banking terms and kinds of cheque
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Ch. 06: Bank & Banking
TransactionsTopics;• Definition of bank• Types of bank accounts• Advancing of loans • Cheques and its types• Important banking terms
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Definition of Bank
A bank is a dealer in money and credit. It accepts deposits from the public at low rate of interest and lends it to those who need it at high rate of
interest.
Process of opening a bank account
1. Formal Application: for opening a bank account, customer fills an application form .
2. Obtaining Introduction: Before opening a bank account, banker may ask some formal questions
from the customer
3. Specimen Signatures: When the banker is satisified about the customer, he takes specimen signatures from
the customer on a card “signature card”
Name of account holder:
SNAWER GILL____ Snawer
Snawer Snawer
4. Initial Deposit: For opening a bank account, first deposit may be minimum of Rs. 500 or Rs. 1000 5. Operating of account: When an account is opened, banker gives to the customer following books to operate it;• Pay-in-slip book• Pass Book• Cheque Book
1. Pay-in-Slip Book: It is a book that contains blank printed form provided by the banker to its customer. It is used to deposit money into bank.
2. Pass Book: It is a book that is used to record all the banking transactions. All the amounts paid into bank and withdrawn from bank are recorded in it.
2. Cheque Book: It is a book that contains blank printed form provided by the banker to its customer. It is used to draw money from the bank.
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Types of
Bank Accounts
1. Current AccountIn this type of account, client
can deposit and withdraw money at any time. No profit is
given by bank in this type of account2. Profit & Loss Saving Account
This type of account is opened with a veiw to receive some profit. Two withdrawals are
allowed in a week. Low rate of profit is given by bank in this
type of account
3. Fixed deposit AccountIn this type of account, a
particular amount of money is deposited into bank for a fixed period of 6 months, 1 years, 2 years or more. Amount cannot be drawn before the expiry of that period. High rate of profit
is given in this account.
4. Foreign Currency AccountThis type of account is opened
and operated in foreign currency like dollar, pond etc. Nature wise this account can be current, saving or a fixed
account.
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Advancing Loan
Loans and advancesBank makes the following types of
loans.• Short-term loans (for 1 year)• Medium term loan (for 1-5 years)• Long term loan (for 5 to 15 years)
Bank Over draftSometimes, bank allows its
trust worthy clients to overdraw money up to a certain limit, this extra
money is called overdraft. Bank charge interest on this
money.
Cheque and its Types
A cheque is an unconditional order in writing addressed by a customer to its banker to pay a sum of money
to him or to the person named therein.
Cheque
1. Bearer Cheque: A cheque that is payable to any person
who may present it at bank on which it is drawn.
2. Order Cheque: A cheque that is only payable to a person whose name is written on it. For the payment of this cheque, banker may demand identification from that person.
3. Crossed Cheque: A cheque on which two parallel lines are drawn on its face. A crossed cheque can not be cashed at bank counter. Amount is transferred from bank to bank.
4. Open Cheque: When a cheque is not croosed, it is said to be an open cheque. A crossed cheque can not be made an open cheque without the signature of the accountholder.
5. Post dated Cheque: A cheque that contains any future date or a date yet to come is called post dated cheque.
6. Anti-dated Cheque: A cheque that contains any previous date on which it is drawn is called anti-dated cheque.
6. Stale Cheque: A cheque that contains six month old date on which it is drawn is called stale cheque.
6. Dishonoured Cheque: When a cheque is returned by the banker unpaid due to any reason is callled a dishonoured cheque
Dishonouring of cheque
• Signatures are different• amount in words and figures differ• alterations are not signed • insufficient funds in account• payment is stopped by accountholder• Stale cheque (6 mont hold date)• etc
Important Terms
Postal Order: It is a written order by which
one post officer requests the other
post officer to pay a specific amount of money to a specific
person.
Bank Draft: It is a written order by which one Banker requests the other banker to
pay a specific amount of money to a specific
person.
Treasury Order: It is a written order by the
Government department to a
particular “government
treasury” to pay a sum of money to the
person whose name is written therein.
Standing Order: Sometimes, the
banker pays some expenses and receives some incomes on the behalf of the client.
This right of the bank is called, standing
order.
&
Regards:
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