Everyday Banking

Unit I

Meaning of Banking:
Banking is the business of protecting money for others. Banks lend this money, generating
interest that creates profits for the bank and its customers.
A bank is a financial institution licensed to accept deposits and make loans. But they may also
perform other financial services.
What is a passbook?
A bank passbook is a physical notebook held by bank account holders. It records on paper the
details of all banking transactions, including elements such as:
 Debits
 Credits
 Loans
 Fixed deposits
 Recurring deposits
While most banks now offer paperless alternatives to the old-fashioned passbook, we can still
find some accounts with a passbook attached. For example, a passbook savings account comes
both with a physical notebook to record transactions, as well as competitive interest rates.
What is Cheque book?
A bank cheque book is a booklet issued to savings account holders in India. A bank cheque book
contains paper instruments printed in advance with the account details of the account holder
called ‘cheques’ that can be used for making financial transactions by the savings account holder.

How to Write a Cheque?

To write a cheque, follow these simple steps:
 Write the date at the top right-hand corner of the cheque in the format of
“DD/MM/YYYY“. You can also create a post-dated cheque if necessary
 Following that, you must record the ‘Payee’s’ name. A payee can be either an individual
or a business. Make certain that the name is written correctly
 Now, write the amount in words in the space designated for ‘Rupees.’ Write the amount
from the very left side of the space, and don’t forget to include the word ‘only’ after
writing the full amount. This way, the cheque will be safe from tampering. For instance,
if the total is 4004, write it as “four thousand and four only.”
 After you have finished writing the amount in words, write the same amount in numerals
in the box provided on the right side of the cheque. Write the amount in the format
“4004/-“
  Sign the cheque. Use the same signature which you have used for other banking
formalities. Wrong/mismatched signatures result in the cancellation of the cheque or can
be proven invalid.
What is a Bank Deposit Challan?
A bank deposit challan is a form used to deposit money into a bank account. It contains the
details of the person depositing the funds, the account number where the funds are to be credited,
and the amount of money to be deposited. The bank deposit challan also serves as proof of the
deposit made by the depositor.
How to Fill out a Bank Deposit Challan?
To fill out a bank deposit challan, follow the steps below:
 Obtain the Challan Form: We can obtain the challan form from the bank, or it may be
available online.
 Fill in the Details: Fill in the details of the depositor, including name, address, and
contact number. Then, provide the account number where the funds are to be credited.
 Mention the Amount: Mention the amount of money to be deposited in both numbers and
words.
 Verify the Details: Verify all the details you have filled in to ensure that they are
accurate.
 Submit the Challan Form: Submit the completed challan form along with the money to be
deposited to the bank teller.
Cheque Clearing Meaning
Cheque Clearing means processing a cheque from one bank to another by transferring the
amount mentioned on the cheque to the payee’s account. The two most commonly used forms of
cheque clearing systems are:
 Cheque Truncation System
 Speed Clearing
Cheque Truncation System (CTS)
1. Introduction
RBI is considering replacement of the existing system of settlement of payment on the basis of
physical cheques by a new procedure called “ Cheque Truncation System” (CTS). It is an online
image-based cheque clearing system where cheque images and Magnetic Ink Character
Recognition (MICR) data are captured at the collecting bank branch and transmitted
electronically eliminating the actual cheque movement.
2. Security.
CTS is protected by a comprehensive PKI-based security architecture which incorporates basic
security and authentication controls such as dual access control, user ID and passwords with
cryptobox and smart card interfaces.
3. Benefits.
 Realisation of proceeds of cheque possible within the same day.
 Data storage and retrieval becomes easy.
 Minimizes risks and introduce a secured cheque clearing system.
 Will result in cost savings due to lower cost in physical movement of cheques.
 Minimizing bottlenecks and delays between presentation and realization time.
 Provides shorter clearing cycles and a centralized image archival system.

Speed Clearing
Speed clearing of a cheque is a mechanism that involves collection of an outstation cheque (a cheque
drawn on non-local bank branch) through the local clearing. It facilitates collection of cheques drawn on
outstation core-banking-enabled branches of banks, if they have a net-worked branch locally.

