Fund and Non Fund Based Banking

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FUND AND NON FUND BASED BANKING



Introduction. Fund based.

Cash credit.

Overdraft facilities.

Bills finance.

Term loans.

Packing credit.

Non fund based.

Letter of credit.

Guarantee.

Deferred payment guarantees.

Conclusion.



Bank offers an easy access to a common man

Banking is a service industry

Bank provides financial services to :-

A. People.

B. Business.

C. Industry.

Financial services :-

A. Merchant banking..

B. Money transfer.C. Credit cards.

D. ATMs.



Bank give advances to people in

various ways.

Advances are divided as :-



Current assets.

Cash credit.

Overdraftfacilities.

Bill financing.

Term loans.

Packing credit.

Fixed assets.

Long term

loans.Guarantees

payments.

Letter of credit.



Facility provided to:-

Availability of the amount:-

Credit facility to the banker:-

Deposits and withdrawal:-

Flexibility:-



An overdraft occurs when money is withdrawn from a

bank account and the available balance goes below

zero.

Pay interest:- Overdrafts occur for a variety of reasons. These may

include:

Intentional short-term loan .

Failure to maintain an accurate account register ATM overdraft .



Smaller banks:-

Parties involved:-

Pre-determined interest:-



Repayable.

Term loans are further classified in three categories

depending upon the period of repayment as under:

Short term repayable in less than 3 years. Medium term loans repayable in a period ranging

from 3 years to 7 years.

Long term loans repayable in a period over 7 years.



Facility.

Period of 90 days.

Facilitates the exporter.



Current assets.

Letter of credit.

Fixed assets.

Guarantees.Deferred

payment

guarantees.



Instrument of trade payment.

Buyer and seller.

'Uniform Customs & Practice for Documentary Credits' (UCPDC).

Issuing bank for payment.

Many disputes have arisen.



Bank guarantee classified according to period,

purpose, performance,& financial guarantees.

Guarantee may be specific or continuing.

Specific guarantee means only limited to

certain sum or a particular specific agreement.

Under section 129,Continuing guarantee means

guarantee which extends to Series of transaction.



Commercial bank should be stringent in

supervision with respect to performance guarantee.

Maximum period of 10 yrs can be provided by any

commercial bank.

Banks can maximum mantain 20% of banks

outstanding unsecured guarantee plus total of its

outstanding unsecured advances should not exceed

15% of its total outstanding advances.

In the case of financial guarantee the creditconversion factor is 100% & for performance

guarantee 50%.

In case of guarantee & counter guarantee the

advance will attract zero risk weight for capital

adequacy.



Deferred Payment Guarantee is issued for

payment of a specified amount over a period of time.

The required margin security & commission

payable are determined on the basis of type of

guarantee & credit worthiness of the customers.

The Deferred Payment Guarantee is bank facility

where bank extends a guarantee to the eqipment

manufacturers in behalf of its clients.



Banks in India have the responsibility of fulfilling socialobligation.

Therefore , banks has to provide certain advances to

industrialist, agriculturist, traders against security.

Fund and non fund based banking activities are part of

advances which are provided for development of people.

Fund and non fund banking is a service provided by

bank against security.



Documents

Fund and Non Fund Based Banking