JAIIBOCTOBER 08/2007

WELCOME TO VIRTUAL CLASS ROOM SESSION

PRINCIPLES OF BANKINGMODULE B

BANKER-CUSTOMERBANKER-CUSTOMERRELATIONSHIPRELATIONSHIP

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

FAQs

KYC: Know Your Customer Know your customer norms are applicable to all customer accounts. It deals with not only to identify the customer but also to understand the activities of the customer, to ensure that the operations in the customer account/s is/are for genuine purpose

Garnishee Order

A garnishee order is issued by a court Ex: Mr X borrows money from Mr Y and fails to

repay. Mr Y files a suit against Mr X, under the Civil

Procedure Code and the Court issues a decree and attaches the funds in Mr. X’s bank account with bank A.

The order issued by the Court on bank A is known as “Garnishee Order”

Mr Y is the judgement creditor Mr.X is the Judgement debtor. Bank A is

Judgement debtor’s debtor

BANKER’S DUTIES & RESPONSIBILITIES

PAYING BANKER PAYMENT OF

CHEQUES

PAYMENT IN DUE COURSE

APPARENT TENOR

PAYMENT INGOOD FAITH

WITHOUTNEGLIGENCE

NEGOTIABLE INSTRUMENTS

CHEQUES

OPEN

CROSSED

ORDER

BEARER

NEGOTIABLE INSTRUMENTS BANKER’S DUTIES

& RESPONSIBILITIES

C0LLECTING BANKER

COLLECTION OF CHEQUES

HOLDER INDUE

COURSE

CONSIDERATIONTITLE

IBEFOREMATURITY

WORKING CAPITAL OPERATING WORKING CAPITAL OPERATING CYCLECYCLE

BILLS REALISED

CREDIT SALES

BILLS

PAYABLE

RAWMATERIAL

SEMI FINISHED PRODUCTS

FINISHED PRODUCTS

CASH

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 AT A DISCOUNTISSUED AT A DISCOUNT 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 FINANCE

BILLS FINANCE

TERMFINANCE

RETAIL FINANCE

OVERDRAFT

CASH CREDIT

LOANS&

ADVANCES

Non-Fund Based Finance

BANKGUARANTEE

CO-ACCEPTANCEOF BILLS

LETTERS OF CREDIT

Non-Resident Indian Accounts

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

account of a) Employment/business/vocation and b) staying outside India for an uncertain period2)A person of Indian origin but a citizen in any other country except Pakistan/Bangladesh if at any time holding an Indian passport

6 Cs6 Cs CHARACTERCHARACTER CAPTIALCAPTIAL CAPACITYCAPACITY COLLATERALCOLLATERAL CONDITIONCONDITION COMPLIANCECOMPLIANCE

Clayton’s CaseClayton’s Case

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

(Right of set off is applicable)(Right of set off is applicable)

Based on the concept of AppropriationBased on the concept of Appropriation

FAQsFAQs Distinguish -Cash Credit and OverdraftDistinguish -Cash Credit and Overdraft Both CC and OD forms part of working Both CC and OD forms part of working capital financecapital finance CC is granted against moveable goodsCC is granted against moveable goods (inventory/semi finished goods/goods etc)(inventory/semi finished goods/goods etc) OD is granted against paper securityOD is granted against paper security (Fixed deposit receipts/shares/book debts)(Fixed deposit receipts/shares/book debts)

ALL THE BEST & THANK YOU

T.M.C.VARADARAJAN TEL : 022-25638965 (R) 022-66364206 (O) e.mail: t.varadarajan@scotiabank.com tmc_varadarajan@yahoo.co.in