Demand Draft

Demand draft or DD is a method used by an individual or a bank to transfer money from one bank
account to another. Demand drafts differ a lot from cheques, as they do not require the signature of the
account holder to be cashed.Also demand drafts are only issued by banks and you cannot issue them on
an individual level.

Types of Demand Drafts

Demand drafts are of two types— Sight demand draft and Time demand draft.

Sight Demand draft

A sight demand draft is only approved after the payee presents certain documents asked by the bank. If
the payee fails to do so, the draft is not paid.

Time Demand draft

A time demand draft is only payable after a specific period of time. You cannot draw this demand draft
from the bank before that time.

Unit II

How to Fill the Account Opening Form?

Choose your account type and download the form:

Visit the Bank website and explore their savings account options. Choose the one that best suits your
needs.

Once selected, download the corresponding account opening form from the website.
Gather required documents:

Identity proof: Aadhaar card, PAN card, Passport, Driving license, Voter ID (any one)

Address proof: Aadhaar card with address, Utility bill (electricity, water, telephone), Passport, Rental
agreement with landlord signature and address proof

Two recent passport-size photographs

Initial minimum deposit amount (varies depending on account type)

Filling the form:

Part 1: Personal details: Carefully fill in your name, date of birth, contact details, occupation, etc.

Part 2: Nominee details: Provide details of your nominee (optional) including name, address, relationship,
and share percentage.

Part 3: Account details: Select the desired account type, branch preference, mode of operation (single or
joint), and nomination type (single or joint).

Part 4: KYC details: Fill in your PAN details and sign the declaration.

Part 5: Additional details: This section may vary depending on the account type. Fill in any required
information honestly.

Part 6: Declaration and signature: Read the declarations carefully, sign and date the form.

Attaching documents:

Securely paperclip the required documents mentioned earlier with the completed form. Ensure they are
self-attested (photocopy attested by yourself).

Submitting the form:

You have two options:

Branch visit: Visit your chosen Bank branch and submit the form and documents to the customer service
representative.

Online submission (for specific accounts): Some Bank accounts allow online applications. Follow the
instructions on the website and upload the scanned copies of the form and documents.
What is a Debit Card?

 Debit cards are payment cards that reduce the need to carry cash or physical checks to make
purchases.
 Customer can use debit cards at ATMs to withdraw cash.
 Debit card purchases may require a personal identification number (PIN), but some purchases can
be made without one.
 Customer may be charged an ATM transaction fee if you use your debit card to withdraw cash
from an ATM that's not affiliated with your bank.

What is a Credit Card?

A credit card is a type of credit facility, provided by banks that allow customers to borrow funds within a
pre-approved credit limit. It enables customers to make purchase transactions on goods and services. The
credit card limit is determined by the credit card issuer based on factors such as income and credit score,
which also decides the credit limit.

What Is an Automated Teller Machine (ATM)?

An automated teller machine (ATM) is an electronic banking outlet that allows customers to complete
basic transactions without the aid of a branch representative or teller. Anyone with a credit card or debit
card can access cash at most ATMs, either in the U.S. or other countries.

What is a Cash Deposit Machine?

The Cash Deposit Machine, better known as Automated Deposit cum Withdrawal Machine (ADWM) is
like an ATM machine that allows customer to deposit cash directly into their account using the ATM
cum debit card. He can use this machine instantly to credit the account without visiting the branch. The
transaction receipt also gives to the customer in the updated account balance.

Some of the salient features of this product are:

 Instant credit of cash deposit into customer's own account

 Quick and convenient way to deposit cash
 Paperless transaction
 The per transaction limit is Rs.49,900/- for Cardless deposit and through Debit Cards Rs. 2.00
lacs (subject to account has ceded with PAN number).
 Customer can also deposit cash in your PPF, RD and Loan accounts
 Upto 200 currency notes can be deposited in a single transaction
 The ADWM only accepts denominations of Rs.100/-, Rs.200/-, Rs.500/- & Rs.2000.

