BASICS OF BANKING

Objectives of the course

To introduce the subject of Banking and impart basic level of banking knowledge to the
students covering
1. Origin, evolution, functions, characteristics and forms of of money,
2. Origin of banking, evolution of banks in India, IBI, RBI
3. Banks role as financial intermediaries, facilitator of payment and collection system,
providers of financial services
4. Definition of banking, banking as business of trust
5. Growth of banking in India after independence, RBIs role, reforms in the financial sector,
private sector banks
6. Social banking lead bank scheme, RRBs
7. Changing face of Indian banks Bank of Baroda initiatives
8. Bank and Customer relationships; duties and rights of both
9. Types of customers
10. Liability products generic and BOB specific (CA,SB,TD);deposit insurance
11. Asset products (in brief)
12. Introduction to Retail/Wholesale/International/Agriculture banking
13. AML/KYC
14. Financial inclusion and customer education


MONEY - Origin
What is money commodity or asset that can
be legally exchanged (Money is valuable
because we want it; we want it because it gets
us what we want) (Money is what it does)
Origin Barter drawbacks (coincidence of
wants, divisibility, exchange of goods)
Receipts for safe-keeping bank notes paper
currency


Functions of money
Medium of exchange
Measure of value
Store of value
Standard for deferred payments
Qualities of money
Durability
Portability
Divisibility
Acceptability
Relatively limited availability
Forms of Money
Chattel
Precious metals
Coins,
Paper money,
Token money
Fiat money
Cheque/bank draft/credit card
E-money
Legal tender
How money derived its value
Gold standard
1944 Bretton Woods agreement modified
gold standard
Fungibility of money
interchangeability/homogenous
Fiat government order - faith fiduciary
Intangible money bank deposits
Fractional Reserve
Money can therefore be defined as anything that
is widely used for payments and accounting
Origin of the word money
MONETA Goddess of warning
Indian Currency
Old system
Decimal System 1957
Currency symbol International Organization
for Standardization , Geneva 163 countries
ISO 4217 3 letters e.g. USD, GBP, JPY, INR,
EUR