Emergency Services To Customer By Bank

Transcript

Emergency services by Banks T.Y.B & I CHAPTER I Introduction of Bank and Banking 1 Chapter: Emergency Services Emergency services by Banks T.Y.B & I Bank A bank is a financial intermediary that accepts deposits and channels the financial system, and are also active players in financial markets. The essential role of a bank is to connect those who have capital (such as investors or depositors), with those who seek capital (such as individuals wanting a loan, or businesses wanting to grow). Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and location. The current sets of global standards are called Basel II. The most recent trend has been the advance of universal banks, which attempt to offer their customers the full spectrum of financial services under the one roof. The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472. The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Jewish Florentine bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in times ancient, which Chapter: Emergency Services 2 those deposits into lending activities. Banks are a fundamental component of Emergency services by Banks T.Y.B & I indicates that the word 'bank' might not necessarily come from the word 'banco'. BANKING The term “Banking” is defined as “accepting for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise.” The salient features of this definition are as follows:1. A banking company must perform both of the essential functions a) Accepting of deposits, and b) Lending or investing the same. If the purpose of accepting of deposits is not to lend or invest, the business will not be called as banking business. 2. The phrase ‘deposit of money from public’ is significant. The banker accepts deposits of money and not of anything else. 3 Chapter: Emergency Services Emergency services by Banks T.Y.B & I 3. It also specifies the time and mode of withdrawal of deposits. The deposited money should be repayable to the depositors on demand made by the latter or according to the agreement reached between the two parties. Chapter: Emergency Services 4 “Banking is the business of a banker, the keeping or management of a bank.” - THE OXFORD ENGLISH DICTIONARY Emergency services by Banks T.Y.B & I CHAPTER II BANKING IN INDIA & TYPES Chapter: Emergency Services BANKING SERVICES IN INDIA: 5 Emergency services by Banks T.Y.B & I In India the business of banking and credit was practices even in very early times. The remittance of money through Hundies, an indigenous credit instrument, was very popular. The hundies were issued by bankers known as Shroffs, Sahukars, Shahus or Mahajans in different parts of the country. Houses of Calcutta and Bombay after the establishment of Rule by the East India Company in 18th and 19th centuries. During the early part of the 19th Century, ht volume of foreign trade was relatively small. Later on as the trade expanded, the need for banks of the European type was felt and the government of the East India Company took interest in having its own bank. The government of Bengal took the initiative and the first presidency bank, the Bank of Calcutta (Bank of Bengal) was established in 180. In 1840, the Bank of Bombay and IN 1843, the Bank of Madras was also set up. 6 Chapter: Emergency Services The modern type of banking, however, was developed by the Agency Emergency services by Banks T.Y.B & I I. HISTORY OF BANKING IN INDIA There are three different phases in the history of banking in India. Chapter: Emergency Services 7 1) Pre-Nationalization Era. 2) Nationalization Stage. 3) Post Liberalization Era. 1)Pre-Nationalization Era These three banks also known as “Presidency Bank”. The Presidency Banks had their branches in important trading centers but mostly lacked in uniformity in their operational policies. In 1899, the Government proposed to amalgamate these three banks in to one so that it could also function as a Central Bank, but the Presidency Banks did not favor the idea. However, the conditions obtaining during world war period (1914-1918) emphasized the need for a unified banking institution, as a result of which the Imperial Bank was set up in1921. The Imperial Bank of India acted like a Central bank and as a banker for other banks. Emergency services by Banks T.Y.B & I The RBI (Reserve Bank of India) was established in 1935 as the Central Bank of the Country. In 1949, the Banking Regulation act was passed and the RBI was nationalized and acquired extensive regulatory powers over the commercial banks. In 1950, the Indian Banking system comprised of the RBI, the Imperial Bank Chapter: Emergency Services 8 of India, Cooperative banks, Exchange banks and Indian Joint Stock banks. 2) Nationalization Stages: After Independence, in 1951, the All India Rural Credit survey, committee of Direction with Shri. A. D. Gorwala as Chairman recommended amalgamation of the Imperial Bank of India and ten others banks into a newly established bank called the State Bank of India (SBI). The Government of India accepted the recommendations of the committee and introduced the State Bank of India bill in the Lok Sabha on 16th April 1955 and it was passed by Parliament and got the president’s assent on 8th May 1955. The Act came into force on 1st July 1955, and the Imperial Bank of India was nationalized in 1955 as the State Bank of India.The main objective of establishing SBI by nationalizing the Imperial Bank of India was “to extend banking facilities on a large scale more particularly in the rural and semi-urban areas and to diverse other public purposes.” Emergency services by Banks T.Y.B & I In 1959, the SBI (Subsidiary Bank) act was proposed and the following eight state-associated banks were taken over by the SBI as its subsidiaries. Name of the Bank Subsidiary with effect from 1. State Bank of Hyderabad 1st October 1959 2. State Bank of Bikaner 1st January 1960 3. State Bank of Jaipur 1st January 1960 4. State Bank of Saurashtra 1st May 1960 5. State Bank of Patiala 1st April 1960 6. State Bank of Mysore 1st March 1960 7. State Bank of Indore 1st January 1968 Chapter: Emergency Services 9 Emergency services by Banks T.Y.B & I 8. State Bank of Travancore 1st January 1960 With effect from 1st January 1963, the State Bank of Bikaner and State Bank of Jaipur with head office located at Jaipur. Thus, seven subsidiary banks State Bank of India formed the SBI Group. The SBI Group under statutory obligations was required to open new offices in rural and semi-urban areas and modern banking was taken to these unbanked remote areas. Chapter: Emergency