Write a short note on MICR.

 MICR, the short-form for Magnetic ink Character Recognition, is a type of technology that is
used to authenticate the legitimacy of cheques issued. This is used by the banking industry. In
simple words, it is nothing but a 'character recognition' tool.
  MICR is a 9-digit code. For example the MICR code of the State Bank of India (SBI) Kolkata
Main branch is 700002021. Here:
 The first three digits '700' represent the name of the city, which in this case is Mumbai
 The following three digits '002' is indicative of the bank code.
 The last three digits, which is '021', represents the specific branch code.

MICR Code Benefits & Features

 Safe and secure verification of cheques

 Faster clearance of cheques
 Helps avoid fraud and fake cheque circulation
 Standardized technique that is reliable
 Printing is done with the help of magnetic ink or a toner
 Systems will be able to read the code even if there are other ink marks or signatures
 Used by the banking industry
 This is make it more difficult for people to alter cheques and hence avoids theft, etc
 Reduces the chances of human error.

What is IFSC Code?

The Indian Financial System Code (IFSC), is a unique 11-digit alphanumeric code that is used for online
fund transfer transactions done via NEFT, RTGS and IMPS. The IFSC code can be found on the cheque
leaf provided by the bank. The Reserve Bank of India (RBI) assigns the IFSC codes to the bank. Apart
from the cheque leaf, you can also find the IFSC code on the official website of the bank and the RBI.

Benefits of IFSC Code are :

 Helps to identify a Bank and its respective branch

 Eliminates errors in the process of fund transfer
 Transfers done with IFSC such as NEFT, RTGS and IMPS are accurate.

What is Electronic Clearing Service or ECS?

Electronic Clearing Service or ECS is a method of transferring funds electronically and is generally used
for bulk transfers. This method is used for funds which are both repetitive and periodic in nature.

This method of fund transfer is usually used by large organisations or institutions for bulky transfers like
salaries, fees, pensions, interests, dividends, loan installments, etc. Electronic Clearing Service or ECS
method can also be used for paying bills and clearing dues.

What is NEFT?

NEFT stands for National Electronic Funds Transfer. It was introduced by the Reserve Bank of India
(RBI) to help send money electronically. Despite being around for some years, it has retained its
popularity and market share in payment methods. NEFT has made fund transfers convenient without the
need to visit the bank branch in person.
To send money online, you simply need to log in to your bank account, select NEFT transfer mode, and
enter the beneficiary’s bank account details and the amount to be transferred. The bank clears the amount
in chunks within an hour, then it is credited to the beneficiary’s account.

Benefits of using NEFT for fund transfers

 NEFT fund transfer is economical to use as it charges low fees on fund transfers. With an IDFC
FIRST Bank account, NEFT fund transfers are completely free of charge.
 It offers a secure environment to send money online. Since it is regulated and monitored by RBI,
NEFT is a trusted way to send money online.
 It makes cheque and DD transfers obsolete as it offers a faster transfer mode.
 You receive SMS alerts and email updates for every transaction.
 The facility is available on public and bank holidays round-the-clock, which makes it convenient
for customers.
 NEFT is versatile, accommodating both high-value transactions and smaller ones, ensuring
flexibility for all kinds of users.

What is RTGS?

RTGS stands for Real-Time Gross Settlement. It is a payment system that enables instantaneous and
secure fund transfers between your bank account to the beneficiary account. It is widely used for high-
value transactions due to its real-time processing and the system of processing transactions individually
and not in batches.

What is the Use of RTGS?

RTGS is used in the transfer of very large amounts and on a real-time basis. It is used by retail as well as
corporate account holders to transfer instantly. Therefore - it helps to get you the money instantly.

