MATHS PROJECT

INTRODUCTION

Banking is an industry that handles cash, credit, and other

financial transactions. Banks provide a Safe place to Store extra
cash and credit.They offer savings accounts, Certificates of
Deposit, and checking accounts. Banks use these deposits to
make loans. These loans include home mortgages, business
loans, and car loans.

A Bank is a financial institution licensed to receive deposits and

make loans. Two of the most common types of banks are
commercial/retail and investment banks. Depending on type, a
bank may also provide various financial services ranging from
providing safe deposit boxes and currency exchange to
retirement and wealth management.

Banking is defined as “Accepting of deposits of money from

public for the purpose of Lending or Investment, repayable on

demand or otherwise and withdrawable by cheque, draft, or

otherwise”
Banking can be defined as the business activity of accepting and

safeguarding money owned by other individuals and entities, and

then lending out this money in order to earn a profit. However,

with the passage of time, the activities covered by banking

business have widened and now various other services are also

offered by banks. The banking services these days include

issuance of debit and credit cards, providing safe custody of

valuable items, lockers, ATM services and online transfer of

funds across the country / world.

TYPES OF BANK ACCOUNTS

1. Current account
A current account is a deposit account for traders, business
owners, and entrepreneurs, who need to make and receive
payments more often than others. These accounts hold more
liquid deposits with no limit on the number of transactions per
day. Current accounts allow overdraft facility, that is
withdrawing more than what is currently available in the
account. Also, unlike savings accounts, where you earn some
interest, these are zero-interest bearing accounts. You need to
maintain a minimum balance to be able to operate current
accounts.

2. Savings account

A savings bank account is a regular deposit account, where you

earn a minimum rate of interest. Here, the number of
transactions you can make each month is capped. Banks offer a
variety of Savings Accounts based on the type of depositor,
features of the product, age or purpose of holding the account,
and so on.

There are regular savings accounts, savings accounts for

children, senior citizens or women, institutional savings
accounts, family savings accounts, and so many more.

You have the option to pick from a range of savings products.

There are zero-balance savings accounts and also advanced ones
with features like auto sweep, debit cards, bill payments and
cross-product benefits.

3. Salary account
Among the different types of bank accounts, your salary account
is the one you have opened as per the tie-up between your
employer and the bank. This is the account, where salaries of
every employee are credited to at the beginning of the pay cycle.
Employees can pick their type of salary account based on the
features they want. The bank, where you have a salary account,
also maintains reimbursement accounts; this is where your
allowances and reimbursements are credited to.

4. Fixed deposit account

To park your funds and earn a decent rate of interest on it, there
are different types of accounts like fixed deposits and recurring
deposits.

A fixed deposit (FD) account allows you to earn a fixed rate of

interest for keeping a certain sum of money locked in for a given
time, that is until the FD matures. FDs range between a maturity
period of seven days to 10 years. The rate of interest you earn on
FDs will vary depending on the tenure of the FD. Generally, you
cannot withdraw money from an FD before it matures. Some
banks offer a premature withdrawal facility. But in that case, the
interest rate you earn is lower.

5. Recurring deposit account

A recurring deposit (RD) has a fixed tenure. You need to invest a
fixed sum of money in it regularly -- every month or once a
quarter -- to earn interest. Unlike FDs, where you need to make
a lump sum deposit, the sum you need to invest here is smaller
and more frequent. You cannot change the tenure of the RD and
the amount to be invested each month or quarter. Even in the
case of RDs, you face a penalty in the form of a lower interest
rate for premature withdrawal. The maturity period of an RD
could range between six months to 10 years.
Steps of opening a bank account

A Savings Account is the most basic type of bank account you can
have, and as the name suggests, its primary purpose is to help
you save money. With this account, you can safely deposit or
withdraw funds at any time and earn interest on the money in
the account. You can also use it as an emergency fund during
medical or personal emergencies, or you can utilize it to cover
your short-term needs.

The best part is that opening a Savings Account is a simple task

that takes just 10 minutes, and most banks usually have similar
procedures to open a Savings Account.

