JAIIBJAIIBAPRIL 02/2007APRIL 02/2007

WELCOME TO VIRTUAL CLASS WELCOME TO VIRTUAL CLASS ROOM SESSSIONROOM SESSSION

BANKER-CUSTOMERBANKER-CUSTOMERRELATIONSHIPRELATIONSHIP

DEBTOR-CREDITORDEBTOR-CREDITORCREDITOR-DEBTORCREDITOR-DEBTORAGENT-PRINCIPALAGENT-PRINCIPALLESSOR-LESSEELESSOR-LESSEEBAILEE-BAILORBAILEE-BAILOR

BANKER’S DUTIES & BANKER’S DUTIES & RESPONSIBILITIESRESPONSIBILITIES

PAYING BANKERPAYING BANKER PAYMENT OF PAYMENT OF

CHEQUESCHEQUES

PAYMENT IN DUE COURSE

APPARENT TENOR

PAYMENT INGOOD FAITH

WITHOUTNEGLIGENCE

NEGOTIABLE INSTRUMENTSNEGOTIABLE INSTRUMENTS

CHEQUES

OPEN

CROSSED

ORDER

BEARER

NEGOTIABLE INSTRUMENTSNEGOTIABLE INSTRUMENTS

BANKER’S DUTIES & BANKER’S DUTIES & RESPONSIBILITIESRESPONSIBILITIES

C0LLECTING C0LLECTING BANKERBANKER

COLLECTION OFCOLLECTION OF CHEQUESCHEQUES

HOLDER INDUE

COURSE

CONSIDERATIONTITLE

IBEFOREMATURITY

DEPOSIT ACCOUNTS

CERTIFICATE

FLEXI

RECURRING

FIXED

SAVINGS

CURRENT

DEPOSITS

CERTIFICATE OF DEPOSITCERTIFICATE OF DEPOSIT

CD IS A MONEY MARKET INSTRUMENTCD IS A MONEY MARKET INSTRUMENT ISSUED AS A DISCOUNT INSTRUMENTISSUED AS A DISCOUNT INSTRUMENT MINIMUM AMOUNT IS Rs. One LAKHMINIMUM AMOUNT IS Rs. One LAKH MINIMUM PERIOD OF CD 15 DAYSMINIMUM PERIOD OF CD 15 DAYS MAXIMUM PERIOD OF 1 YEARMAXIMUM PERIOD OF 1 YEAR DIFFERS FROM FD DIFFERS FROM FD a) Prepayment not alloweda) Prepayment not allowed b) Loan is not allowedb) Loan is not allowed

CHARGESCHARGES

HYPOTHECATIONHYPOTHECATION PLEDGEPLEDGE MORTGAGEMORTGAGE ASSIGNMENTASSIGNMENT LIENLIEN SET OFFSET OFF

FUND BASED FINANCEFUND BASED FINANCE

BILLS FINANCE

TERMFINANCE

RETAIL FINANCE

OVERDRAFT

CASH CREDIT

LOANS&

ADVANCES

Non-Fund Based FinanceNon-Fund Based Finance

BANKGUARANTEE

CO-ACCEPTANCEOF BILLS

LETTERS OF CREDIT

Working Capital Cycle

Cash

Raw material

Semi finished goodsFinished goods

sales

Bills receivables

Non-Resident Indian AccountsNon-Resident Indian Accounts

Who is a Non Resident Indian?Who is a Non Resident Indian?1)An Indian citizen who resides outside India on 1)An Indian citizen who resides outside India on

account of account of a) Employment/business/vocationa) Employment/business/vocation

andandb) staying outside India for an uncertain b) staying outside India for an uncertain

periodperiod2)A person of Indian origin but a citizen in2)A person of Indian origin but a citizen in any other country except Pakistan/Bangladeshany other country except Pakistan/Bangladesh if at any time holding an Indian passportif at any time holding an Indian passport

6 Cs6 CsCHARACTERCHARACTERCAPTIALCAPTIALCAPACITYCAPACITYCOLLATERALCOLLATERALCONDITIONCONDITIONCOMPLIANCECOMPLIANCE

Clayton’s Case

Applicable only to aa) joint a/c and or a partnership a/cb) running c/c and o/d a/csc) Not to two different a/cs

(Right of set off is applicable)

Based on the concept of Appropriation

FAQs• Distinguish -Cash Credit and Overdraft• Both CC and OD forms part of working capital finance CC is granted against moveable goods (inventory/semi finished goods/goods

etc) OD is granted against paper security (Fixed deposit receipts/shares/book

debts)

FAQsFAQs

• KYC: Know Your CustomerKYC: Know Your Customer• Know your customer norms are applicableKnow your customer norms are applicable• to all customer accounts. It deals with notto all customer accounts. It deals with not• only to identify the customer but alsoonly to identify the customer but also• to understand the activities of the customer,to understand the activities of the customer,• to ensure that the operations in the to ensure that the operations in the

customercustomer• account/s is/are for genuine purposeaccount/s is/are for genuine purpose

FAQs

Fund Based and Non Fund Based limits Banks grants credit facilities to their clients to

carry on with their trade activities. These facilities are classified as Fund

based/Non fund based depending upon the client’s business requirements.

Cash Credit/Overdraft/Loans are examples of fund based limits, where the bank allows the customer to withdraw funds against securities, whereas in respect of non fund based limits like Letters of Credit and Guarantees, the bank extend a comfort level to the clients to enable them to carry on with their business activities

THANKS & ALL THE BEST

• T.M.C.VARADARAJAN• TEL : 022-25638965 (R)• 022-66364206 (O)• e.mail:

t.varadarajan@scotiabank.com•

tmc_varadarajan@yahoo.co.in