KSEEB Class 10 SSLC BUSINESS STUDIES Chapter 1 Banking Transactions Notes
Meaning and Characteristics of Banks, Types of Banks and Finance Transactions by Banks and Post Offices
- Meaning of banks
- Banks are the financial institutions which accept deposits from the public and use the money deposited as investment and agree to return whenever they require in the form of cheques, drafts or in some other forms.
- The term bank is derived from the Italian word “BANCO” or from the French word “BANQUE”, both means a “BENCH” or money ovhanno table
- Financial institution: It is a financial institution which deals with money.
- Form of organization: Bank may be a person, a group of persons, firm or a company,
- Acceptance of deposits and lensing of loans: Bank acts as a custodian of the deposits of the public and also lends loans in the form of overdraft, cash credit etc.
Payment and withdrawal: Customer can withdraw their deposits in the form of cheques and drafts etc.
“Class 10 Karnataka Board Business Studies Chapter 1 notes”
- Agency and utility functions: Bank acts as an agent of its customers and also provides general utility services like paying the taxes, paying the insurance premium and locker facility etc.
- Profit and service orientation: Bank makes profit by rendering various services to its customers.
- Ever increasing functions: Bank can expand and diversify its activities and functions means many other functions can also be performed by the bank like investment in government securities and mutual funds etc.
- Connecting link: Bank acts as an intermediary between depositors and borrowers as the deposited amount of a person is given as a loan to another person.
- Banking BUSINESS: The main activity of a bank is the creation of credit by accepting deposits and lending loans.
“KSEEB Class 10 Business Studies Banking Transactions notes”
Name identity: A bank is always associated by the word bank, for example – State Bank of India and Union Bank of India. It enables the customers to know in which bank they are dealing with money. Functions of a bank
KSEEB Class 10 Business Studies Chapter 1 Banking Transactions
The banking functions can be categorized in two types:
- Primary or main functions.
- Secondary or agency and general utility functions. Primary or main functions
- Accepting deposits
- Lending loans
- Creation of credit
Secondary or agency and general utility functions. - Transfer of funds
- Collection of cheques, drafts and bills
- Discounting of commercial bills
- Issuing letters of credit and guarantees
- Underwriting and mutual fund services
Relationship between bankers and customers - General Relationship – it includes the following relationship:
- Primary relationship as a debtor and creditor
- Subsidiary relationship as a trustee and beneficiary
- Agent and principal relationship
- Special Relationship
- Obligation to honour cheques
- Obligation to maintain secrecy of accounts
Services offered by banks - Providing debit and credit card to its customers.
- Providing personal loan on a reasonable interest.
- Providing home and vehicle loan.
- Trading of mutual funds for its customers.
“SSLC Business Studies Chapter 1 Banking Transactions explained”
Providing locker facilities to safe the consumer’s precious items.
- Providing trust services by issuing letter of credit etc.
- Providing signature guarantees.
- Providing e-banking facilities to its customers.
- Banking transactions-banks and post offices
- Any sort of activity involving in money or exchange of money in an account is considered as bank transaction.
- Banks keep money of the customers in the form of deposits and money thus collected is lent to the customers who need money as loans. These loans are called bank loans.
- All the banking transactions in India are controlled and regulated by the Reserve Bank of India (RBI). RBI is known as the mother of all the banks or bankers BANK or Central Bank of India.
- The postal department of India also acts as the saving bank as it provides the following financial facilities-
- Saving bank account facility.
- Retail Banking functions of monthly income schemes, recurring deposits, time deposits, money order facility etc.
KSEEB Class 10 Business Studies Chapter 1 Banking Transactions Types Of Banks
- Central Bank or Reserve Bank of India
- Commercial banks
- Industrial development banks
- Land development banks
- Indigenous banks
- Co-operative banks
- Exchange banks
“KSEEB SSLC Banking Transactions chapter summary”
KSEEB Class 10 Business Studies Chapter 1 Banking Transactions Types of Bank Accounts
- Savings Bank Account: limited transactions per day.
- Current Account: Unlimited number of transactions can be made.
- Recurring Deposit Account: Fixed amount each time (fixed) has to pay.
- Term Deposit Account: A fixed amount is deposited for a certain period.
Procedure to open a Bank Account:
To avail professional banking service, it is mandatory for every individual to open a bank account. - Decide the type of account you want to open.
- Approach the bank officer to collect the form.
- Fill up the bank account form or the proposal form.
- Give reference for opening your bank account.
- Submit the bank account form fully filled in the bank.
- Initial deposit to be made.
Advantages of opening a Bank Account: - Safe custody of money.
- Facility of deposits and withdrawals.
- Easy borrowing of loans and advance.
- Financial discipline.
- Safety of money and valuables.
Major operations provided by a Banker. - Provides savings bank facility.
- Mobilization of deposits for the purpose of lending.
- No deposits less than 10 are accepted by bank.
- Collection and payment of cheques, drafts or other instruments drawn in favour of account holder.
- Withdrawal of money by account holders through Pass-book, Cheques, ATM.
- Agency functions on behalf of its account holders.
- Transfer of account between different branches of the bank and closure of the account at the request of account holder.
- Crediting prescribed rate of interest for each calendar month on the minimum balance of credit of the account of its account holder.
Note: No interest is paid to the customer on Current Account.