Features and Benefits of RTGS

Here are the primary features of RTGS (Real Time Gross Settlement):

 One of the key advantages of RTGS is that funds are transferred instantly, providing immediate
availability of the funds to the recipient.
 RTGS transactions are highly secure as they are settled individually and in real-time, reducing
the risk of fraud or interception.
 RTGS eliminates the need for intermediaries, ensuring direct and seamless transfers between
banks and reducing delays and costs associated with intermediary banks.
 RTGS is particularly suitable for high-value transactions as there is usually no upper limit on the
amount that can be transferred. The minimum transaction in this mode is Rs. 2 lakhs.
 Businesses can benefit from RTGS by having better control over their cash flow, as payments are
settled immediately.

Unit III
What is Online Banking?

Internet banking, also known as online banking, e-banking or virtual banking, is an electronic payment
system that enables customers of a bank or other financial institution to conduct a range of financial
transactions through the financial institution's website.

How can a customer register for online banking?

To register for online banking, customer can either go to bank's home branch and fill the net-banking
application form. After submitting the form along with the required documents, customer will be
provided with a net-banking kit which consists of customer's User ID and Password for login. Customer
can also register online for netbanking-

 Go to Bank's official net-banking website

 Click on ‘New User Registration/Activation’
 Enter all the required details
 Enter the OTP received on your registered mobile number
 Submit and Activate.

Tips for Creating a Strong Password

 Make your password at least 16 characters or longer

 Choose a unique password that you don’t use for any other service
 Memorize your password and don’t share it with anyone
 Don’t use personal information or a close relative’s, including birthdate, telephone number or
address
 Don’t use more than 2 characters that typically appear in order, like “abc” or “123”
 Don’t repeat the same characters 3 or more times, like “aaa” or “000”

How to change your password in Online Banking:

 Go to Online Banking Login

 Select “Forgot Your Password?”
 Enter your User ID
 Enter the last 4 digits of your SSN. You can also select “Don't have SSN?” to enter your Date of
Birth.
 Select a verification method
 For One-Time Passcode Verification:
 Select One-Time Passcode Verification from the drop-down menu. We’ll send a One-Time
Passcode to the number we have for you
 Check for the One-Time Passcode we sent via SMS (text message) or by automated voice
messaging
 Enter One-Time Passcode
 Select “Continue”
 For ATM, Debit, or Credit Card Verification: (If you don’t have a Santander Debit Card or Credit
Card, or don’t know your PIN, contact Customer Service at 1-877-768-2265)
 Enter the last 4 digits of your Santander Debit, ATM, or Credit Card Number
  Enter PIN
 Select “Continue”
 Enter and verify your new password
 Select “Continue” and you’ll see a confirmation message that your password was changed
successfully
 Select “Log in to Online Banking”

What is fund transfer?

Fund transfer is the electronic movement of money from one bank account to another, using services like
NEFT, RTGS, IMPS, UPI, or international transfers.

What are the key features offered by the fund transfer service?

The fund transfer service provides fast, secure, and immediate money transfers using various payment
modes, allowing customers to transfer money worldwide with ease and enjoy 24/7 accessibility.

What is bill of payments?

A customer of your bank could choose to make payments for utility services, to the required institutions
or utility providers against bills issued by them, through your bank. Such payments are bill payment
transactions.

In a bill payment transaction, the entities involved in a contract are the customer, your bank and the
institutions (utility providers) that are the recipients of the bill payment.

Unit IV

What is a Loan?

The term loan refers to a type of credit vehicle in which a sum of money is lent to another party in
exchange for future repayment of the value or principal amount. In many cases, the lender also adds
interest or finance charges to the principal value, which the borrower must repay in addition to the
principal balance.

Components of a Loan

There are several important terms that determine the size of a loan and how quickly the borrower can pay
it back:

Principal: This is the original amount of money that is being borrowed.

Loan Term: The amount of time that the borrower has to repay the loan.

Interest Rate: The rate at which the amount of money owed increases, usually expressed in terms of an
annual percentage rate (APR).
Loan Payments: The amount of money that must be paid every month or week in order to satisfy the
terms of the loan. Based on the principal, loan term, and interest rate, this can be determined from an
amortization table.

What is repayment of Loan?

