Minus cheques lodged last week, but not shown Minus cheques lodged last week, but not shown 300300

15001500

Add bank chargesAdd bank charges 2020

15201520Minus Credit Transfer from Aunt MaryMinus Credit Transfer from Aunt Mary 100100

16201620

This figure should be the amount you thought or had in the Bank, if This figure should be the amount you thought or had in the Bank, if not either you or the bank have made a mistake.not either you or the bank have made a mistake.


Traveller’s ChequesTraveller’s Cheques When one is abroad a foreign bank or business When one is abroad a foreign bank or business

will not normally accept one’s normal cheques. will not normally accept one’s normal cheques. Hence one has to buy Traveller’s Cheques in a Hence one has to buy Traveller’s Cheques in a

bank.bank. You tell the bank what value of cheques you You tell the bank what value of cheques you

want in the currency of the country you are want in the currency of the country you are going to and they charge you in euros plus a going to and they charge you in euros plus a commission for themselves.commission for themselves.

You sign the cheques before leaving the bank.You sign the cheques before leaving the bank. When using the cheques in the foreign country, When using the cheques in the foreign country,

you normally have to have your passport and you normally have to have your passport and you sign the cheque again, as evidence that you sign the cheque again, as evidence that you are the person, who bought the cheques.you are the person, who bought the cheques.


Traveller’s Cheques Traveller’s Cheques continuedcontinued

Travellers cheques can be used in shops, hotels Travellers cheques can be used in shops, hotels and banks abroad.and banks abroad.

If traveller’s cheques are stolen when you are If traveller’s cheques are stolen when you are abroad, you must report this and your money will abroad, you must report this and your money will be reimbursed.be reimbursed.

Nowadays rather than use travellers cheques a Nowadays rather than use travellers cheques a lot of people pay money into their Credit Card lot of people pay money into their Credit Card account and then use the credit card abroad and account and then use the credit card abroad and because they have paid the credit card in because they have paid the credit card in advance will not be charged interest, but will advance will not be charged interest, but will normally be charged for the privilege of using normally be charged for the privilege of using their card abroad.their card abroad.


ConclusionConclusion Are Banks useful or not?Are Banks useful or not?

Previous Slide

banking by rahul jain by rahul jain next slide. aim of lesson to understand the services provided by...

Documents