Services 10 On 19th July 1969, then the Prime Minister, Mrs. Indira Gandhi announced the nationalization of 14 major scheduled Commercial Banks each having deposits worth Rs. 50 crore and above. This was a turning point in the history of commercial banking in India. Later the Government Nationalized six more commercial private sector banks with deposit liability of not less than Rs. 200 crores on 15th April 1980, viz. i) Andhra Bank. ii) Corporation Bank. iii) New Bank if India. iv) Oriental Bank of Commerce. v) Punjab and Sind Bank. Emergency services by Banks T.Y.B & I vi)Vijaya Bank. In 1969, the Lead Bank Scheme was introduced to extend banking facilities to every corner of the country. Later in 1975, Regional Rural Banks were set up to supplement the activities of the commercial banks and to especially meet the credit needs of the weaker sections of the Chapter: Emergency Services 11 rural society. Nationalization of banks paved way for retail banking and as a result there has been an alt round growth in the branch network, the deposit mobilization, credit disposals and of course employment. The first year after nationalization witnessed the total growth in the agricultural loans and the loans made to SSI by 87% and 48% respectively. The overall growth in the deposits and the advances indicates the improvement that has taken place in the banking habits of the people in the rural and semi-urban areas where the branch network has spread. Such credit expansion enabled the banks to achieve the goals of nationalization, it was however, achieved at the coast of profitability of the banks. Consequences of Nationalization: ✔ The quality of credit assets fell because of liberal credit extension policy. ✔ Political interference has been as additional malady. ✔ Poor appraisal involved during the loan meals conducted for credit disbursals. ✔ The credit facilities extended to the priority sector at concessional rates. Emergency services by Banks T.Y.B & I ✔ The high level of low yielding SLR investments adversely affected the profitability of the banks. ✔ The rapid branch expansion has been the squeeze on profitability of banks emanating primarily due to the increase in the fixed costs. ✔ There was downward trend in the quality of services and efficiency of Chapter: Emergency Services 12 the banks. 3) Post-Liberalization Era: Thrust on Quality and Profitability: By the beginning of 1990, the social banking goals set for the banking industry made most of the public sector resulted in the presumption that there was no need to look at the fundamental financial strength of this bank. Consequently they remained undercapitalized. Revamping this structure of the banking industry was of extreme importance, as the health of the financial sector in particular and the economy was a whole would be reflected by its performance. The need for restructuring the banking industry was felt greater with the initiation of the real sector reform process in 1992. the reforms have enhanced the opportunities and challenges for the real sector making them operate in a borderless global market place. However, to harness the benefits of globalization, there should be an efficient financial sector to support the Emergency services by Banks T.Y.B & I structural reforms taking place in the real economy. Hence, along with the reforms of the real sector, the banking sector reformation was also addressed. The route causes for the lackluster performance of banks, formed the elements of the banking sector reforms. Some of the factors that led to the dismal performance of banks Chapter: Emergency Services 13 were. ✔ Regulated interest rate structure. ✔ Lack of focus on profitability. ✔ Lack of transparency in the bank’s balance sheet. ✔ Lack of competition. ✔ Excessive regulation on organization structure and managerial resource. ✔ Excessive support from government. Against this background, the financial sector reforms were initiated to bring about a paradigm shift in the banking industry, by addressing the factors for its dismal performance. In this context, the recommendations made by a high level committee on financial sector, chaired by M. Narasimham, laid the foundation for the banking sector reforms.These reforms tried to enhance the viability and efficiency of the banking sector. The Narasimham Committee suggested that there should be functional autonomy, flexibility in operations, dilution of banking strangulations, reduction in reserve requirements and Emergency services by Banks T.Y.B & I adequate financial infrastructure in terms of supervision, audit and technology. The committee further advocated introduction of prudential forms, transparency in operations and improvement in productivity, only aimed at liberalizing the regulatory framework, but also to keep them in time with international standards. The emphasis shifted to efficient and prudential banking linked to better customer care and customer services. Chapter: Emergency Services 14 Emergency services by Banks T.Y.B & I Types of banks in India The History of banking in India dates back to the early half of the 18th century. 3 Presidency Banks that were established in the country namely the Bank of Hindustan, Bank of Madras and Bank of Bombay can also be referred to as some of the oldest banking institutions in the country. The State Bank of India that was earlier known as the Bank of Bengal is also one of the oldest in the genre. To know about the types of banks in India, it is necessary that we first comprehend the banking system so as to be able to distinguish about its various types. All types of Banks in India are regulated and the activities monitored by a standard bank called the Reserve Bank of India that stands at the apex of the banking structure. It is also called the Central Bank, as major banking decisions are taken at this level. The other types of banks in India are placed 15 Chapter: Emergency Services Emergency services by Banks T.Y.B & I below this bank in the hierarchy. The major types of banks in India are as follows: Public sector banks in India - All government owned banks fall in this variety. Besides the Reserve Bank of India, the State Bank of India and its sector banks. Many of the regional rural banks that are funded by the government banks can also be clubbed in this genre. Private sector banks in India - A new wave in the banking industry came about with the private sector banks in India. With policies on liberalization being generously taken up, these private banks were established in the country that also contributed heavily towards the