Step 1: Get online:

Open a Savings Account online with HDFC Bank through your
mobile phone or laptop through InstaAccount. You can initiate
the process with just your mobile number, documents, and by
filling out a form. It can all be done conveniently via our online
portal, allowing you to avoid having to go to the bank physically.

Step 2: Keep the documents required for opening a Savings

Account handy

Regardless of which method you choose, you need to provide

certain documents to open your Savings Account. These are:

Aadhaar Card – You don’t need any other identity or address

proof if you have Aadhaar Card
Or
Identity Proof (driver’s license, passport etc.)
Address Proof (driver’s license, passport etc.)
PAN card
Or, Form 16, which is a certificate issued by the applicant’s
employer, asserting that TDS has been deducted from your
salary. This is required if the applicant does not have a PAN card.
Two of the latest passport-size photographs
Step 3: Experience better banking with video KYC
You can now submit your KYC documents and verify yourself
online! It can all be done on a video call with an HDFC Bank
official. Just provide access to your location, camera and
microphone on your smartphone, and you are all set to operate
your new Savings Account!

Step 4: Explore the HDFC Bank Savings Account – to access

banking services almost instantly

What happens if you don’t want to wait for your Debit Card and
bank account details to arrive at your home? How can the bank
issue you an account if it cannot verify your documents and
details? If you have already verified and done step 3, then the
Debit Card will reach your address in 15-25 days. Otherwise, head
to the nearest branch for KYC and verify yourself physically.

Step 5: Login via NetBanking or MobileBanking to start

transacting

Once you receive your customer ID and account number you will
be able to to start using your account and even transfer. Get
started by logging into NetBanking and MobileBanking and
creating a password.

HDFC Bank strives to enhance its customer experience by

offering safe and convenient digital services, and InstaAccount is
yet another offering to live up to this promise. With HDFC Bank
InstaAccount opens a Savings Account instantly in a few simple
steps. It comes pre-enabled with HDFC Bank NetBanking and
MobileBanking and you can enjoy Cardless Cash withdrawals.

PASSBOOK

A bank passbook is a physical notebook held by bank account

holders. It records on paper the details of all banking

transactions, including elements such as:

Debits

Credits

Loans

Fixed deposits

Recurring deposits
A bank passbook is simply a physical log of your transactions,

but what type of information should be recorded?

For debit transactions, you’d include all details about payments

including payee name, method of payment, and name of the

bank making a transfer. You’d also record all direct debit and pay

order information, as well as details about self-payments to

other accounts.

Similarly for credit transactions, you’d use your passbook to keep

track of deposit interest, receipts from third parties, and cash

deposits. Any loan-related details would go here as well

including the mode of payment.

Essentially, passbooks hearken back to a pre-internet form of

banking when you’d need to meticulously keep paper-based
records in the absence of computers and SMS alerts. Bank
customers would use a cheque book and passbook to balance
their accounts.
You may have seen the term ‘passbook’ also used in relation to

mobile apps and wallets. For example, Apple Wallet is also called

Passbook. However, this goes a step beyond the traditional

meaning of a passbook by also allowing users to store cards,

coupons, event tickets, and boarding passes in a central location.

In addition to Apple Passbook, there are several informal

passbook apps offered by banks. These work the same way as a

physical paper version, showing a record of transactional details.

Most banking apps could be looked at as the replacement for the

old-fashioned passbook, allowing you to facilitate transactions

and record their details without the need to visit the bank in

person.

TYPES OF LOANS

We may not always have the money we require to do certain

things or to buy certain things. In such situations, individuals

and businesses/firms/institutions go for the option of borrowing

money from lenders.

When a lender gives money to an individual or entity with a

certain guarantee or based on trust that the recipient will repay

the borrowed money with certain added benefits, such as an

interest rate, the process is called lending or taking a loan.

A loan has three components – principal or the borrowed

amount, rate of interest and tenure or duration for which the

loan is availed.

Most of us prefer borrowing money from a bank or a trusted

non-banking financing company (NBFC) as they are bound to the

government policies and are trustworthy. Lending is one of the

primary financial products of any bank or NBFC (Non-Banking

Financial Company) offers.

Secured Loans
These loans require the borrower to pledge collateral for the

money being borrowed. In case the borrower is unable to repay

the loan, the bank reserves the right to utilize the pledged

collateral to recover the pending payment. The interest rate for

such loans is much lower as compared to unsecured loans.

