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Banking product and services

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Bank’s products and services
Bank’s products and services
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Banking product and services

  1. 1. The product mix for business banking services is very broad and product lines are deep, with many product items. Products are often customized to the needs of the customer. There can be two type of banking products; Fee based Banking Products/ Services Fund based Banking Products/ Services
  2. 2. Fee basedBanking Products/ Services Broadly fee based services can be divided into two categories: Corporate fee-based services Retail fee-based services Fee- based Services Retail Fee-based Services Corporate Fee- based Services Personal Tax Counseling Credit Cards Debit Cards Smart Cards E-Cash Automated Teller Machines (ATM) Foreign Inward/Outward Remittances Fund Transfer Facilities Microfinance Online Trading Utility Bills Payment Portfolio Management Safe Deposit Lockers Safe-Custody Facilities  Cash Management Services  Collection  Payment  Liquidity  Merchant Banking  Foreign Exchange Services  Bill Discounting  Factoring  Forfeiting  Leasing  Credit Rating  Letter of Credit  Bank Guarantee
  3. 3. Corporate fee-based services : A corporate fee based service is a collective term giving to all those financial services that various financial institutions, bank offer to corporate customers on payment of a fee. The various fee-based services provided by banks to corporate customers are:  Cash Management Services Cash management is the effective management of cash in order to minimize transaction costs, exercise greater control and maximize returns. Banks offer cash management services to their corporate customers. Cash management services can be broadly divided into three sub categories. They are:  Collection : Collection and disbursement of cheques for the clients form an important part of the cash management services. Clients continuously receive payments from their distributers and customers in the form of cheques and demand drafts.
  4. 4.  Payment : Payment services include payments to clients’ vendors and suppliers, dividends to the shareholders payment of interest on commercial bills and debentures payment of salaries to employees, etc.  Liquidity : Liquidity management involves pooling and distributing funds across the client’s multiple accounts with the bank.  Merchant Banking Merchant Banking can be defined as an activity in which a bank deals mostly in international finance, long-term loans for companies and underwriting. They include registrar service, underwriting services and custodial services.  Foreign Exchange Services Foreign exchange services refer to converting foreign currency into Indian currency and vice-versa. The need for such services is felt by organisation, whose executives travel abroad, and importers and exporters of goods and services. Bank and other non-banking financial companies operate in this market and they charge a fee for providing such services.
  5. 5.  Bill Discounting A bill discounting or a bill of exchange is a short-term, negotiable and self-liquidating money-market instrument. The bill of exchange is used for financing a transaction in goods which means that it is essentially a trade-related instrument.  Factoring Bank also provides factoring services to corporate. A factor manages the collection of account receivables of the companies on their behalf and bears the credit risk associated with those accounts.  Forfeiting Forfeiting is a form of financing of receivables pertaining to international trade. It denotes the purchase of trade bills / Promissory notes by a bank / financial institution without recourse to the seller.  Leasing Lease is contract between the owner of the asset and the user of the asset called the lessee ,. Where by the lesser gives the right to use the asset to the lessee over an agreed period of time for a consideration called the lease rental.
  6. 6.  Credit Rating The credit rating services are a corporate fee-based service where a credit rating agency gives its expert opinion on the relative willingness and ability of the company that is interested in taking debt in any form.  Letter of Credit Under the system of letter of credit the banker issues commitment on behalf of its client to the supplier of goods to accept clients’ bills up to the amount stated in the letter of credit. The credit is available subject to the fulfillment of the terms and conditions stipulated in the letter.  Bank Guarantee A guarantee is a contract between the issuing bank an the client in which the bank undertakes to meet the claims put forward by the client against the customer on behalf of whom the guarantee is issued. If the customer fails to meet the obligation, the client will approach the bank for payment of the amount of default.
  7. 7. Retail fee-based services : Retail fee-based services are essentially marketed to retail consumers to help them meet their specific financial requirement. A retail fee-based service can be a pure fee-based service or may be linked to certain fund-based product. The latter can be called a value added fee-based service as they add value to the existing fund-based products.  Personal Tax Counseling One of the emerging areas of Income Tax Act1961, every individual whose annual taxable income exceeds the specified limit should pay income tax and file the annual return in a prescribed format. These limits are revised periodically at the time of presentation of annual budget by the Union Finance Minister and given effect by an amendment to the Finance Act.  Credit Cards A Credit Card is a plastic card bearing an account number assigned to a cardholder with a credit limit that can be used to purchase goods and services and to obtain cash disbursements on credit, for which a cardholder is subsequently billed by an issuer for repayment of the credit extended at once or on an installment basis.
  8. 8. Debit Cards Debit Cards are substitutes for cash or check payments much the same way that credit cards are. However, banks only issue them to you if you hold an account with them. When a debit card is used to make a payment, the total amount charged is instantly reduced from your bank balance. A debit card is only accepted at outlets with electronic swipe-machines that can check and deduct amounts from your bank balance on-line. Smart Cards Smart Cards offer consumers the ability to hold multiple applications on a single card, separately and securely. Smart cards allow consumers to make secure electronic commerce purchases anytime, anywhere they go. This is simply not possible with today’s available card because when one makes on online purchase, the electronic proof of his/her identity is actually locked inside his/her PC. E-Cash E-Cash is a payment system, based on smart card technology, which offers an alternative to paying cash for goods and services.
