The largest source by far of funds for banks is deposits; money that account holders entrust to the bank for safekeeping and use in future transactions, as well as modest amounts of interest.
6. Mortgage Loans
• Loan Against Property
• Loan for Purchase of Commercial Property
• Loan through Lease Rental Discounting
• Loan may have maturity upto thirty years
7. Capital Funds
• Bank capital is divided into two groups
1. Tier 1 :-
Capital is known as core or primary capital
2. Tier 2 :-
Capital is known as supplementary capital
• This fund includes common stocks, suppliers,
retained earnings and undivided profit.
8. Uses of Bank Fund
uses
Capital
expenditure
Decrease in Long-
term Loans
Increase in
Current Assets
Interest on Long-
term Loans
Taxation
Dividend
9. Capital Expenditure
• Spent for acquiring additional fixed assets
• Emplacement and renewals separately under the relevant
periods
• Undertake new projects or investments
10. Decrease in Long-term Loans
• Raised form financial institutions are repayable in
installments.
• Payment for plants and machinery purchased
11. Increase in Current Assets
• Increase in the amount of book debts, stock in trade, bills
receivable
• Assets increases in the level of working
• Capital raise through short –term borrowings.
12. Interest on Long-term Loans
• Interest payable on term loans
• The term loans are repayable in installments
• Amount of interest payable on the outstanding amount of loans
goes on declining
13. Taxation
• Compulsory money collection by a levying authority
• Term "taxation" applies to all types of involuntary levies
• Concern starts earning profits, provision for taxation is to be
taken into account.
14. Dividend
• Refers to a reward and cash
• It can be issued in forms of payment and stocks
• Dividend is decided by the board of directors
• It’s a part of profit that company shares with share holder