growth of the economy and also offering numerous services to its customers. Some of the most popular banks in this genre are: Axis Bank, Bank of Rajasthan, Catholic Syrian Bank, Federal Bank, HDFC Bank, ICICI Bank, ING Vysya Bank, Kotak Mahindra Bank and SBI Commercial and International Bank. The Foreign Banks in India like HSBC, Citibank, and Standard Chartered bank etc can also be clubbed here. Cooperative banks in India - With the aim to specifically cater to the rural population, the cooperative banks in India were set up through the country. Issues like agricultural credit and the likes are taken care of by these banks. Chapter: Emergency Services 16 associate banks and about 20 nationalized banks, all comprises of the public Emergency services by Banks T.Y.B & I BANKING IN INDIA Overview of Banking: Banking Regulation Act of India, 1949 defines Banking as “accepting, for the purpose of lending or of investment of deposits of money cheque, draft order or otherwise.” The Reserve Bank of India Act, 1934 and the Banking Regulation Act, 1949, govern the banking operations in India. Chapter: Emergency Services 17 from the public, repayable on demand or otherwise or withdrawable by Organizational Structure of Banks in India : Broad Classification of Banks in India : (1)The RBI: The RBI is the supreme monetary and banking authority in the country and has the responsibility to control the banking system in the country. It keeps the reserves of all scheduled banks and hence is known as the “Reserve Bank”. (2) Public Sector Banks: Emergency services by Banks T.Y.B & I • State Bank of India and its Associates (8) • Nationalized Banks (19) • Regional Rural Banks Sponsored by Public Sector Banks (196) • Old Generation Private Banks (22) • Foreign New Generation Private Banks (8) • Banks in India (40) (4) Co-operative Sector Banks: • State Co-operative Banks • Central Co-operative Banks • Primary Agricultural Credit Societies • Land Development Banks • State Land Development Banks (5)Development Banks: 18 Chapter: Emergency Services (3) Private Sector Banks: Emergency services by Banks T.Y.B & I Development Banks mostly provide long term finance for setting up industries. They also provide short-term finance (for export and import activities) • Industrial Finance Co-operation of India (IFCI) • Industrial Development of India (IDBI) • Industrial Investment Bank of India (IIBI) • Small Industries Development Bank of India (SIDBI) • National Bank for Agriculture and Rural Development (NABARD) • Export-Import Bank of India Chapter: Emergency Services 19 Role of Banks: Banks play a positive role in economic development of a country as repositories of community’s savings and as purveyors of credit. Indian Banking has aided the economic development during the last fifty years in an effective way. The banking sector has shown a remarkable responsiveness to the needs of planned economy. It has brought about a considerable progress in its efforts at deposit mobilization and has taken a number of measures in the recent past for accelerating the rate of growth of deposits. As recourse to this, the commercial banks opened branches in urban, semi-urban and rural Emergency services by Banks T.Y.B & I areas and have introduced a number of attractive schemes to foster economic development. The activities of commercial banking have growth in multidirectional ways as well as multi-dimensional manner. Banks have been extended assistance to rural development all along helping agriculture, industry, international trade in a significant manner. In a way, commercial banks have emerged as key financial agencies for rapid economic development. Chapter: Emergency Services 20 playing a catalytic role in area development, backward area development, By pooling the savings together, banks can make available funds to specialized institutions which finance different sectors of the economy, needing capital for various purposes, risks and durations. By contributing to government securities, bonds and debentures of term- lending institutions in the fields of agriculture, industries and now housing, banks are also providing these institutions with an access to the common pool of savings mobilized by them, to that extent relieving them of the responsibility of directly approaching the saver. This intermediation role of banks is particularly important in the early stages of economic development and financial specification. A country like India, with different regions at different stages of development, presents an interesting spectrum of the evolving role of banks, in the matter of inter-mediation and beyond. Emergency services by Banks T.Y.B & I Mobilization of resources forms an integral part of the development process in India. In this process of mobilization, banks are at a great advantage, chiefly because of their network of branches in the country. And banks have to place considerable reliance on the mobilization of deposit mobalization by banks in India acquired greater significance in their new role in economic development. Chapter: Emergency Services 21 deposits from the public to finance development programmes. Further, Commercial banks provide short-term and medium-term financial assistance. The short-term credit facilities are granted for working capital requirements. The medium-term loans are for the acquisition of land, construction of factory premises and purchase of machinery and equipment. These loans are generally granted for periods ranging from five to seven years. They also establish letters of credit on behalf of their clients favouring suppliers of raw materials/machinery (both Indian and foreign) which extend the banker’s assurance for payment and thus help their delivery. Certain transaction, particularly those in contracts of sale of Government Departments, may require guarantees being issued in lieu of security earnest money deposits for release of advance money, supply of raw materials for processing, full payment of bills on the assurance of the performance etc. Commercial banks issue such guarantees also. Emergency services by Banks T.Y.B & I CHAPTER III BANKING SERVICES & PRODUCTS 22 Chapter: Emergency Services Emergency services by Banks T.Y.B & I BANKING SERVICES Banking covers so many services that it is difficult to define it. However, these basic services have always been recognized as the hallmark of the genuine banker. These are… • The receipt of the customer’s deposits The collection of his cheques drawn on other banks • The payment of the customer’s cheques drawn on himself There are other various types of banking services like: 1) Advances – Overdraft, Cash Credit, etc. 2) Deposits – Saving Account, Current Account, etc. 3) Financial Services – Bill discounting etc. 4) Foreign Services – Providing foreign currency, travelers cheques, etc. 5) Money Transmission – Funds transfer etc. 6) Savings – Fixed deposits, etc. 23 Chapter: Emergency Services Emergency services by Banks 7) Services of place or time – ATM Services. 