 Repayment is the process of settling a debt, typically through set payments over time toward the
principal and interest.
 Repayment terms are detailed in the loan agreement, including the contracted interest rate.
 Federal student loans and mortgages are among the most common that individuals repay.
 If you're a borrower facing financial or health problems, you may have choices if you can't make
regular payments to your lender.

What are the different types of Loan Repayment

Different types of loan repayment options are available to borrowers, providing flexibility in how they
repay their debts. Some common types of loan repayment methods include

Fixed Monthly Payments

Borrowers make equal monthly payments throughout the loan term, with each payment consisting of both
principal and interest.

Variable Payments

Payments fluctuate based on factors such as interest rate changes or income variations. This repayment
option is commonly used in adjustable-rate mortgages.

Interest-Only Payments

Borrowers make payments that only cover the interest accrued on the loan for a specific period. The
principal amount remains unchanged.

Balloon Payments

A large lump sum payment is made at the end of the loan term, typically seen in certain mortgage or
Business Loan agreements.

Graduated Repayment

Payments start lower initially and increase over time, usually suited for borrowers expecting their income
to rise in the future.

The type of loan repayment option chosen depends on the borrower's financial situation, loan agreement
terms, and ability to manage the payments effectively.

What Is Mobile Banking?

Mobile banking is the act of making financial transactions on a mobile device (cell phone, tablet, etc.).
This activity can be as simple as a bank sending fraud or usage activity to a client’s cell phone or as
complex as a client paying bills or sending money abroad.

Mobile Banking Advantages

Time Saving

Mobile Banking offers quick and instant banking services, eliminating your dependence on banks for
basic transactions. Do you want to check the account balance, the details of your recent transactions or
simply transfer funds in a jiffy? Just load your bank’s mobile banking app on your phone, and you are
good to go.

Remote Banking

Are you travelling to a different city or perhaps going abroad? No matter where you are, all you need is a
stable internet connection and a robust mobile and internet network. You can conduct various kinds of
transactions form from anywhere across the globe, thanks to mobile banking.

Monitoring Transactions

Another mobile banking advantage is that you can track all your financial transactions. You can monitor
your bank accounts and conveniently dispute fraudulent transactions simply by logging in to your mobile
banking app.

Easy Access

Whether you want to transfer funds, check account balances and statements, or apply for loans – you can
do it all with mobile banking. You can order cheque books and apply for credit and debit cards, open
fixed and recurring deposits, and more using your mobile banking app.

Round-the-clock availability

Mobile banking is like carrying your bank in your pockets 24 hours a day, 7 days. You can initiate fund
transfers at any hours, reach out to customer care helplines and get banking information within minutes
through the mobile banking app.

Value-Added Services

Mobile banking apps also enable utility bill payments, mobile phone recharges, insurance policy
purchases, etc. You can open investment securities accounts, pay taxes, purchase FASTags, open pension
accounts, and more.

Mobile Banking Disadvantages

Internet reliant
A major disadvantage of mobile banking is that it functions only if you have an internet-enabled
smartphone. You can also enjoy the services on regular mobile phones, but they are not as extensive as
those you can get through mobile apps.

Tech Knowledge

You need to be well-versed with the constantly evolving banking technologies to enjoy mobile banking
advantages. This can prove to be quite a challenge for older people or people from rural areas.

Internet Phishing

Unsafe internet and mobile banking practices can lead to internet phishing scams. You risk exposing your
account details if you store your passwords and other sensitive banking information on your phone. Avoid
opening scam emails or sharing passwords to enjoy mobile banking services securely.

The Importance of Mobile Banking

Mobile banking allows consumers to be able to access banking services from anywhere. Businesses and
business owners are now able to save time by making use of mobile applications to process their
payments or even receive funds from clients directly to their phone numbers. It is particularly popular
among small to medium-sized enterprises (SMEs).

With mobile technology, banks are able to cut down on operational costs while still maintaining client
satisfaction. The fact that any client of a bank can make use of their app to request a service, such as
opening an account or even the ability to schedule debit orders or other payments from an application,
allows for larger transactional volumes, eventually driving business growth.

