Banking Services Flashcards
(29 cards)
FORMS OF MONEY
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts in a particular country or socio-economic context. The main functions of money are distinguished as:
a medium of exchange;
a unit of account;
a store of value;
a standard of deferred payment.
Any item or verifiable record that fulfils these functions can be considered as money.
commodity
The first and oldest form of money is commodity money. Commodity money value comes from the commodity out of which it is made. The government selects one commodity from society to become money, such as gold or silver coins, where the coin’s inherent value equals the coin’s market value.
METALLIC MONEY/COINAGE
Metallic money refers to coins made out of various metals like gold, silver, bronze, nickel, etc. A coin is a piece of metal of a given size, shape, weight and fineness whose value is certified by the government.
credit money
In modern economic societies, with the development of banking activity, along with paper money, another form of convertible money has developed in the form of credit money or cheques. Cheques are now conventionally accepted as a mode of payment by the business community in general.
PAPER MONEY/BANK NOTE/CASH
Paper money consists of currency notes issued by the Central Bank of the country. The use of paper money has many advantages. It economizes the use of precious metals. It is convenient to carry and easy to store.
ELECTRONIC MONEY
Electronic money is not tangible like a bank note or a coin. It is money which exists only in banking computer systems and is not held in any physical form. Electronic money is exchanged using technologies such as debit/credit cards and the internet. The electronic money is linked to the amount the depositor ha in his/her account at the bank.
purpose of the banks
A bank’s job is to provide customers with financial services that help people better manage their lives. As technology advances and competition increases, banks are offering different types of services to stay current and attract customers. It helps to know the different types of banking services available.
This ensures you get the most out of your current financial institution. Deciding which services are most important can lead you to the bank that best fits your needs.
Payment Services
The payment service is the backbone of the entire money flow in an economy. Previously, the payment system was supported by Cheques, Demand draft etc, which have now been replaced with direct online money transfer with the evolution of technology.
Financial Intermediary
This is one of the oldest functions of the Bank which deals with accepting deposits from customers and then lending these funds to borrowers. This is the main core business of the Banking system.
Financial Services
These services include investment banking, foreign exchange business, wealth management, Loans and remittance services. These services generate income for the commercial bank in the form of commission of minimal charges for the service.
Ancillary Services:
These services form a very small section of the services offered by the bank. They include safe deposit lockers, cheque pick up facility
ADVANTAGES OF A CHEQUE
SAFE AND TRUSTED
Only the named recipient is able to cash the cheque at a bank or other financial institution. Being a method of payment that has been around for generation, people trust this traditional method of payment over online solution at times.
ADVANTAGES OF A CHEQUE
CONVENIENT
It is more convenient than carrying around bank notes. In addition, it prevents one from having the count bank notes and possibly making mistakes
ADVANTAGES OF A CHEQUE POST DATED
This allows the costumers to place a later date on cheques that grants them time to put funds into their accounts. This is widely used as consumers can make payments for goods and services in advance even if they do not have the funds in their accounts.
ADVANTAGES OF A CHEQUE
PERSONALIZATION
Companies as well as business professionals are able to personalize and customize cheques according to their companies, incorporating logos, trademarks and designs.
parts of a cheque
Name/Address – this is the name/address of the person/organization issuing the cheque.
- Date of the cheque - To be able to receive payment, the date must be the current date
- Cheque Number - Each cheque has a different number for identification purposes,
normally printed using Magnetic ink.
- Payee/Person/Company getting the cheque- this is the person to whom the cheque is to be made payable to. Ensure that the name of the person is correctly spelt and written close to the words “pay to”. Draw a line on the space after the payee’s name to avoid alteration
Amount of money/The payment amount – this must be written in words. The same value will be written in the box beside it. Ensure that the amount in words and in figures tally, otherwise, the bank will return the cheque.
Signature – this should be the signature of the person writing the cheque.
Amount of money in numbers – after writing the cheque amount in words, the same amount must be written in numbers beside it.
Name/Address of Bank- this is the name and address of the bank that the cheque originated from.
Note about Cheque- this is a summary note of the purpose for which the cheque is issued.
Bank account number – this is the account number of the person/organization issuing the cheque.
Branch # and Cheque # - this is the branch number of the bank issuing the cheque as well as the nine digit cheque number.
safety guidelines for drawing a check
Keep Cheque Clean and Tidy
Write clearly and legibly and always use permanent ink pens such as a ball pen. Ensure no
alteration/amendment/erasure on the face of the cheque as banks will reject such cheques.
Cheque Management
Make sure that no cheque is being removed from the cheque book without your knowledge and
ensure that spoiled cheques are completely destroyed. Ensure that cheques are kept in a safe and
locked place and never leave cheques whether signed or unsigned unattended. Undertake regular
review of your stock of unused cheques and conduct regular reconciliation of cheques paid with your
bank statement
Lost or Stolen Cheque
Report immediately to your bank if there are cheques missing from your cheque book or discrepancies
in your bank statement
Check before issuing cheque
Ensure your account has sufficient funds before you issue a cheque. It is not the duty of your bank to
call you when there are insufficient funds, although some banks may do so as part of their service to their customers.
Commercial Banks
A commercial bank is a financial institution that provides various financial services, such as accepting deposits and issuing loans.
Bank Deposits
This is bank credit in the form of deposits instead of the issue of notes
Cheques
A cheque is a document that orders a bank to pay a specific amount of money from a person’s account to the person in whose name the cheque has been issued.
Cash
Cash is legal tender or money in the physical form of bank notes or coins that can be used to exchange goods, debt or services.
Withdrawal
A withdrawal involves removing funds from a bank account, savings plan, pension or trust.
Deposit
A deposit involves placing money into a bank account for safekeeping. These deposits are made to deposit accounts such as savings accounts, checking accounts and money market accounts.
Lodgement
Lodgement is an amount lodged to a bank account or the act of paying money into a bank account