8) Status – Debit Cards, Credit Cards, etc. T.Y.B & I Common Banking Products Available: Chapter: Emergency Services 24 Some of common available banking products are explained below: 1)Credit Card: Credit Card is “post paid” or “pay later” card that draws from a credit line-money made available by the card issuer (bank) and gives one a grace period to pay. If the amount is not paid full by the end of the period, one is charged interest. A credit card is nothing but a very small card containing a means of identification, such as a signature and a small photo. It authorizes the holder to change goods or services to his account, on which he is billed. The bank receives the bills from the merchants and pays on behalf of the card holder. These bills are assembled in the bank and the amount is paid to the bank by the card holder totally or by installments. The bank charges the customer a small amount for these services. The card holder need not have to carry money/cash with him when he travels or goes for purchasing. Emergency services by Banks T.Y.B & I Credit cards have found wide spread acceptance in the ‘metros’ and big cities. Credit cards are joining popularity for online payments. The major players in the Credit Card market are the foreign banks and some big public sector banks like SBI and Bank of Baroda. India at present has about 3 million credit cards in circulation. 2) Debit Cards: Debit Card is a “prepaid” or “pay now” card with some stored value. Debit Cards quickly debit or subtract money from one’s savings account, or if one were taking out cash. Every time a person uses the card, the merchant who in turn can get the money transferred to his account from the bank of the buyers, by debiting an exact amount of purchase from the card. To get a debit card along with a Personal Identification Number (PIN). When he makes a purchase, he enters this number on the shop’s PIN pad. When the card is swiped through the electronic terminal, it dials the acquiring bank system – either Master Card or Visa that validates the PIN and finds out from the issuing bank whether to accept or decline the transaction. The customer never overspread because the amount spent is debited immediately from the customers account. So, for the debit card to work, one must already have the money in the account to cover the transaction. There is no grace period for a debit card purchase. Some debit cards have monthly or per transaction fees. 25 Chapter: Emergency Services Emergency services by Banks T.Y.B & I Debit Card holder need not carry a bulky checkbook or large sums of cash when he/she goes at for shopping. This is a fast and easy way of payment one can get debit card facility as debit cards use one’s own money at the time of sale, so they are often easier than credit cards to obtain. The major limitation of Debit Card is that currently only some 30004000 shops country wide accepts it. Also, a person can’t operate it in case the telephone lines are down. Chapter: Emergency Services 26 3) Automatic Teller Machine: The introduction of ATM’s has given the customers the facility of round the clock banking. The ATM’s are used by banks for making the customers dealing easier. ATM card is a device that allows customer who has an ATM card to perform routine banking transaction at any time without interacting with human teller. It provides exchange services. This service helps the customer to withdraw money even when the banks ate closed. This can be done by inserting the card in the ATM and entering the Personal Identification Number and secret Password. ATM’s are currently becoming popular in India that enables the customer to withdraw their money 24 hours a day and 365 days. It provides the customers with the ability to withdraw or deposit funds, check account balances, transfer funds and check statement information. The advantages of ATM’s are many. It increases existing business and generates new business. It allows the customers. • To transfer money to and from accounts. Emergency services by Banks To view account information. • To order cash. • To receive cash. Advantages of ATM’s: T.Y.B & I • ATM’s provide 24 hrs., 7 days and 365 days a year service. •Service is quick and efficient • Privacy in transaction • Wider flexibility in place and time of withdrawals. •The transaction is completely secure – you need to key in Personal Identification Number To view account information. • To order cash. • To receive cash. The e-chequing is a great boon to big corporate as well as small retailers. Most major banks accept e-cheques. Thus this system offers secure means of collecting payments, transferring value and managing cash flows. The transaction is completely secure – you need to key in Personal Identification Number 27 Chapter: Emergency Services To the Customers Emergency services by Banks T.Y.B & I 4) Electronic Funds Transfer (EFT): Many modern banks have computerised their cheque handling banks are dispensing with the use of paper cheques. The system called electronic fund transfer (EFT) automatically transfers money from one account to another. This system facilitates speedier transfer of funds electronically from any branch to any other branch. In this system the sender and the receiver of funds may be located in different cities and may even bank with different banks. Funds transfer within the same city is also permitted. The scheme has been in operation since February 7, 1996, in India. The other important type of facility in the EFT system is automated clearing houses. These are the computer centers that handle the bills meant for deposits and the bills meant for payment. In big companies pay is not disbursed by issued cheques or issuing cash. The payment office directs the computer to credit an employee’s account with the person’s pay. Chapter: Emergency Services 28 process with computer networks and other electronic equipments. These 5) Telebanking: Telebanking refers to banking on phone services.. a customer can access information about his/her account through a telephone call and by Emergency services by Banks T.Y.B & I giving the coded Personal Identification Number (PIN) to the bank. Telebanking is extensively user friendly and effective in nature. • To get a particular work done through the bank, the users may leave his instructions in the form of message with bank. • Facility to stop payment on request. One can easily know about the cheque Chapter: Emergency Services 29 status. Information on the current interest rates. • Information with regard to foreign exchange rates. • Request for a DD or pay order. • D-Mat Account related services. • And other similar services. 