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Title: Banking and Finance - Introduction to Banking and Banking Products
Description: 20 Pages - 1st year Types of Banking Services - 1) Fee-based Banking Services 2) Fund-based Banking Services Cash Management Services Merchant Banking Foreign Exchange Services Lease Finance Services

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Introduction to Banking and Banking
Products

TYPES OF BANKING SERVICES
A -FEE BASED BANKING SERVICES
Fee-based banking services are those for which banks in India charge a specific fee to customers
...
Instead, they are additional services that can help customers in various ways
...
Demand Drafts and Pay Orders: These are used to make payments to someone when you don't want to use
cash or a cheque
...

2
...
Customers pay an annual fee for using these lockers
...
Forex Services: When you need foreign currency for travel or business, banks provide foreign exchange
services
...


5
...
There may also be fees for late payments, exceeding credit limits, or using the card
abroad
...
Financial Advisory Services: Banks offer advice on investments, insurance, and other financial matters
...

7
...

8
...
This
fee is usually a percentage of the loan amount
...


B-FUND BASED SERVICES
Fund-based banking services are those where banks in India provide money directly to customers
...
Here’s a simple
explanation of some common fund-based banking services:
1
...
Borrowers repay the loan amount with interest over a specified period
...
Overdraft Facility: This service allows customers to withdraw more money than they have in their account,
up to a certain limit
...

3
...
Banks allow businesses to
borrow money up to a certain limit against their inventory or receivables
...


4
...
The borrowed amount needs to be repaid within a certain period, usually with interest if not paid in
full by the due date
...
Term Deposits: Also known as fixed deposits, these are investment products where customers deposit a
lump sum of money for a fixed period
...

6
...
Banks pay interest on
savings accounts (usually lower) and may charge fees for current accounts
...
Mutual Funds and Investment Products: Some banks offer mutual funds and other investment products
where they pool money from various customers to invest in stocks, bonds, or other securities
...

These fund-based services help banks earn interest and other forms of income, while providing customers
with the funds they need for various purposes
...
These services ensure that companies can manage their incoming and outgoing cash smoothly
...
Collection Services: Banks help businesses collect payments from customers quickly and efficiently
...

- Cheques and Demand Drafts: Collecting cheques and demand drafts from customers and ensuring they are
deposited into the business’s account
...
Disbursement Services: Banks assist businesses in making payments to suppliers, employees, and other
parties
...

- Electronic Payments: Using methods like NEFT, RTGS, IMPS, or issuing cheques and demand drafts
...
Liquidity Management: Banks help businesses manage their cash flow by providing tools to monitor and
optimize the use of available funds
...

- Zero Balance Accounts (ZBA): Accounts that automatically transfer funds to and from a central account,
maintaining a zero balance at the end of the day
...
Reconciliation Services: Banks provide detailed reports and tools to help businesses match their
transactions with bank statements
...

5
...


6
...

- Vault Services: Providing secure storage for cash and valuables
...
E-commerce and Payment Gateway Services: Helping businesses collect online payments from customers
through various digital channels like credit/debit cards, UPI, and net banking
...


MERCHANT BANKING
Merchant banking services in India refer to a suite of financial services that banks and financial institutions
offer to corporations and high-net-worth individuals
...
Project Financing
- Assessment and Funding: Merchant banks assess the viability of projects and provide funding through
loans or equity investments
...

2
...

- Risk Management: Undertaking the risk by buying securities from the issuer and selling them to the
public
...
Advisory Services
- Corporate Restructuring: Advising on mergers, acquisitions, and demergers
...

4
...

- Private Placements: Facilitating the sale of securities to a select group of investors
...
Loan Syndication
- Arranging Loans: Coordinating with multiple lenders to provide large loans to clients
...

6
...

- Asset Management: Managing investment portfolios on behalf of clients
...
Credit Syndication
- Coordination: Arranging credit facilities from multiple lenders
...

8
...

- Advisory: Offering strategic advice and mentorship to fledgling companies
...
Corporate Counseling
- Business Strategy: Advising on business planning, growth strategies, and market entry
...

