Types of Loan

• Education Loan: Education loans are financing instruments that aid the borrower pursue
education.
• Personal Loan: Whenever there is a liquidity issue, you can go for a personal loan. The purpose
of taking a personal loan can be anything from repaying an old debt, going on vacation, etc.
• Vehicle Loan: Based on the on-road price of the vehicle, the loan amount will be determined by
the lender. You may have to get ready with a down payment to get the vehicle as the loan rarely
provides 100% financing. The vehicle will be owned by the lender until full repayment is made.
• Home Loan: Home loans are dedicated to receiving funds in order to purchase a house/flat,
construct a house, renovate/repair an existing house, or purchase a plot for the construction of a
house/flats. In this case, the property will be held by the lender and the ownership will be
transferred to the rightful owner upon completion of repayments.

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 Types of Loan
• Gold Loan: Many financiers and lenders offer cash when the borrower pledges physical gold, may
it be jewellery or gold bars/coins. The lender weighs the gold and calculates the amount offered
based on several checks of purity and other things. The money can be utilised for any purpose.
The loan must be repaid in monthly instalments so the loan can be cleared by the end of the
tenure and the gold can be taken back to custody by the borrower. If the borrower fails to make
the repayments on time, the lender reserves the right to take over the gold to recover the losses.
• Loan Against Assets: Similar to pledging gold, individuals and businesses pledge property,
insurance policies, FD certificates, mutual funds, shares, bonds, and other assets in order to
borrow money. Based on the value of the pledged assets, the lender will offer a loan with some
margin at hand. The borrower needs to make repayments on time so that he/she can get custody
of the pledged assets at the end of the tenure. Failing to do so, the lender can sell the assets to
recover the defaulted money.

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 Types of Loans
• Credit Card Loans: A credit card is a thin rectangular piece of plastic or metal issued by a bank or
financial services company, that allows cardholders to borrow funds with which to pay for goods
and services with merchants that accept cards for payment.
Credit cards impose the condition that cardholders pay back the borrowed money, plus any
applicable interest, as well as any additional agreed-upon charges, either in full by the billing
date or over time. When you are using a credit card, you must understand that you will have to
repay for all the purchases you make at the end of the billing cycle. Credit cards are accepted
almost everywhere, even when you are travelling abroad. As it is one of the most convenient
ways to pay for the things you buy, it has become a popular loan type.

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 Demand Loan
Demand loan, often termed as Working Capital Demand Loan (WCDL) is basically the ready to repay
loan on demand of the lenders. In demand loan, the financiers or lenders can ask for the lent money
to be repaid by the borrower in relatively shorter duration. Also, the borrowers have the liberty to
repay the amount anytime without facing any pre-payment charges. Unlike term loan where loans
are sanctioned on a fixed tenure and repayment on instalment, demand loan is a form of short-term
finance with no fixed tenure.
Purpose of Demand Loan:
• Short-term funding for start-up businesses
• To meet daily and temporary working capital requirements
• Used for raw material purchase
• Paying office space rent and salaries
• Purchasing small assets like cars, farm animals or equipment

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 Demand Loan
Some of the Features of Demand Loan can include:
• Demand loans are basically secured loans granted by the lenders against collateral
• Borrowers needs to pay the interest only on the used amount
• Borrowers doesn’t have to worry about long-term EMIs
• The loan amount or tenure is fixed by the lenders in consultation with the borrower
• Loan component can be split by the banks, with different maturity periods as per the needs and
requirements of the borrowers

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 Demand Loan vs Term Loan
Purpose:
Demand loans are basically sanctioned to meet the working capital financial need such as purchase
of small equipment, raw materials or repaying short-term liabilities;
Term loans are basically granted for starting a new business or expansion of existing business,
purchase of land/plant, machinery for setting up factory etc.
Tenure:
Demand Loans - Generally granted for a short term ranging from minimum 7 days to few months.
Term Loans - Granted for mostly 1 year to 20 years.
Repayment:
Demand Loans have open-ended repayment schedule. Borrowers can repay the borrowed amount
anytime when they have surplus amount. But they are subjected to repay the entire loan amount
anytime on demand of the lender.
Term loans have a specified repayment terms with fixed instalment facilities. Interest is charged on
the principal amount in this case.
(Cont. on next slide)
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 Demand Loan vs Term Loan
Interest:
In demand loan, interest is charged on the amount used by the borrowers instead of the total loan
amount.
In the term loan, interest is charged on the whole amount sanctioned as a loan.
Security:
Demand loans are sanctioned by banks or financial institutes against some kind of security as goods
or stocks, shares, land building or any other assets.
In case of term loan, mortgage of land, plant and machinery, building may be shown as the security
to avail the loan.
Penalty
In demand loan there is no such penalty for pre-payment which is normal to other loans with fixed
lock-in period.
In term loan, the borrower has to pay a penalty amount in case of repayment of their borrowed
money before maturity term.