6) Mobile Banking: A new revolution in the realm of e-banking is the emergence of mobile banking. On-line banking is now moving to the mobile world, giving everybody with a mobile phone access to real-time banking services, regardless of their location. But there is much more to mobile banking from just on-lie banking. It provides a new way to pick up information and interact with the banks to carry out the relevant banking business. The potential of mobile banking is limitless and is expected to be a big success. Booking and paying for travel and even tickets is also expected to be a growth area. Emergency services by Banks T.Y.B & I According to this system, customer can access account details on mobile using the Short Messaging System (SMS) technology6 where select data is pushed to the mobile device. The wireless application protocol (WAP) technology, which will allow user to surf the net on their mobiles to access anything and everything. This is a very flexible way of transacting banking business. Already ICICI and HDFC banks have tied up cellular service provides such as Airtel, Orange, Sky Cell, etc. in Delhi and Mumbai to offer these mobile banking services to their customers. Chapter: Emergency Services 30 7) Internet Banking: Internet banking involves use of internet for delivery of banking products and services. With internet banking is now no longer confirmed to the branches where one has to approach the branch in person, to withdraw cash or deposits a cheque or request a statement of accounts. In internet banking, any inquiry or transaction is processed online without any reference to the branch (anywhere banking) at any time. The Internet Banking now is more of a normal rather than an exception due to the fact that it is the cheapest way of providing banking services. As indicated by McKinsey Quarterly research, presently traditional banking costs the banks, more than a dollar per person, ATM banking costs 27 cents and internet banking costs below 4 cents approximately. ICICI bank was the first one to offer Internet Banking in India Emergency services by Banks T.Y.B & I Benefits of Internet Banking: • Reduce the transaction costs of offering several banking services and diminishes the need for longer numbers of expensive brick and mortar branches and staff. Chapter: Emergency Services 31 • Increase convenience for customers, since they can conduct many banking transaction 24 hours a day. • Increase customer loyalty. • Improve customer access. • Attract new customers. • Easy online application for all accounts, including personal loans and mortgages. Financial Transaction on the Internet: 8) Electronic Cash: Companies are developing electronic replicas of all existing payment system: cash, cheque, credit cards and coins. Automatic Payments: Utility companies, loans payments, and other businesses use on automatic payment system with bills paid through direct withdrawal from a bank account. Emergency services by Banks T.Y.B & I 9)Direct Deposits: Earnings (or Government payments) automatically deposited into bank accounts, saving time, effort and money. Chapter: Emergency Services 32 10) Stored Value Cards: Prepaid cards for telephone service, transit fares, highway tolls, laundry service, library fees and school lunches. 11)Cyber Banking: It refers to banking through online services. Banks with web site “Cyber” branches allowed customers to check balances, pay bills, transfer funds, and apply for loans on the Internet. 12) Demat: Emergency services by Banks T.Y.B & I Demat is short for de-materialisation of shares. In short, Demat is a process where at the customer’s request the physical stock is converted into electronic entries in the depository system. In January 1998 SEBI (Securities and Exchange Board of India) initiated DEMAT ACCOUNTANCY System to regulate and to improve stock investing. As on date, to trade on shares it has become compulsory to have a share demat account and all trades take place through demat. Chapter: Emergency Services 33 Advantages of Demat The demat account reduces brokerage charges, makes pledging/hypothecation of shares easier, enables quick ownership of securities on settlement resulting in increased liquidity, avoids confusion in the ownership title of securities, and provides easy receipt of public issue allotments. It also helps you avoid bad deliveries caused by signature mismatch, postal delays and loss of certificates in transit. Further, it eliminates risks associated with forgery, counterfeiting and loss due to fire, theft or mutilation. Demat account holders can also avoid stamp duty (as against 0.5 per cent payable on physical shares), avoid filling up of transfer deeds, and obtain quick receipt of such benefits as stock splits and bonuses. HOW TO OPEN A DEMAT ACCOUNT? Opening an individual Demat account is a two-step process: You approach a DP and fill up the Demat account-opening booklet. The Emergency services by Banks Web sites of the NSDL and the CDSL list the approved DPs. T.Y.B & I You will then receive an account number and a DP ID number for the account. Quote both the numbers in all future correspondence with your DPs. So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. All these will show in your demat account. So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions. Chapter: Emergency Services 34 your demat account. Let's say your portfolio of shares looks like this: 150 of Is a demat account a must? Nowadays, practically all trades have to be settled in dematerialised form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of up to 500 shares to be settled in physical form, nobody wants physical shares any more. So a demat account is a must for trading and investing. Most banks are also DP participants, as are many brokers. You can choose your very own DP. To get a list, visit the NSDL and CDSL websites and see who the registered DPs are. Emergency services by Banks T.Y.B & I A broker is separate from a DP. A broker is a member of the stock exchange, who buys and sells shares on his behalf and on behalf of his clients. A DP will just