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LOANS

LOANS – MEANING, HOW THEY WORK, TYPES, AND FEATURES

Loans – Meaning, How They Work, Types, and Features

Updated on: May 26th, 2023

10 min read

We may not always have the money we require to do certain

things or to buy certain things. In such situations, individuals

and businesses/firms/institutions go for the option of borrowing

money from lenders.

When a lender gives money to an individual or entity with a

certain guarantee or based on trust that the recipient will repay

the borrowed money with certain added benefits, such as an

interest rate, the process is called lending or taking a loan.

A loan has three components – principal or the borrowed

amount, rate of interest and tenure or duration for which the

loan is availed.

Most of us prefer borrowing money from a bank or a trusted

non-banking financing company (NBFC) as they are bound to the

government policies and are trustworthy. Lending is one of the

primary financial products of any bank or NBFC (Non-Banking

Financial Company) offers.

Types of Loans
Secured Loans

These loans require the borrower to pledge collateral for the

money being borrowed. In case the borrower is unable to repay

the loan, the bank reserves the right to utilize the pledged

collateral to recover the pending payment. The interest rate for

such loans is much lower as compared to unsecured loans.

Unsecured Loans

Unsecured loans are those that do not require any collateral for

loan disbursement. The bank analyzes the past relationship with

the borrower, the credit score, and other factors to determine

whether the loan should be given or not. The interest rate for

such loans can be higher as there is no way to recover the loan

amount if the borrower defaults.

Education Loan
Education loans are financing instruments that aid the borrower

pursue education. The course can either be an undergraduate

degree, a postgraduate degree, or any other

diploma/certification course from a reputed

institution/university. You must have the admission pass

provided by the institution to get the financing. The financing is

available both for domestic and international courses.

Gold Loan

Many financiers and lenders offer cash when the borrower

pledges physical gold, may it be jewelry or gold bars/coins. The

lender weighs the gold and calculates the amount offered based

on several checks of purity and other things. The money can be

utilized for any purpose.

The loan must be repaid in monthly installments so the loan can

be cleared by the end of the tenure and the gold can be taken

back to custody by the borrower. If the borrower fails to make

the repayments on time, the lender reserves the right to take

over the gold to recover the losses.

Vehicle Loan

Vehicle loans finance the purchase of two-wheeler and

four-wheeler vehicles. Further, the four-wheeled vehicle can be

a new one or a used one. Based on the on-road price of the

vehicle, the loan amount will be determined by the lender. You

may have to get ready with a downpayment to get the vehicle as

the loan rarely provides 100% financing. The vehicle will be

owned by the lender until full repayment is made.

Home Loan

Home loans are dedicated to receiving funds in order to

purchase a house/flat, construct a house, renovate/repair an

existing house, or purchase a plot for the construction of a

house/flats. In this case, the property will be held by the lender

and the ownership will be transferred to the rightful owner upon

completion of repayments.

Transactions in Banking

A bank transaction is a record of money that has moved in and

out of your bank account.

When you have costs associated with your business - for

example, rent for office space - the payments for these will come
out of your bank account as transactions. The formation of your
asset accounts, capital accounts and liability accounts all rely on
bank transactions.

The transaction banking division of a bank typically provides

commercial banking products and services for both corporations
and financial institutions, including domestic and cross-border
payments, risk mitigation, international trade finance as well as
trust, agency, depositary, custody and related services. It
comprises the Cash Management, Trade Finance and Trust &
Securities Services businesses. Although some business banking
depends on a third party for 3-5 working days, others take over
10 working days.
A number of global trends are leading to a renewed focus on the
transaction banking sector. These trends include the
globalization of trade, the increasing importance of liquidity
management and a heightened emphasis on securing
relationships in a world where both competition and clients are
becoming more global and sophisticated. Transaction banking is
also particularly attractive in the current economic context
because it often has relatively low regulatory capital
requirements

As businesses and the world itself becomes increasingly

globalized, transaction banking has become more important

than ever before, and it will likely continue to gain significance in

the years to come. The most vital function it delivers is a safe,

secure and efficient flow of cash across borders.

