Services Rendered by Banks.: Advancing of Loans

SERVICES RENDERED BY BANKS.
1. Advancing of loans - Banks are profit-oriented business organizations.

So they have to advance a loan to the public and generate interest
from them as profit. After keeping certain cash reserves, banks
provide short-term, medium-term and long-term loans to needy
borrowers. Interest on loan account is payable on the entire amount
till paid off.
2. Overdraft - The customer may be allowed to overdraw his current
account with or without security if he requires temporary
accommodation. Interest is charged from the customers on the
overdrawn amount.
3. Discounting of Bills Of Exchange - This is another popular type of
lending by modern banks. Through this method, a holder of a bill of
exchange can get it discounted by the bank, in a bill of exchange, the
debtor accepts the bill drawn upon him by the creditor (i.e., holder of
the bill) and agrees to pay the amount mentioned on maturity. After
making some marginal deductions (in the form of commission), the
bank pays the value of the bill to the holder. When the bill of
exchange matures, the bank gets its payment from the party, which
had accepted the bill.
4. Cheque payments - Banks provide cheque pads to the account
holders. Account holders can draw cheque upon the bank to pay
money. Banks pay for cheques of customers after formal verification
and official procedures.
5. Collection & Payment of Credit Instruments - In modern business,
different types of credit instruments such as the bill of exchange,
promissory notes, cheques etc. are used. Banks deal with such
instruments. Modern banks collect and pay different types of credit
instruments as the representative of the customers.
6. Foreign Currency Exchange - Banks deal with foreign currencies. As
the requirement of customers, banks exchange foreign currencies
with local currencies, which is essential to settle down the dues in the
international trade.
7. Bank Guarantee - Customers are provided the facility of bank
guarantee by modern commercial banks. When customers have to
deposit certain fund in governmental offices or courts for a specific
purpose, a bank can present itself as the guarantee for the customer,
instead of depositing fund by customers.
8. Remittance of Funds - Banks help their customers in transferring
funds from one place to another through cheques, drafts, etc.
9. Credit Cards - A credit card is cards that allow their holders to make
purchases of goods and services in exchange for the credit card’s
provider immediately paying for the goods or service, and the
cardholder promising to pay back the amount of the purchase to the
card provider over a period of time, and with interest.
10. ATM Service – ATM is a user friendly, computer driven system which
operates 24 hours a day, 7 days a week. Key advantages of ATMs
include:
 24 hour availability
 Elimination of labor cost
 Convenience of location
11. Debit Cards - Debit cards are used to electronically withdraw funds
directly from the cardholders’ accounts. Most debit cards require a
Personal Identification Number (PIN) to be used to verify the
transaction.
12. Online Banking - Online banking is a service offered by banks that
allows account holders to access their account data via the internet.
Online banking is also known as “Internet banking” or “Web
banking.” Online banking through traditional banks enable customers
to perform all routine transactions, such as account transfers,
balance inquiries, bill payments, and stop-payment requests, and
some even offer online loan and credit card applications. Account
information can be accessed anytime, day or night, and can be done
from anywhere.
13. Mobile Banking - Mobile banking (also known as M-Banking) is a
term used for performing balance checks, account transactions,
payments, credit applications and other banking transactions
through a mobile device such as a mobile phone or Personal Digital
Assistant (PDA).
14. Accepting Deposits - Accepting deposit from savers or account
holders is the primary function of a bank. Banks accept deposit from
those who can save money but cannot utilize in profitable sectors.
People prefer to deposit their savings in a bank because by doing so,
they earn interest.

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SERVICES RENDERED BY BANKS.

1. Advancing of loans - Banks are profit-oriented business organizations.

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