give you an account to hold those shares. You do not have to take the same DP that your broker takes. You can choose your own. A. Emergency Medical Services • Telephone Medical Advice The service provider will arrange for the provision of medical advice to NBB Platinum Cardholders over the telephone. It must be noted that a telephone conversation, even with the local attending physician, can not establish diagnosis and must be treated as advice only. • Medical Service Provider Referral The service provider can also provide to NBB cardholders, upon their request, the name, address, telephone number and if available, office hours of physicians, hospitals, clinics, dentists and dental clinics. However, the service provider shall not be responsible for providing medical diagnosis or treatment. Although they will make such referrals, the quality of the Medical Service Providers cannot be guaranteed and the final selection of a Medical Service provider shall be the decision of NBB Cardholder. However the service provider will exercise maximum care and diligence in selecting the Medical Service Providers. • Monitoring of Medical Condition 35 Chapter: Emergency Services Emergency services by Banks T.Y.B & I The service provider will monitor the NBB Cardholder’s medical condition during and after hospitalization, subject to any and all obligations in respect of confidentiality and relevant authorization. • Delivery of Essential Medicine or Equipment The service provider will arrange to deliver to the NBB Cardholder necessary for a Cardholder’s care and / or treatment but which are not available at the Cardholder’s location. The delivery of such medicine, drugs and medical suppliers will be subjected to the laws and regulations applicable locally. Please note that the service provider will not pay for the costs of such medicine, drugs or medical suppliers and any delivery costs thereof, and all costs must be borne by the Cardholder. Chapter: Emergency Services 36 essential medicines, drugs, medical suppliers or medical equipment that are • Dispatch of Physician In the event of an emergency where either NBB Cardholder can not be adequately assisted by telephone for possible evacuation, or the Cardholder can not be moved and/or local medical treatment is unavailable, the service provider will send an appropriate medical practitioner to the Cardholder. Costs of medical practitioner, consultation charges and any related cost thereof will be paid by the Cardholder. • Guarantee of Hospital Admittance Deposit The service provider will guarantee or pay any required hospital admittance deposit on behalf of NBB Cardholder up to US $ 2,500. The Emergency services by Banks T.Y.B & I provision of financial guarantees is subject to first securing payment from the Cardholder through his / her credit card or from funds from the family. • Arrangement of Emergency Medical Evacuation When deemed medically necessary by the service provider, in the event of an illness or accident, provision of air and / or surface all usual ancillary services required to move the Cardholder to the nearest hospital where appropriate medical care is available, will be arranged by the service provider. Costs for the same will be borne by the Cardholder Chapter: Emergency Services 37 transportation will, medical care during transportation, communications and • Arrangement of Emergency Medical Repatriation The service provider will arrange for the return of NBB Cardholder to the Principle Country of residence following the Cardholder’s Emergency Medical Evacuation and subsequent hospitalization. • Arrangement of Transportation of Mortal Remains In the case of death of a Cardholder whilst abroad, the service provider will assist with the necessary formalities and will arrange for the repatriation of the mortal remains to any location as may be selected by the Cardholder’s legal personal representative. • Arrangement of Transportation to join a Cardholder Emergency services by Banks T.Y.B & I The service provider will arrange for round trip transportation for a person chosen by the Cardholder to join him / her if he / she has been hospitalized abroad. • Arrangement of Return of Children If dependent children are left unattended as a result of a Cardholder’s such children by common carrier to their normal place of residence. Qualified attendants will be provided when deemed appropriate by our partners. The above services (items (4) to (11)) are charged on a case-by-case basis. Chapter: Emergency Services 38 Accident or illness, the service provider will arrange the transportation for The provision of these chargeable Services is subject to the service provider first securing payment from the cardholder through his / her NBB credit card or from funds from the Cardholder’s family. B. Emergency Legal Services 1. Legal Referral The service provider will provide NBB Cardholders with the name, address, and telephone number and if requested by the Cardholders and if available, office hours for referred lawyers and legal practitioners. They will Emergency services by Banks T.Y.B & I not give any legal advice to the Cardholders. Also, they are not responsible for any legal fees or related charges, which is the responsibility of the Cardholder. 2. Interpreter Referral Our partners will provide NBB Cardholder with the name, address, telephone numbers and if requested by the Cardholders and if available, office hours for interpreters world – wide. They will not be responsible for any interpreting fees or related charges, which is the responsibility of the Cardholder. Chapter: Emergency Services 39 Emergency services by Banks T.Y.B & I CHAPTER VI RISK MANAGEMENT 40 Chapter: Emergency Services Emergency services by Banks T.Y.B & I RISK MANAGEMENT Risk is inherent in any walk of life in general and in financial sectors in particular. Till recently, due to regulate environment, banks could not afford to take risks. But of late, banks are exposed to same competition and hence are compelled to encounter various types of financial and non-financial risks. Risks and uncertainties form an integral part of banking which by nature entails taking risks. There are three main categories of risks; Credit Risk, Market Risk & Operational Risk. Author has discussed in detail. Main features of these risks as well as some other categories of risks such as Regulatory Risk and Environmental Risk. Various tools and techniques to manage Credit Risk, Market Risk and Operational Risk and its various component, are also discussed in detail. Another has also mentioned relevant points of