TOPIC 2

Visit a Commercial
Bank. Find out the
procedure to open a
Savings account.
Find out the details
of Various Agency
and general utility
services provided by
the Bank.
 AGENCY FUNCTION
Bank of Baroda serves as an agent for
its customers in the following ways :
(a) Collects cheques, bills, dividends,
interest, rent, etc., on behalf of customers.
(b) Pays cheques, bills, rent, taxes, interest,
insurance premium, fees,
subscriptions,etc., on behalf customers.
(c) Purchases and sells securities on behalf of
customers as per their instructions.
(d) Acts as trustee, executor, gurantor etc., in
financial matters for their customers.
(e) Carries out correspondence for and on
behalf of customers.
(f) Acts as agent or correspondent for other
banks at home and abroad.
 General Utility Services
(a) Transfer of funds through RTGS, NEFT,
etc.
(b) Issuing letter of credit and standing as
surety for customers.
(c) Accepting valuables, jewellery and
securities for safe custody.
(d) Underwriting capital issues.
(e) Providing foreign exchange to persons
going abroad and to importers.
(f) Issuing travellers, cheques, demand
drafts, circular notes, etc.
(g) Providing trade information to
customers.
(h) Providing reports on the
creditworthiness of customers.
(i) Accepting and discounting bills of
exchange of exporters.
(j) Advising customers with regard to
investments and other financial matters.
REAL TIME GROSS SETTLEMENT
Real-time gross settlement (RTGS) systems are
specialist funds transfer systems where the transfer
of money or securities takes place from one bank
to any other bank on a "real time" and on a "gross"
basis. Settlement in "real time" means a payment
transaction is not subjected to any waiting period,
with transactions being settled as soon as they are
processed. "Gross settlement" means the
transaction is settled on one-to-one basis without
bundling or netting with any other transaction.
"Settlement" means that once processed,
payments are final and irrevocable.

RTGS systems are typically used for high-value

transactions that require and receive immediate
clearing. In some countries the RTGS systems may
be the only way to get same day cleared funds and
so may be used when payments need to be settled
urgentlyRTGS payments typically incur higher
transaction costs and usually operated by a
country's central bank.

Features are:
(i) RTGS transactions are processed individually and
continuously throughout banking hours rather than
in batches.
(ii) The minimum amount in a RTGS transaction is
two lacs. There is no upper ceiling for a RTGS
transaction.
 NATIONAL ELECTRONIC FUNDS
TRANSFER
National Electronic Funds Transfer (NEFT) is an
electronic funds transfer system maintained by the
Reserve Bank of India (RBI). Started in November
2005, the setup was established and maintained by
Institute for Development and Research in Banking
Technology (IDRBT). NEFT enables bank customers
in India to transfer funds between any two NEFT-
enabled bank accounts on a one-to-one basis. It is
done via electronic messages. Unlike real-time
gross settlement (RTGS), fund transfers through
the NEFT system do not occur in real-time basis.
NEFT settles fund transfers in half-hourly batches
with 23 settlements occurring between 8:00 am
and 6:30 pm on week days and the first, third and
fifth Saturday of the calendar month. Transfers
initiated outside this time period are settled at the
next available window. No settlements are made
on the second and fourth Saturday of the month,
or on Sundays, or on public holidays.
Features are:
1. An individual, firm or company can make use
of NEFT even without having abank account by
depositing cash at a NEFT enabled bank branch.
2.NEFT transactions take place in batches.
3.There is no minimum or maximum amount
that can be transferred through NEFT.
 CORE BANKING SOLUTION
Core Banking Solution (CBS) is networking of
branches, which enables Customers to operate
their accounts, and avail banking services from
any branch of the Bank on CBS network,
regardless of where he maintains his account.
The customer is no more the customer of a
Branch. He becomes the Bank’s Customer.
Another interesting fact regarding CBS is that all
CBS branches are inter-connected with each
other. Therefore, Customers of CBS branches can
avail various banking facilities from any other
CBS branch located anywhere in the world.
Features are:
1.Instant transfer of funds between the
accounts in CBS branches across the
country.
2.Cash withrawal facility from any of the CBS
branches.
3.The facility of centralised corporate limits
in all the CBS branches.
4.Transactionmanagement.
 ELECTRONIC BANKING
Electrornic banking means banking transactions
carried out with the help of computer systems
having Internet Connection. Any user having a PC
and a browser can access the bank website and
avail of banking services. Electronic banking is
banking over the internet. It is a part of virtual
banking.
Features are:
1.There is no face-to-face contact in person
between the bank and the client.
2.Both the bank and the client need
computer/mobile.
Advantages are:
1.Customers get 24 hours and 365 days-a-year
services.
2.Customers can make the permitted
transactions from residence or office and
even while travelling. They need not go to
the bank.
Disadvantages are:
1.The bank and its clients have to invest money
in e-banking technology.
2.Training in technology is needed for both.