BANKING BASICS

1. BANKING BASICS

2. BANK • A BANK is a financial intermediary which allocates funds from the savers to the borrowers. • 3 types of banks exist:  • Central banks (RBI in India) • Commercial banks • Merchant/ investment banks

3. TYPES OF BANKS

4. CORPORATE BANKING • It is a broad term given to the different banking services that large companies, governments, or other big institutions need in order to function from day to day. • It comprises of three main verticals • Transaction Services • Client-Relationship Management • Treasury Services

5. TRANSACTION SERVICES Cash Management • Centered on the seemingly simple job of efficient management of receivables and payables • Web-based cash management is bringing the capabilities directly to the corporate customers through the Internet. • The following constitutes the main functional modules - Collection Services, Customer Billing, Information Management, Electronic Invoice Presentment and Payment (EIPP), Electronic Bill Presentment & Payment. (EBPP)

6. TRANSACTION SERVICES Trade Services Provide trade finance solutions that enhance organizations global competitiveness and maximize trading partner relationships Working Capital Management To ensure that the firm is able to continue its operations and that it has sufficient cash flow to satisfy both maturing short-term debt and upcoming operational expenses.

7. CLIENT RELATIONSHIP MANAGEMENT Relationship management is important for winning and maintaining profitable business in the corporate banking market. The relationship manager is knowledgeable of the company, senior management, financial needs and the range of capabilities that the bank offers. They manage the relationship proactively as a problem-solving professional using their knowledge to tailor unique and innovative financial solutions that will create company value.

8. TREASURY MANAGEMENT • Money Market Desk • Management of assets and liabilities of the bank viz. Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) of the bank • Daily Funds/ Balance Sheet Management for the Bank Equity Desk • Offers services to enable the corporate client to trade in equities in stock markets all over the world

9. TREASURY MANAGEMENT • Forex Desk • Offers corporate clients access to foreign markets and manages financial exposures and risks • Offers trading capabilities in different currencies in established and emerging markets worldwide—giving organizations ready access to the world’s currency markets • Asset Liability Management • Coordinates the management of assets and liabilities so that an adequate return may be earned

10. RETAIL BANKING • PERSONAL FINANCE • Credit Cards • There are around 18 million credit cards in India and this number is growing rapidly Hence, there’s tremendous growth potential in this segment. • Loans for SMEs • Wealth Management • It is an off-balance sheet activity. It is fee-based and the bank sells third party products. Investment services provided to wealthy clients fall under this category.

11. PERSONAL FINANCE • Consumer Finance • This division is responsible for giving loans to small-ticket customers. Foreign banks face a lot of regulations in this segment in India. • Mortgages • Popular sections under this category are Home loans and Auto loans • Current account and liabilities • Caters to trade needs and cash needs of the customers

12. INTERNATIONAL FINANCE In India, this department caters mainly to the NRIs. There are many NRIs who want to invest in India. These banks provide advisory services in this regard and also execute the transaction on behalf of the clients. Moreover, transfer payments by NRIs can be made through commercial banks. Banks also assist them in real estate investment

13. PRIORITY BANKING This is a service provided by banks to HNI (High Net Worth) individuals. The products sold are same but the ticket size is different. A Relationship Manager is appointed to do overall profiling of priority banking client. Special services are provided keeping in view the importance of the clients.