Banking By Rahul Jain By Rahul Jain Next Slide

Aim of Lesson To understand the services provided by a bank. Previous Slide Next Slide

Banks Takes in ones savings Gives out loans Previous Slide Next Slide

Interest rates Banks normally talk about two types of interest, that they give people with money in the bank and that they charge people who have loans from them. Banks normally talk about two types of interest, that they give people with money in the bank and that they charge people who have loans from them. So banks borrow from savers and give them a lower rate of interest, than they charge those who have taken out loans from them. So banks borrow from savers and give them a lower rate of interest, than they charge those who have taken out loans from them. This is how they make some of their profits. This is how they make some of their profits. Previous Slide Next Slide

Parties of a cheque The person, who writes the cheque is the Drawer. The person, who writes the cheque is the Drawer. The person, to whom the cheque is written to is called the Payee. The person, to whom the cheque is written to is called the Payee. The bank that the drawer has their account in is called the Drawee. The bank that the drawer has their account in is called the Drawee. Previous Slide Next Slide

Endorsed Cheque One can pay their debts by endorsing a cheque they have received from a third party, but anyone receiving such a cheque needs to be careful because the third party may not have the funds to pay or the cheque could be stolen. One can pay their debts by endorsing a cheque they have received from a third party, but anyone receiving such a cheque needs to be careful because the third party may not have the funds to pay or the cheque could be stolen. Previous Slide Next Slide

When will a bank refuse to pay the money stated on the cheque? If there is insufficient funds in the account. If there is insufficient funds in the account. The drawer has stopped the cheque. The drawer has stopped the cheque. The drawer has died or been declared bankrupt. The drawer has died or been declared bankrupt. The date on the cheque has not yet arrived. The date on the cheque has not yet arrived. The cheque is stale, i.e. 6 months has passed since the date on the cheque. The cheque is stale, i.e. 6 months has passed since the date on the cheque. Words and figures do not agree. Words and figures do not agree. Previous Slide Next Slide

Overdraft One cannot withdraw or write cheques for more than they have in their accounts unless they have special permission to do so called an Overdraft. One cannot withdraw or write cheques for more than they have in their accounts unless they have special permission to do so called an Overdraft. Special permission has to be sought to get this privilege. Special permission has to be sought to get this privilege. Previous Slide Next Slide

Bank Draft Sometimes a business is not prepared to exchange goods for a personal cheque, so they demand a Bank Draft. Sometimes a business is not prepared to exchange goods for a personal cheque, so they demand a Bank Draft. The buyer must go to the bank, give the bank the money, plus extra called commission and in return the bank gives the customer a cheque from the bank, known as a Bank Draft. The buyer must go to the bank, give the bank the money, plus extra called commission and in return the bank gives the customer a cheque from the bank, known as a Bank Draft. Previous Slide Next Slide

Credit Transfer When someone puts money into your account on your behalf, it is known as a credit transfer. When someone puts money into your account on your behalf, it is known as a credit transfer. You can lodge money from another bank in this way into your own account. You can lodge money from another bank in this way into your own account. Parents sometimes have to use this method to put money into their children’s accounts, if they are away from home and are running out of money. Parents sometimes have to use this method to put money into their children’s accounts, if they are away from home and are running out of money. Previous Slide Next Slide

Direct Debit This is where you give permission for your bank to pay different sums of money from your account on a regular basis to another named account. This is where you give permission for your bank to pay different sums of money from your account on a regular basis to another named account. For example you can pay your ESB or Phone bill in this way. For example you can pay your ESB or Phone bill in this way. Previous Slide Next Slide

Pay Path This is where an employer pays their employees wages into the employee’s account, rather than giving them cash. This is where an employer pays their employees wages into the employee’s account, rather than giving them cash. It is safer and cheaper, as the employer does not have to accumulate large amounts of cash. It is safer and cheaper, as the employer does not have to accumulate large amounts of cash. The employee can take it out of the account using an ATM, 24 hours per day, 7 day a week. The employee can take it out of the account using an ATM, 24 hours per day, 7 day a week. Previous Slide Next Slide