Basel’s New Capital Accord’ and role of capital adequacy, Risk Aggregation & Capital Allocation and Risk Based Supervision (RBS), in managing risks in banking sector. Background The word “Risk” can be traced to the Latin word “Rescum” meaning Risk at Sea or that which cuts. Risk is associated with uncertainty and reflected by way of charge on the fundamental/basic i.e. in the case of business it is the Capital, 41 Chapter: Emergency Services Emergency services by Banks T.Y.B & I which is the cushion that protects the liability holders of an institution. These risks are inter-dependent and events affecting one area of risk can have ramifications and penetrations for a range of other categories of risks. Foremost thing is to understand the risks run by the bank and to ensure that the risks are properly confronted, effectively controlled and rightly managed. Each transaction that the bank undertakes changes the risk profile of the bank. The extent of calculations that need to be performed to understand the impact of each such risk on the transactions of the bank makes it nearly impossible to continuously update the risk calculations. Hence, providing real time risk information is one of the key challenges of risk management exercise. Till recently all the activities of banks were regulated and hence operational environment was not conducive to risk taking. Better insight, sharp intuition and longer experience were adequate to manage the limited risks. Business is the art of extracting money from other’s pocket, sans resorting to violence. But profiting in business without exposing to risk is like trying to live without being born. Every one knows that risk taking is failure proneas otherwise it would be treated as sure taking. Hence risk is inherent in any walk of life in general and in financial sectors in particular. Of late, banks have grown. 42 Chapter: Emergency Services Emergency services by Banks T.Y.B & I Risk Management framework. A risk management framework encompasses the scope of risks to be managed, the process/systems and procedures to manage risk and the roles and responsibilities of individuals involved in risk management. The framework should be comprehensive enough to capture all risks a bank is exposed to and have flexibility to accommodate any change in business activities. An effective risk management framework includes a) Clearly defined risk management policies and procedures covering risk identification, acceptance, measurement, monitoring, reporting and control. b) A well constituted organizational structure defining clearly roles and responsibilities of individuals involved in risk taking as well as managing it Banks, in addition to risk management functions for various risk categories may institute a setup that supervises overall risk management at the bank. Such a setup could be in the form of a separate department or bank’s Risk Management Committee (RMC) could perform such function. The structure should be such that ensures effective monitoring and control over risks being taken. The individuals responsible for review function (Risk review, internal audit, compliance etc) should be independent from risk taking units and report directly to board or senior management who are also not involved in risk taking. c) There should be an effective management information system that ensures flow of information from operational level to top management and a system to address any exceptions observed. There should be an explicit procedure regarding measures to be taken to address such deviations. d) The framework should have a mechanism to ensure an ongoing review of systems, policies and procedures for risk management and procedure to adopt changes. Chapter: Emergency Services 43 Risk Management for Banking SAS Risk Management for Banking delivers functionality for all major risk types, as well as data management and reporting, enabling business units within banks to independently and separately calculate measures of risk – such as market, Emergency services by Banks T.Y.B & I credit and ALM – as well as calculate firmwide risk measures using models and correlated aggregation techniques. The firmwide risk forecast dashboard in SAS Risk Management for Banking The complexity, severity, and interdependencies of enterprise risk management – made abundantly clear in the recent global financial crisis – means that a more advanced, integrated and scalable infrastructure is needed to protect the financial industry, investors and other stakeholders more appropriately going forward. SAS Risk Management for Banking delivers functionality for all major risk types, as well as data management and reporting, enabling business units within banks to independently and separately calculates measures of risk – such as market, credit and ALM – as well as calculates firm wide risk measures using models and correlated aggregation techniques. Benefits • • Supports an integrated risk management strategy. SAS provides an architecture that supports the data requirements, methodology requirements, usability criteria and ability to distribute key risk information effectively across the enterprise for many different users. Enables innovation. Combining a fully integrated set of risk management applications supported by a flexible risk management framework, SAS provides an infrastructure that enables banks to introduce new risk measurements and models within a fully transparent and auditable environment. 44 Chapter: Emergency Services Emergency services by Banks • T.Y.B & I Improves competitive advantage. SAS optimizes investment strategies, which results in better investment performance, while also providing the flexibility to reallocate capital and risk capacity for current and future business opportunities. Provides more control over and ownership of risk management data. Comprehensive data management capabilities improve data quality by eliminating or reducing data inconsistencies, and a banking-specific data model serves as a single source of information. Chapter: Emergency Services 45 • • Lowers the total cost of ownership. SAS delivers a single solution that provides comprehensive features – from data integration, to risk analysis, to reporting – in a flexible and extendible software application that meets the evolving risk analysis needs of banks. Features Risk data management • • Provides a risk data model with preconfigured data flows. Existing data flows can be modified for customer-specific conditions and data quality controls – e.g., rules for handling bad data, unclassified data or data not fitting