  9. 9.  Automated Teller Machines (ATM) An Automated Teller Matching is a mechanism which enables the customer to withdraw money from his account without visiting the bank branch. An ATM card is issued to the customer by bank in order to make cash withdrawals at cash machines. This service help the ATM customer to withdraw money even when the banks are closed.  Foreign Inward/Outward Remittances Non-resident Indians working abroad may have to send money to their near and dear in india. Companies and business firms also may have to send remittances to India in connection with their business. Exporters receive advance remittances in respect of the export order received from aboard. The remittances are received in the form of cheques, drafts, travelers’ cheques, currency notes, mail transfers, etc. The foreign inward remittance involves transaction in foreign currency. Individuals may have to remit funds abroad for purposes like education, subscription to journals and magazines, membership in professional bodies, participation fee for seminars and conferences, etc. The remittances are made by way of demand drafts drawn in favor of the beneficiary abroad on the branch of the bank or by cheque drawn on the bank’s correspondent bank abroad.
  10. 10.  Fund Transfer Facilities Predominantly, people were using post offices for funds transfer. The development of banking enabled the banks to provide fund transfer facilities at a cheaper rate than the money order facility offered by postal department. The common form of fund transfer facilities through banks are cheques, drafts, mail transfers and telegraphic transfers.  Microfinance Microfinance refers to a range of financial services including credit, savings, insurance, money transfers, and other financial products provided by different service provides, targeted at poor and low-income people.  Online Trading Online trading is one of the latest fee-based services offered by banks and other financial institutions-brokers (or) depository participants. Online trading involve trading in shares, debentures, commodities, and foreign exchange in the respective markets.  Utility Bills Payment Utility bills payment helps the bank’s customers to pay their utility bills such as electricity bill, water bill, phone bill, etc, in a hassle-free manner. The payment can be done either through the ATM or through internet banking.
  11. 11.  Portfolio Management Banks NBFCs and broking firm are providing portfolio management services to individuals. A portfolio is defined as total holding of securities belonging to any person. The securities can be shares, bonds or other securities.  Safe Deposit Lockers Safe deposit locker is a facility provided by banks to their customers to keep their valuables like jewelry, title deeds, etc. Safe deposit locker is a steel cabinet having multiple cubicles.  Safe-Custody Facilities Banks, are providing facility to keep valuables like documents, title deeds, etc. The customer has to pay a charge for this facility.
  12. 12. Fundbased Banking Products/ Services Fund based services are those where bank has to make the investment. There is a cost and risk of these services and return expected from them. Some of the fund based services are: Fund based Banking Products/ Services Working Capital Finance Short Term Finance Bill Discounting Export Finance Term Lending Buyer’s Credit / Supplier’s Credit
  13. 13. Working Capital Finance We offer working capital facilities - both fund-based and fee-based. Fund- based working capital products include cash credit, overdraft, bill discounting, short- term loans, export financing (pre-shipment as well as post-shipment). Fee based facilities include letters of credit and bank guarantees. Working Capital facilities are provided to finance the day-to-day business requirements. Funding requirements are structured to finance procurement of raw materials/stores and payment towards manufacturing costs and other overheads. Sales are financed against sundry debtors/ receivables. The Bank offers a combination of operative cash credit and working capital demand loan to meet the domestic working capital requirements of our clients. Short Term Finance The Bank offers short-term loans for a period ranging from 3 months to 12 months to sound corporate for meeting their specific short-term working capital requirements. The funds are provided with interest rates either linked to our BPLR or at a fixed rate with varying repayment patterns.
  14. 14. Bill Discounting This product enables corporate to fund their operating cycle right from the stage of procurement to sale. Bill Financing is extended by IndusInd Bank to its clients at competitive rates. Letter of credit backed bill discounting and clean bill discounting are the convenient mode of financing for domestic trade transactions. BOE could be broadly classified into Demand and Usance bills and are further classified into clean and documentary bills Export Finance As an important incentive to the exporters community for boosting exports, financial assistance in Rupees is extended to exporters on priority basis on relatively liberal terms. Such finance is provided both at pre-shipment stage (as working capital finance) and at post-shipment stage (to bridge the time lag between the shipment of goods and the realization of proceeds). Interest charged on export credit is exempted from the purview of interest tax.
  15. 15. Term Lending We offer term loans to both Industrial as well as Infrastructure sectors promoted by strong business houses. These loans are for a period of 3-5 years with a moratorium period. Interest rates could be fixed or floating linked to the bank's BPLR. Buyer’s Credit / Supplier’s Credit This facility provides total flexibility to corporate to utilize the line (sanctioned limit) of credit. The terms of the line of credit are either predetermined or negotiated at the time of availment. This facility is used as and when the client has a requirement

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