10
...

- Risk Management: Offering hedging solutions to manage currency risk
...
Leasing and Hire Purchase
- Asset Financing: Providing leasing and hire purchase services for acquiring machinery, equipment, and
vehicles
...

Regulatory Framework
Merchant banking activities in India are regulated by the Securities and Exchange Board of India (SEBI)
...

Leading Merchant Banks in India
- ICICI Bank
- HDFC Bank
- Kotak Mahindra Bank
- State Bank of India (SBI)
- Axis Bank
- IDBI Bank
These banks offer a comprehensive range of services to support the financial and strategic needs of their
clients
...
These services include a range of offerings that cater to individuals, businesses, and
institutional clients dealing with foreign currencies
...
Currency Exchange
- Buying and Selling Foreign Currency: Banks buy and sell foreign currency notes for various purposes
such as travel, education, and medical expenses
...

2
...

- Secure Payments: Ensuring secure and reliable international payments
...
Wire Transfers and Remittances
- SWIFT Transfers: Facilitating international wire transfers through the SWIFT network for quick and
secure fund transfers
...

4
...

- Foreign Currency Non-Resident (FCNR) Accounts: Offering FCNR accounts for Non-Resident Indians
(NRIs) to hold their deposits in foreign currencies
...
Trade Finance Services
- Letters of Credit (LCs): Issuing and advising letters of credit to ensure payment security in international
trade
...

- Bill Discounting: Discounting export bills to provide immediate liquidity to exporters
...
Forex Cards
- Prepaid Travel Cards: Issuing prepaid forex travel cards loaded with multiple foreign currencies for
hassle-free international travel
...

7
...

- Advisory Services: Providing advisory services to businesses on managing currency risk and optimizing
forex transactions
...
Forex Derivatives
- Forward Contracts: Entering into forward contracts to lock in exchange rates for future transactions
...


9
...

- Import Financing: Facilitating import financing through buyer’s credit and supplier’s credit arrangements
...
Regulatory Compliance and Documentation
- Adherence to FEMA: Ensuring compliance with the Foreign Exchange Management Act (FEMA) and
other regulatory requirements
...


LEASE FINANCE SERVICES
Lease finance services provided by banks in India are designed to help businesses and individuals acquire
assets without the need for outright purchase
...
Here's an overview of the primary lease finance services offered by banks in
India:
1
...

- Maintenance and Risk: The bank (lessor) retains ownership and responsibility for maintenance, insurance,
and obsolescence risks
...
Finance Lease (Capital Lease)
- Long-term Leasing: Involves leasing assets for most of their useful life, with the lessee enjoying the
benefits and risks of ownership
...


3
...

- Cash Flow Management: This helps improve liquidity and manage cash flows effectively
...
Leveraged Lease
- Structured Finance: Involves multiple parties, including the lessee, lessor, and a lender, to finance the
acquisition of high-value assets
...

5
...

- Customization: Tailored lease agreements to suit the cash flow and usage requirements of businesses
...
Vehicle Leasing
- Fleet Management: Leasing options for corporate fleets, including cars, trucks, and commercial vehicles
...

7
...

- Flexible Terms: Offering flexible lease terms to accommodate the business needs of clients
...
Capital Conservation: Businesses can conserve capital by avoiding large upfront payments and using leased
assets
...
Tax Advantages: Lease payments may be tax-deductible, reducing the overall tax burden
...
Flexibility: Lease terms can be tailored to match the specific needs and cash flows of the business
...
Risk Mitigation: The lessor bears the risks related to asset ownership, such as obsolescence and
depreciation
...
Off-Balance Sheet Financing: Operating leases do not appear on the balance sheet, improving financial
ratios and borrowing capacity
...
Banks must adhere to these regulations to ensure compliance and protect the
interests of both lessors and lessees
Title: Banking and Finance - Introduction to Banking and Banking Products
Description: 20 Pages - 1st year Types of Banking Services - 1) Fee-based Banking Services 2) Fund-based Banking Services Cash Management Services Merchant Banking Foreign Exchange Services Lease Finance Services