Bank Charges In addition to charging interest on loans banks make their profits by charging their customers for each: Cheque Cheque ATM withdrawal ATM withdrawal Overdraft facility Overdraft facility Credit Transfer Credit Transfer Pay Path Transaction Pay Path Transaction Direct Debit Direct Debit Previous Slide Next Slide

Bank Statement Periodically banks sent out bank statements to current account holders showing all the transactions that has taken place through their account in the last period. Periodically banks sent out bank statements to current account holders showing all the transactions that has taken place through their account in the last period. Previous Slide Next Slide

Missing Items on Bank Statements However when a customer receives their bank statement, there can be a difference in what they thought was in their account and what the bank says they have, due to one of the following reasons: Some cheques being lodged since the statement was printed Some cheques being lodged since the statement was printed Cheques were issued to people, but the people have not yet cashed them. Cheques were issued to people, but the people have not yet cashed them. People paid money into your account by credit transfer and did not tell you. People paid money into your account by credit transfer and did not tell you. You gave permission for Direct Debit. You gave permission for Direct Debit. The bank has charged you bank charges and did not tell you, although they normally send you a letter telling you they are charging you bank charges nowadays. The bank has charged you bank charges and did not tell you, although they normally send you a letter telling you they are charging you bank charges nowadays. Previous Slide Next Slide

Bank Reconciliation Statement It is recommended that all customers on receiving a bank statement, make a list of all the difference that has occurred between, what they thought was in their bank account and what the bank says is in their bank account. It is recommended that all customers on receiving a bank statement, make a list of all the difference that has occurred between, what they thought was in their bank account and what the bank says is in their bank account. They then start a Bank Reconciliation Statement for themselves. They then start a Bank Reconciliation Statement for themselves. Previous Slide Next Slide

Bank Reconciliation Statement continued Balance as per Bank statement 1200 Add Cheques written not yet presented Minus cheques lodged last week, but not shown Add bank charges Minus Credit Transfer from Aunt Mary This figure should be the amount you thought or had in the Bank, if not either you or the bank have made a mistake. Previous Slide Next Slide

Traveller’s Cheques When one is abroad a foreign bank or business will not normally accept one’s normal cheques. When one is abroad a foreign bank or business will not normally accept one’s normal cheques. Hence one has to buy Traveller’s Cheques in a bank. Hence one has to buy Traveller’s Cheques in a bank. You tell the bank what value of cheques you want in the currency of the country you are going to and they charge you in euros plus a commission for themselves. You tell the bank what value of cheques you want in the currency of the country you are going to and they charge you in euros plus a commission for themselves. You sign the cheques before leaving the bank. You sign the cheques before leaving the bank. When using the cheques in the foreign country, you normally have to have your passport and you sign the cheque again, as evidence that you are the person, who bought the cheques. When using the cheques in the foreign country, you normally have to have your passport and you sign the cheque again, as evidence that you are the person, who bought the cheques. Previous Slide Next Slide

Traveller’s Cheques continued Travellers cheques can be used in shops, hotels and banks abroad. Travellers cheques can be used in shops, hotels and banks abroad. If traveller’s cheques are stolen when you are abroad, you must report this and your money will be reimbursed. If traveller’s cheques are stolen when you are abroad, you must report this and your money will be reimbursed. Nowadays rather than use travellers cheques a lot of people pay money into their Credit Card account and then use the credit card abroad and because they have paid the credit card in advance will not be charged interest, but will normally be charged for the privilege of using their card abroad. Nowadays rather than use travellers cheques a lot of people pay money into their Credit Card account and then use the credit card abroad and because they have paid the credit card in advance will not be charged interest, but will normally be charged for the privilege of using their card abroad. Previous Slide Next Slide

Conclusion Are Banks useful or not? Are Banks useful or not? Previous Slide