What is a mobile app (mobile application)?

A mobile app (or mobile application) is a software application developed specifically for use on small,
wireless computing devices, such as smartphones and tablets, rather than desktop or laptop computers.

Write a short note on Wireless Application Protocol (WAP)?

Wireless Application Protocol (WAP) is a specification for a set of communication protocols to

standardize the way wireless devices, such as mobile phones and radio transceivers, can be used for
internet access, including email, the web, newsgroups and instant messaging.

WAP was conceived in 1997 by Ericsson, Motorola, Nokia and Unwired Planet (now Enea Openwave
Mobility) at an event known as the WAP Forum. While wireless internet access was possible before the
introduction of WAP, different manufacturers used varying technologies, and WAP was intended to be an
industry standard. However, WAP is now considered obsolete, as modern devices use networks and
browsers that function similarly to those on PCs.

What is USSD?

Unstructured Supplementary Service Data (USSD) allows users without a smartphone or data/internet
connection to use mobile banking through the *99# code. USSD based mobile banking can be used for
fund transfers, checking account balance, generating bank statements, among other uses.
How to Register for Mobile Banking?

The general steps to register for mobile banking are:

Step 1: Download the mobile banking app of your banking partner on your mobile.

Step 2: Activate your mobile banking account, either by registering a separate user ID and password or
using your credit card PIN.

Step 3: Once activated, log in using your credentials and proceed with mobile banking activities.

Step 4: Depending on the bank’s security policies, additional security steps, such as OTP for verification,
etc., might be required to proceed with mobile banking transactions.

Unit V

What is a Branch Banking?

 Branch banking is a system of providing banking services through different offices of a bank that
acts as the head branch. The idea is to expand the bank’s business to cater to different locations
and provide services to all its customers.
 The branch office will offer all the services that are offered by the main branch. The main branch
controls the operations of the branch office.
 Each branch has a manager who is responsible for managing all the activities of that branch.

User ID: Definition

A User ID is a unique customer identifier by which an advertiser chooses to identify a user visiting their
website.

What is an MPIN Number?

The full form of MPIN is Mobile Personal Identification Number. It is a 4 or 6-digit code you must enter
on payment or banking apps before making a transaction. It acts as an authentication process during
payments.

How to Change MPIN?

As an added security measure, users are always requested to change their MPIN at regular intervals. To
change or reset your MPIN, follow these steps:

Log in to your mobile banking app using your credentials or current MPIN.

Go to the "More" option or Settings Section and select "Change MPIN".

Enter your old MPIN and the new PIN you want to set and confirm your selection.

Enter the OTP sent to your registered mobile number to successfully change your MPIN.
You can also change your MPIN using the UPI app. Follow the same steps that are mentioned above to
set up an MPIN.

What is IMPS?

Immediate Mobile Payment System or IMPS is an electronic fund transfer system facilitated by the NPCI.
This is an instant fund transfer system that can be done from branches, net banking, and mobile banking
platforms. Therefore, customers can make IMPS transactions even on public or bank holidays.

What is Unified Payments Interface (UPI)

Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile
application (of any participating bank), merging several banking features, seamless fund routing &
merchant payments into one hood. It also caters to the “Peer to Peer” collect request which can be
scheduled and paid as per requirement and convenience.

How is it unique?

 Immediate money transfer through mobile device round the clock 24*7 and 365 days.
 Single mobile application for accessing different bank accounts.
 Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet provides for a
very strong feature of seamless single click payment.
 Virtual address of the customer for Pull & Push provides for incremental security with the
customer not required to enter the details such as Card no, Account number; IFSC etc.
 QR Code
 Best answer to Cash on Delivery hassle, running to an ATM or rendering exact amount.
 Merchant Payment with Single Application or In-App Payments.
 Utility Bill Payments, Over the Counter Payments, QR Code (Scan and Pay) based payments.
 Donations, Collections, Disbursements Scalable.
 Raising Complaint from Mobile App directly.