Below, we’ll delve into the various roles of transaction banking so

that you can get a clearer idea of the meaning of transaction

banking.

Cash management
The first role of transaction banking is the assistance it provides

businesses in identifying the most efficient ways to manage cash

inflows and outflows, as well as recognising and offering

solutions to any cash flow problems which may arise.

International exchange

Transaction banking can be national, but it often operates

internationally. This is sometimes referred to as global

transaction banking. The service ensures that all

country-respective laws and regulations are honored during

international trade.

Security Provider

Transaction banking also offers security services which are

intended to help strengthen relations between banking

institutions, clients and partners. This facilitates the protection

of a company’s financial assets during a transaction.

Banking transaction advantages

Now that we’ve covered banking transaction meaning, let’s

consider the advantages the service offers:

Global transaction banking services are a huge aid in the efficient

carrying out of international trade.

Transaction banking plays a role in optimizing working capital in

commercial activity by equipping companies with investment

options.

Transaction banking helps clients to manage their cash inflows

and outflows in an effective way, and provides them with

short-term cash management options.

Transaction banking assists in the transfer of payments across

borders.
Transaction banking poses less risks compared to some other

financial services. This is because the kind of deals made are

short-term and self-liquidating.

Transaction banking provides a safety net due to the security of

the commercial agreements it facilitates.

Technology in Banking

In the rapidly evolving digital landscape, technology has become

a critical component for delivering effective services to
customers in the banking industry.

To stay competitive, banks must leverage the power of innovative

technologies to enhance customer experiences, optimize

operations, and drive growth.

According to industry reports, global banking IT spending is

projected to reach $761 billion by 2025 , underscoring the

significance of technology investments in the Banking sector.

As technology plays a pivotal role in shaping the future of

banking, IT analysts, managers, VP, and CIOs face unique

challenges in identifying the right solutions to implement.

The complexity of the technology landscape, the need to balance

cost and effectiveness, integration hurdles, and the paramount

importance of security and regulatory compliance present

formidable obstacles.

Integrating new technologies with existing systems is one of the

top challenges in implementing digital transformation initiatives.

Furthermore, the banking industry faces its own set of distinct

technology challenges. Legacy systems, data management and

analytics complexities, security concerns, compliance and

regulatory requirements, and integration challenges are just a

few examples.

These challenges necessitate adopting innovative solutions

tailored to the industry's specific needs.

This blog aims to explore the latest banking technologies, shed

light on the challenges faced by the industry, and highlight how

emerging technologies can help mitigate these challenges.

By delving into the potential of cutting-edge solutions, we

provide valuable insights and thought leader perspectives to help

IT leaders in the banking industry make informed decisions and

navigate the complex landscape of banking technologies.

The banking industry is undergoing a significant transformation

driven by advancements in technology. Digitalization,

automation, and data-driven insights have become key focus

areas for banks looking to enhance customer experiences,

streamline operations, and gain a competitive edge. Here's an

overview of the current state of technology in the banking

industry.

Digital Banking:
The rise of digital banking has changed how customers interact

with their banks. Mobile banking apps, online portals, and

self-service options have become the norm, providing customers

with convenience and real-time access to their accounts.

According to a report by Economic Times, digital banking

transactions are projected to reach $1 trillion by 2023.

Hyper Automation:

Hyper Automation combines robotic process automation (RPA)

with AI and ML capabilities to automate complex business

processes end-to-end. Banks can leverage hyper-automation to

automate repetitive and rule-based tasks, such as data entry,

document processing, and customer onboarding. By automating

these processes, banks can reduce errors, improve operational

efficiency, and free up employees to focus on higher-value

activities.

Low-Code Development:
Low-code development platforms like Kissflow enable banks to

build applications with minimal coding requirements,

accelerating development and reducing reliance on traditional

coding methods.

These platforms provide visual interfaces, pre-built templates,

and drag-and-drop functionalities, allowing both technical and

non-technical stakeholders to participate in application

development.

Banks can leverage low-code development to quickly create

custom applications, streamline internal processes, and deliver

innovative customer experiences.