the model. Enables users to acquire and consolidate historical data from internal and external sources for risk analysis and reporting. Includes a data model – SAS Detail Data Store for Banking – that serves as a single source of all the information for creating a risk data warehouse. Eliminates or reduces data inconsistencies with automated data quality tools. Supports integration with third-party applications. Provides the ability to create and amend user security for access, authentication and authorization. • • • • • Emergency services by Banks • T.Y.B & I Provides audit functionality, including the creation and inquiry of automatic audit trails. Risk reporting • • • Report framework includes sample reports, OLAP cubes and interactive analysis results for all application components. Provides a common reporting data model that supports the integration and reporting of enterprise risk measures as well as decomposed measures at the entity, business unit, geography or any other userdefined hierarchy. • Asset and liability management • • Enables valuation of traditional balance-sheet instruments, such as loans and deposits and their associated (off-balance) hedges, factoring in embedded options – e.g., prepayment and withdrawal, credit risk, liquidity risk, etc. Assesses fund transfer rates – with or without risk-based spreads, such as credit and liquidity spreads and option-adjusted spreads – and calculates economic value. Performs advanced analysis across risk types, stress testing and modeling of liquidity risk, net interest income and economic value. Assesses the effect of hedge instruments and analyzes optimal cash flow replication hedges. • • Market risk • Enables valuation of complex market instruments, stress testing and calculation of VaR, expected shortfall and other risk measures using a variety of methods – historical simulation, covariance simulation, analytical models and advanced user-defined models. 46 Chapter: Emergency Services Using SAS Stored Processes, users can configure their own workflows and integrate daily and ad hoc advanced risk analytics procedures into their preferred environments. Comes with a wide array of preconfigured reporting and risk analysis workflows. Emergency services by Banks • T.Y.B & I Decomposes portfolio risk in additive risk contributions and analyzes the relative importance of risk factors in determining portfolio loss. Performs back tests and scenario tests of the model. Analyzes the effect of static and dynamic hedges and trade strategies, and determines optimal portfolios. • • Credit risk Chapter: Emergency Services 47 • • • Calculates and stress tests credit exposures, taking into account the effect of netting, collateral and margining, as well as credit derivatives book. Performs advanced simulation of potential future exposure. Calculates portfolio credit risk measures using advanced portfolio credit risk models, such as actuarial models, multivariate Merton models and reduced form stochastic transition matrix models. Optimizes the credit portfolio with respect to assets held or collateral needed or both. • Firm- wide risk • • Calculates the aggregate risk using either correlation matrices or correlated copula aggregations of marginal risk distributions. Perform bottom-up firm- wide risk exposure calculations, taking into account the different risk type sensitivity of exposures, such as market and credit risk. Calculates risk-based performance of the firm based on the effect from balance sheet items and off-balance-sheet items. Provides sample economic capital calculations. • • Emergency services by Banks T.Y.B & I 48 Chapter: Emergency Services Emergency services by Banks T.Y.B & I CHAPTER V CONCLUSION 49 Chapter: Emergency Services Emergency services by Banks T.Y.B & I Banking sectors has undergone various changes after the new economic policy based on privatization, globalization & liberalization adopted by government of India. Introduction of assets classification & accounting norms, deregulation of intrest rate & opening up of financial sector made Indian banking sector competitive encouragement to foreign bank & private bank increased competition for all operators in bank info sectors. Banks in India to adopt the new economic policy & technology was protect by government & was having assured market due to almost state monopoly in banking sectors. Universal banking providing all financial service under one roof will have more success in urban areas. In rural areas for bank marketing personalised banking will go in long way also banks needs to offer innovative trial or made deposit & advance of right amount of right amount at right time in rural marketing. It is submitted that the banking system is on the threshold of a momentous era of change and continuity in growth and development, of individual customer needs and corporate practices, technology and 50 Chapter: Emergency Services CONCLUSION Emergency services by Banks T.Y.B & I competitions. The role of marketing in the banking industry continues to change. For many years the primary focus of bank marketing was public returns. Then the focus shifted to advertising and sales promotion. That was followed by a focus on the development of a sales culture. Now the focus is on the individual customer meeting and even anticipating his or needs and developing trusting, long-term relationships by delivering high quality personalized service. Marketing both as a philosophy and an activity; is expected to contribute immensely to the realization of goals both immediate and future. All though all the elements of the marketing concept – customer satisfaction, profit integrated framework and social responsibility must receive the greatest emphasis in the years a head. They must be guided by the dictum of Mahatma Gandhi. “A customer is the most important visitor in our promises. He is most dependent on us. We are depending on him. He is not an interruption on our work. He is the purpose of it. He is not an outsider on our business. He is part of it. We are not doing him a favour by serving him. He is doing as a favour by giving as an opportunity”. Chapter: Emergency Services 51 Emergency services by Banks T.Y.B & I BIBLIOGRAPHY INTERNATIONAL BANKING – K VISWANATHAN INTERNATIONAL BANKING – DEEPAK ABHYANKAR FINANCIAL MARKETS AND INSTRUMENTS – L M BHOLE INTERNATIONAL FINANCE – APTE FINANCIAL MARKETS AND SERVICES – GORDAN & NATRAJAN 52 Chapter: Emergency Services Emergency services by Banks T.Y.B & I WEBLOGRAPHY GOOGLE.COM WIKIPEDIA.COM YAHOO.COM ANSWERS.COM CANARA. COM Chapter: Emergency Services 53