BANKING REGULATION AND

OPERATIONS
• What is commercial bank
 A commercial bank is a financial institution which accepts deposits from the public and gives loans for the purposes of
consumption and investment to make profit
• Who is banker
 A banker provides financial banking services and typically works in a bank. 
• What do you mean by forged cheque
 The term "forged check" is used to describe a check on which the drawer's signature is forged or unauthorized.
• Give the meaning wrongful dishonour of cheque
 Wrongful dishonor occurs when a bank or credit union fails to honour a valid check or draft sent to it.
• What is the meaning of security for loan
 lending, security or collateral, is an asset that is pledged by the borrower as protection in case he or she
defaults on the repayment A security interest lowers the risk for a lender, allowing it to charge lower interest on
the loan
• Who is trustee-customer of bank
 If the customer deposits securities or valuables with the banker for safe custody, banker becomes a trustee of
his customer.
• Who is a minor
 A minor is a person who is still legally a child.
• What is general crossing
  When across the face of a cheque two transverse parallel lines are drawn at the top left corner, along with the words
& Co.
• What is cash credit
 A cash credit is a short-term source of financing without keeping a credit balance, account is limited to only
borrowing up to the borrowing limit
• Who is paying banker
 Paying banker is a banker, who actually pays a cheque to his customer or to the order.
• Give the meaning of npa
 A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained
overdue for a period,
• Who is present governor of rbi
 Shri Shaktikanta Das
• What is opening of crossing
 The opening cross is a method the Nasdaq uses to determine the opening price for an individual
stock.
• Types of loan
1. Unsecured personal loans
2. Secured personal loans
3. Payday loans
4. Title loans
5. Pawn shop loans
6. Payday alternative loans
7. Home equity loans
8. Credit card cash advances
• Define cheque? State the essential features of a cheque.
A cheque, or check, is a document that orders a bank to pay a
specific amount of money from a person's account to the
person in whose name the cheque has been issued
Below given are some of the important features of a cheque:-
A cheque should be in writing and properly signed by the drawer
A cheque contains an unconditional order
A cheque issued on a specified banker only
The amount specified is always certain and should be clearly mentioned both
in figures and words.
The payee of a cheque is always certain
 A cheque is always payable on demand
The cheque should bear a date otherwise it is invalid and shall not be
honored by the bank
• distinguish between overdraft and cash credit.
Features Overdraft Cash credit
Purpose To help you buy raw materials, To keep your business operational
take care of receivables and
maintain stocks.
Purpose Individual requirements To fulfill non-business
requirements
Calculating rate of interest Based on the entire amount you Based on the amount used
withdraw
General rate of interest Lower Higher
Bank account Need to open a separate account You can use your current account
to avail the facility
Maximum amount Up to 60% of the value of your The lender decides based on your
inventories and receipts account and your relationship with
the institution
Limit of withdrawal Can be changed based on the Cannot be changed. Your current
value or quantity of your balance may influence your
inventories current account
Charges Nil Your lender decides
• Duties of a collecting banker
• Principles of sound bank lending
Safety:- means that the borrower should be able to repay the
loan and interest in time at regular intervals without default.
Banks are trustee of public money.
Five Cs Five Ps Five Ms Five Rs
 Character/conduct Person Man Reliability
 Capacity Purpose Management Responsibility
 Capital Product Money Resources
 Condition Place Materials Respectability
 Collateral Profit Market Returns
 liquidity:- The term liquidity refers to the extent of availability of funds with the banker for
providing credit to borrowers. It is to be seen that money lent is not going to be locked up for a
long time. The money should return to the bank as per the repayment schedule.

Purpose:- The purpose should be productive so that the money not only remain safe but also
provides a definite source of repayment. Loans may be required for productive purposes,
trading purposes, agriculture, transport, self-employment etc.

Profitability:- Banks are not charitable institutions. All banks are profit-earning institutions.
The ultimate objective of lending is to earn profits. Banks receive interest on loans and
advances lent, and they pay interest to their depositors.
National Interest:- Even when an advance satisfies all the aforesaid principles, it may still not
be suitable. The advance may run counter to national interest. They should keep in mind the
national development plan/program while going for lending but maintaining safety, liquidity
and profitability.

Diversification:- A prudent banker always tries to select the borrower very carefully and takes
tangible assets as security to safeguard his interests. Banks have to lend to a large number of
industries and borrowers so that the risk gets diversified

 Security:- The security offered by a borrower for an advance is as like as the insurance to the
banker. It serves as the safety valve for an unforeseen emergency.
• Explain the general relationship between the banker and customer
 Banker:- According to sec 5(c) of the Banking Regulation Act 1949, a banker is
a person or institution who undertakes the business of banking.
Customer:- A person who has a bank account in his name and for whom the
banker undertakes to provide the facilities as a banker is considered to be a
customer.
 General Relationship
1. Debtor and Creditor
2. Pledger and Pledgee
3. Licensor and Licensee
4. Bailor and Bailee
5. Trustee and Beneficiary
6. Agent and Principal
7. Advisor and Client
Thankyou
DONE BY:- Hussasin.N.Kalangi
Chandan Kumar
Dharmesh Sharma