Non-Banking Activities
All blogspot.com//search?q=what-is-bank-introduction-definition">banks perform non-banking activities along alongside their traditional functions.
A banking company cannot live without performing the next non-banking activities:
- Banks assist their customers to brand utility payments alongside ease.
- They perform merchant banking for their customers.
- They render factoring services to their clients.
- They contend mutual funds as well as minimize investment risks.
- They result gift cheques to the people.
- They deport feasibility study as well as submit the feasibility report.
- They facilitate the part transactions yesteryear maintaining demat accounts.
- They offering credit as well as debit cards facility.
- They likewise offering leasing services.
- They give hire-purchase services to owners of diverse goods.
- They are forthwith allowed to offering insurance services.
- They render funds (capital) for starting novel ventures.
Now let's hash out of import non-banking activities performed yesteryear banks.
1. Utility Payments
Banks brand utility payments for their customers. Utility payments include payment of an Electricity bill, Insurance premiums, call bill, H2O bill, etc. They likewise pay SIP (Systmatic Investment Plan) payments to Mutual funds for their customers. These payments are made yesteryear using the Electronic Clearance Scheme (ECS). Banks accuse a small-scale (nominal) fee for making these payments.
2. Merchant Banking
Large banks perform blogspot.com//search?q=what-is-bank-introduction-definition">merchant banking for their customers. They assist them to heighten blogspot.com//search?q=what-is-bank-introduction-definition">finance. They give them advice virtually starting as well as running a blogspot.com//search?q=what-is-bank-introduction-definition">business. They assist their customers to brand a earnings inward the blogspot.com//search?q=what-is-bank-introduction-definition">stock exchange. They fifty-fifty exercise projection blogspot.com//search?q=what-is-bank-introduction-definition">management. They likewise assist inward expanding as well as modernizing the draw of piece of occupation concern of their clients. Today, banks assist to revive (cure) sick industries. They likewise assist inward restructuring the business.
3. Factoring Services
Banks likewise render factoring services to their clients. Factoring is an understanding betwixt a banking company (factor) as well as a draw of piece of occupation concern theatre (client). Under this agreement, the draw of piece of occupation concern theatre sells goods as well as services to their customers on credit. The banking company (factor) purchases the customers' Bills Receivable or debtors draw of piece of occupation concern human relationship from the draw of piece of occupation concern firm. So, the draw of piece of occupation concern theatre is guaranteed payment for their credit sales. However, the banking company (factor) decides whom to give credit as well as how much credit to give.
4. Mutual Funds
blogspot.com//search?q=what-is-bank-introduction-definition">Mutual funds are real pop because of expansion as well as diversification of the fiscal sector. The Unit Trust of Bharat (UTI) was the start fiscal establishment to start mutual funds inward India. Many other banks forthwith bring mutual funds such equally ICICI Mutual Fund, SBI Mutual Fund, HDFC Mutual Fund, etc. Mutual Funds are controlled yesteryear SEBI. Mutual Funds are purchased yesteryear investors because they offering minimum risk, maximum render as well as liquidity. Mutual funds alongside their resources as well as expertise invest on behalf of private investors giving them upper-case missive of the alphabet appreciation alongside minimum risk. Mutual funds issue the NAV (Net Asset Value) of their funds daily. They likewise repurchase the units issued yesteryear them based on their NAV. Investors who similar to play rubber larn for mutual funds.
5. Gift Cheques
Gift blogspot.com//search?q=what-is-bank-introduction-definition">cheques are printed inward attractive colours as well as designs. Gift cheques are issued yesteryear banks to the public. They tin give these cheques equally a acquaint on auspicious occasions similar marriage, birthdays, retirements, promotion, anniversary, etc. They are commonly issued for Rs. 11, 21, 51 as well as 101. The purchaser makes total payment at the fourth dimension of purchase. Gift cheques are transferable yesteryear manus delivery. These cheques bring an perish date. If a gift banking company check is lost, a duplicate is issued. These cheques are payable on demand. The payee tin claim the blogspot.com//search?q=what-is-bank-introduction-definition">money at whatsoever branch of the issuing bank.
6. Feasibility Reports
Banks deport feasibility study on behalf of the client as well as submit the feasibility report. This written report shows chances of success of the project. Feasibility study is conducted earlier starting the projection or business. Conducting feasibility study is non compulsory, but it gives many benefits to the businessman. Banks similar IDBI or whatsoever commercial banking company tin deport feasibility study inward functional areas such equally technical, managerial, fiscal as well as economic. After completion of feasibility study, the banks submit a feasibility report. Based on this written report the homo of affairs decides whether to exercise the projection / draw of piece of occupation concern or not.
7. Demat Account
Demat is a commonly used advert for dematerialization. Traditionally, shares were held inward a physical form. Under dematerialization, shares are held inward an electronic form. Demat draw of piece of occupation concern human relationship is similar coin kept inward a savings account. You tin deposit as well as take away the sum whenever y'all want. The transactions inward electronic shares are quick, rubber as well as simple. The shares purchased yesteryear a shareholder are transferred inward his advert on the side yesteryear side twenty-four hr menses of payout. H5N1 shareholder tin sell as well as transfer his electronic shares from his business office / identify through a broker. Most of the shares are nether demat. Banks facilitate the part transactions yesteryear maintaining demat accounts inward their branch.
8. Credit as well as Debit Cards
Most large banks offering credit bill of fare facilities. Indian credit bill of fare marketplace position is growing at 30-35% per annum. ICICI, Citi, HDFC as well as SBI are the leading banks that offering blogspot.com//search?q=what-is-bank-introduction-definition">credit card facilities. Most of the banks likewise offering debit cards to their customers. With the assist of debit cards, the customers tin brand payments for the goods as well as services. This sum gets deducted from the residuum they handle alongside the banks.
9. Leasing Services
Indian banks offering leasing services. In March 1994, RBI permitted banks to larn into leasing finance provided next weather condition are fulfilled:
- Specialized branches must live opened for doing this work.
- Banks may give lease finance upward to 10% of their total advances.
- Assets inward leasing volition live treated equally assets carrying 100% endangerment weightage.
10. Hire Purchase
Banks render hire-purchase services. They finance hire-purchase contracts. Here, the possessor of goods hires them to closed to other political party for a sure as shooting menses as well as for the payment of a specific installment. The transfer of goods is passed on to the user later on a definite menses provided payment of all specified installments is clear.
11. Insurance
Banks are forthwith allowed to offering insurance services through split upward branches. Many Indian banks such equally ICICI, IDBI, HDFC, etc., bring entered into unusual collaborations to render life insurance service inward India. ICICI has joined Prudential Life, HDFC alongside Standard Life, IDBI alongside Fortis (now Federal) to render life insurance services to Indians.
12. Venture Capital Services
Banks similar ICICI, SBI, IDBI provides venture blogspot.com//search?q=what-is-bank-introduction-definition">capital services. Here, banks render funds for starting novel ventures as well as for high-risk businesses alongside high-profit potential. Venture upper-case missive of the alphabet helps businessmen to larn funds for highly risky projects. Venture upper-case missive of the alphabet way to purchase shares inward high-risk projects / businesses alongside high-profit potential.