Artificial Intelligence (AI) and Machine Learning (ML):

Banks increasingly leverage AI and ML technologies to enhance

operational efficiency, detect fraud, and improve customer

experiences. AI-powered chatbots and virtual assistants are

being used to provide personalized assistance and support. At

the same time, ML algorithms analyze large datasets to uncover

valuable insights for risk assessment and customer

segmentation.

Robotic Process Automation (RPA):

RPA has gained traction in the banking industry, automating

repetitive manual tasks and improving operational efficiency. By

deploying software robots, banks can streamline processes such

as customer onboarding, data entry, and compliance checks,

reducing errors and enhancing productivity.

Cloud Computing:

Banks are embracing cloud computing to optimize infrastructure

costs, improve scalability, and enable faster deployment of

applications. Cloud-based solutions offer enhanced data security

measures, agility, and the ability to integrate with other systems,

enabling banks to innovate and launch new services quickly.

Blockchain Technology:
Blockchain has emerged as a disruptive force in the banking

industry, transforming areas such as cross-border payments,

trade finance, and identity verification. Its decentralized and

secure nature has the potential to streamline processes, reduce

costs, and increase transparency in transactions.

Data Analytics and Big Data:

Banks leverage data analytics and big data technologies to derive

actionable insights from vast customer data. By harnessing data

analytics, banks can better understand customer behavior,

personalize offerings, and make data-driven decisions to

mitigate risks and optimize operations.

Cybersecurity and Fraud Prevention:

With the increasing digitization of banking services,

cybersecurity, and fraud prevention have become critical

priorities. Banks are investing in advanced cybersecurity

technologies, including threat intelligence, encryption, and

biometric authentication, to safeguard customer data and

protect against evolving threats.

COMPARING THE RATE OF INTEREST

Banks Interest on Fixed Tenure

Deposit

HDFC 3.00% – 7.00% 7 days to 10 years

Post office 6.90% – 7.50% 12 months to 120

months

ICICI Bank 3.00% – 6.90% 7 days to 10 years

Axis Bank 3.00% – 7.00% 7 days to 10 years

Calculating maturity value in a recurring deposit account:

To make an investment decision, it is essential to get an estimate

of the potential returns from it. Thus, the RD interest calculator
will help an investor estimate the potential returns.
Interest in RD is compounded quarterly. Until then, it is
calculated as simple interest. For example, when an investor
starts their RD in the month of February, the amount will earn
only simple interest until the month of March. Only after the first
quarter, the interest starts compounding. To calculate the
maturity value of an RD, you can use the following formula:
RD Maturity Amount = R[(1+i) (n-1)]/1-(1+i)(-1/3))
R = Monthly Installment. This is the amount that you invest in
the RD account every month. The minimum deposit amount
varies for every bank and can be as low as Rs 10.
N = number of quarters (tenure). It is the duration for which you
hold the money in the RD account. Generally, RD tenure varies
between 6 months to 10 years.
i = Rate of interest/400. The amount of interest earned depends
on the deposit amount in the RD account, the applicable interest
rate by the bank, and the tenure of RD.
Let’s take the example of Arun, who is planning to invest INR
5,000 every month at 8% interest p.a. for 24 months or eight
quarters. When we insert these values in the formula, we get,
M=5,000[(1+8/400) (8-1)]/1-(1+8/400)(-1/3))
M=INR 1,26,369
The maturity value for Arun on his investment in RD is INR
1,26,369.
The calculation might look simple but is not. Hence one can use
an RD interest calculator to save time and get accurate results.
Conclusion
n Conclusion, banking holds a crucial role in our day-to-day life.
We must adhere to the banking system as responsible citizens.
The banking system acts as a crucial base for the financial
system as well as the entire economic system of the country. It
provides a base to the market and the companies.The banking
system is a coordinating procedure between the banks of the
nation. Banks are financial institutions that deal with the
financial aspect of society. The Reserve Bank of India is the
central bank of India. The banking system of India consists of the
central bank, commercial banks, and cooperative banks. The
banks are lending institutions that provide their customers with
short-term and long-term loans. Banks deal with various
financial services like savings, investments, loans, and others.
Some examples of banks are - HDFC Bank, State Bank of India,
and Indian Bank.