JAIIB

OCTOBER 08/2007
WELCOME TO VIRTUAL CLASS
ROOM SESSION
PRINCIPLES OF BANKING
MODULE B
 BANKER-CUSTOMER
RELATIONSHIP
 DEBTOR-CREDITOR
 CREDITOR-DEBTOR
 AGENT-PRINCIPAL
 LESSOR-LESSEE
 BAILEE-BAILOR
FAQs

 KYC: Know Your Customer

 Know your customer norms are applicable
 to all customer accounts. It deals with not
 only to identify the customer but also
 to understand the activities of the customer,
 to ensure that the operations in the customer
 account/s is/are for genuine purpose
Garnishee Order
 A garnishee order is issued by a court
 Ex: Mr X borrows money from Mr Y and fails to
repay.
 Mr Y files a suit against Mr X, under the Civil
Procedure Code and the Court issues a decree
and attaches the funds in Mr. X’s bank account
with bank A.
 The order issued by the Court on bank A is
known as “Garnishee Order”
 Mr Y is the judgement creditor
 Mr.X is the Judgement debtor. Bank A is
Judgement debtor’s debtor
NEGOTIABLE INSTRUMENTS

 BANKER’S DUTIES & PAYMENT IN

DUE COURSE
RESPONSIBILITIES
 PAYING BANKER
 PAYMENT OF APPARENT PAYMENT IN WITHOUT
TENOR GOOD FAITH NEGLIGENCE
CHEQUES
CHEQUES
BEARER

ORDER

CROSSED

OPEN
NEGOTIABLE
INSTRUMENTS
 BANKER’S DUTIES HOLDER IN
DUE
& COURSE

RESPONSIBILITIES
 C0LLECTING CONSIDERATION IBEFORE
TITLE
MATURITY
BANKER
 COLLECTION OF
 CHEQUES
WORKING CAPITAL OPERATING
CYCLE
RAW
CASH
MATERIAL

SEMI FINISHED
BILLS
PRODUCTS
REALISED

BILLS
FINISHED
PAYABLE
PRODUCTS

CREDIT
SALES
DEPOSIT ACCOUNTS
CURRENT

CERTIFICATE SAVINGS

DEPOSITS

FLEXI FIXED

RECURRING
 CERTIFICATE OF DEPOSIT
 CD IS A MONEY MARKET INSTRUMENT
 ISSUED AT A DISCOUNT
 MINIMUM AMOUNT IS Rs. One LAKH
 MINIMUM PERIOD OF CD 15 DAYS
 MAXIMUM PERIOD OF 1 YEAR
 DIFFERS FROM FD
 a) Prepayment not allowed
 b) Loan is not allowed
 CHARGES
• HYPOTHECATION
• PLEDGE
• MORTGAGE
• ASSIGNMENT
• LIEN
• SET OFF
FUND BASED FINANCE
CASH CREDIT

BILLS
OVERDRAFT
FINANCE
LOANS
&
ADVANCES

RETAIL
TERM
FINANCE
FINANCE
Non-Fund Based Finance

LETTERS OF BANK
CREDIT GUARANTEE

CO-ACCEPTANCE
OF BILLS
Non-Resident Indian Accounts
 Who is a Non Resident Indian?
1)An Indian citizen who resides outside India on
account of
 a) Employment/business/vocation
and
 b) staying outside India for an uncertain
period
2)A person of Indian origin but a citizen in
any other country except Pakistan/Bangladesh
if at any time holding an Indian passport
 6 Cs
 CHARACTER
 CAPTIAL
 CAPACITY
 COLLATERAL
 CONDITION
 COMPLIANCE
 Clayton’s Case
 Applicable only to a
 a) joint a/c and or a partnership a/c
 b) running c/c and o/d a/cs
 c) Not to two different a/cs

(Right of set off is applicable)

Based on the concept of Appropriation

 FAQs
 Distinguish -Cash Credit and Overdraft
 Both CC and OD forms part of working
capital finance
CC is granted against moveable goods
(inventory/semi finished goods/goods etc)
OD is granted against paper security
(Fixed deposit receipts/shares/book debts)
ALL THE BEST & THANK
YOU
 T.M.C.VARADARAJAN
 TEL : 022-25638965 (R)
 022-66364206 (O)
 e.mail: t.varadarajan@scotiabank.com
 tmc_varadarajan@yahoo.co.in