Ancillary Services By

Banks
 Banks
• Banks play an important role in the field of
trade, commerce and industry.
• They promote and mobilize savings by
providing safety, confidentiality and attractive
rate of interest.
• Banks inspire confidence in people and help in
creating banking habits in them.
 Bank services
• Primary services: ‘borrowing’ and ‘lending’ of
money
• Secondary services( or ancillary services):
Services offered by banks to help the customers
Such activities include collection of cheques,
dividend, warrants, etc. on behalf of customers
as well as effecting transfer of funds, remittances
by mail and telegram in order to attract
customers and make banking services effective.
 Category of ancillary services
•Rendered to banks own customers

•Available to general public

 Services of bank to its customers
Some of functions in this category are enumerated
below:
(a) Dealing in Bills of Exchange, Promissory Notes, Hundies and
Drafts.
(b) Issuing letter of credit, Traveller’s cheques and Circular notes.
(c) Buying, selling and dealing in bullion as well as foreign exchange
and foreign bank notes.
(d) Acting as ‘agent’ for clients, buying and selling shares and
debentures, and acting as underwriter.
(e) Collection and remittance of money and extending guarantee
against loans raised by customers.
 Services to the General Public
(i) Providing facility of lockers for the safe custody of valuables.
(ii) Financial assistance for the establishment of trusts,
association, clubs and charitable institutions.
(iii) Performing certain functions as are incidental or conducive
to the promotion and advancement of trade and commerce.
(iv) extending financial help to the weaker sections of society
for self-employment.
(v) Issue of bank drafts, gift-cheques, banker's cheques, etc.
(vi) Providing financial assistance to the physically handicaped
to engage in gainful occupation and earn their livelihood.
 Types of ancillary services
• Remittance of funds
• Safe custody of valuables
• Safe deposit vaults
• Merchant banking
• Bid bonds and performance guarantees
• Credit/Debit cards
• Standing instruction
• Gift cheques
• Teller system
• Stock invest
 Remittance
 With a network of their branches spread over
the entire country banks are eminently
suitable institutions for transfer of funds from
one place to another
• Mail transfers
• Telegraphic transefer
• Banks Drafts
• Traveller cheques
 Safe custody of valuables
• Banks render a valuable service by accepting
the valuables of their customers for safety
custody:
-By accepting the valuables
-By hiring out safe deposit vaults to the
customer
-By facility of nomination
 Merchant Banking
• Merchant banking comprises in rendering services of non-
banking nature to the industrial and business houses.
• Divisions of merchant banking services
-project counseling
-preparation of feasibility Report
-term finances
-Obtaining government consent
-Working capital
-As managers to new issues
-Arranges foreign currency
-Joint venture abroad
Bid Bonds and Performance Guarantees
• Banks render valuable services to their
customers by providing guarantees on their
behalf in favour of third parties, specially the
government departments and foreign importers.
• The bid bonds and performance guarantees are
also being issued in case of export of capital
goods and overseas construction contracts.
• Dealing in Bills of Exchange, Promissory Notes,
letter of credit
 Credit Cards Services
• It is an instrument which provides
instantaneous credit facility to its holder
• Called Plastic money
• Parties involved
-the issuing bank
-the card holder
-the member establishments
 Debit Cards Facility
• Provides same facility as the credit card but
instead of providing credit facility it debits
money from the users account.
 Standing Instructions
• Payment of life insurance premium of L.I.C.
• Payment of periodic membership fee, subscription to clubs,
libraries, professional associations or charitable institutions.
• Payment of other bills of the customers
• Transfer of specified amounts from one account of the
customer to another account
• Collection of dividends on behalf of customers
• Collection of pension from government deposits
• Collection of interest on government securities held in safe
custody.
 Gift cheques
• Banks issue gift cheques to the member of the
public to enable them to present a specified
amount to some friend or relation
• These are payable on demand hence the
payee can claim the money at any branch of
the issuing bank
 Teller System
• Generally used to reduce the effort in
presenting a cheque for payments in terms of
number of persons involved and time
duration.
• Generally a cashier is designated as “Teller”
who handles cash up to specified amounts
immediately on presentation of cheques etc.
 Stock Invest
• Reserve Bank of India has permitted 56 banks to issue Stock
Invest
• Rule in stock invest:
1. Name of the capital issuing company has to be filled before delivering to
the applicant
2. Restricted to individual investors and mutual funds
3. Issued against term deposits and credit balances in saving and current
accounts
4. Effective ceiling of Rs.50000 per individual per capital (not applicable for
mutual funds)
5. Original stock invest should be enclosed
6. Bank’s lien on deposits account in respect of unused stock invest shall
not be lifted before 4 months
 Conclusion
• All these ancillary services are providing
competitive advantage to the banks in terms
of customer satisfaction and also customer
loyalty
• But all these implementation requires a lot of
patience and conscious efforts.
THANK YOU