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 Banker Customer Relationship
The banker customer relationship depends on type of services provided by banks and satisfaction
of customer.
A banker is a person who is doing banking activities or business. A banker is an officer of a bank. In a
broad sense, banker conducts the business of banking. A banker is a person who is doing banking
activities or business.
Bank Customer: We can say that any person or entity that maintain an account and has business
relationship with the bank is known as customer.
As per KYC norms issued by RBI a customer means –
• A person or entity that has bank account and this bank account is utilized for the purpose of
business transaction.
• The person on behalf the account is maintained is called as beneficial owner.
• In such cases the beneficiaries of transaction conducted by intermediate like Charters
Accountant, stock broker, solicitors etc. as permitted in bank law is also considered as customer.

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 Banker Customer Relationship
Some of the common nature of bank customer relationship can include:
• Debtor and Creditor Relationship: When bank accept deposit then bank becomes debtor and
customer becomes creditor. In another word the customer who has their deposit with the bank
then bank are considered as debtor and customer as creditor. In case, when customer avail any
loan facility from the bank then bank become creditor and customer becomes debtor.
• Lessor (Licensor) and Lessees (Licensee): When customer hires safe deposit vault on rent from
the bank then the bank becomes the lessor or licensor and customer becomes lessees or
licensee. The transferor is called the lessor; the transferee is called the lessee
• Bailee and Bailor Relationship: A bailment is the delivery of goods by one person to another for
some purpose, upon a contract that they shall, when the purpose is accomplished, be returned
or otherwise disposed of according to the directions of the person delivering them. The person
delivering the goods is called the bailor. The person to whom they are delivered is called, the
bailee. Banks secure their advances by obtaining tangible securities. In some cases, physical
possession of securities goods, valuables, bonds, etc., are taken. While taking physical possession
of securities the bank becomes bailee and the customer bailor. As a bailee, the bank is required
to take care of the goods bailed.

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 Banker Customer Relationship
Following are the common nature of bank customer relationship observed in India:
• Trustee and Beneficiary: The trustee is the holder of property on behalf of a beneficiary.
Customers keep certain valuables or securities with the bank for safekeeping or deposits certain
money for a specific purpose; the banker in such cases acts as a trustee. Banks charge fees for
safekeeping valuables. Customer here becomes beneficiary.
• Agent and Principal Relationship: An agent is a person employed to do any act for another or to
represent another in dealings with third persons. The person for whom such act is done or who
is so represented is called the Principal. Banks collect cheques, bills, and makes payment to
various authorities’ viz., rent, telephone bills, insurance premium, etc., on behalf of customers. .
Banks also abides by the standing instructions given by their customers. In all such cases bank
acts as an agent of its customer, and charges for these services. So bank here is the agent and
customer is the principal.
• Pawnee (Pledgee) and Pawnor (Pledger) Relationship: The relationship between customer and
banker can be that of Pledger and Pledgee. This happens when the customer pledges (promises)
certain assets or security with the bank to get a loan. In this case, the customer becomes the
Pledger or Pawnor, and the bank becomes the Pledgee or Pawnee. Under this agreement, the
assets or security will remain with the bank until a customer repays the loan.
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 Banker Customer Relationship
Following are the common nature of bank customer relationship observed in India:
• Mortgagee and Mortgagor Relationship: A mortgage is a transfer of an interest in immovable
property and it is given as a security for a loan. The transferor of interest in the property is called
a mortgagor and the transferee is called a mortgagee. Here, the customer is the Mortgagor and
the Banker is the Mortgagee.
• Hypothecatee and Hypothecator Relationship: When bank create charge over movable property
like vehicle, tractor standing crop, furniture against loan given to the customer then in such case
bank become hypothecatee and customer becomes hypothecator.

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Banker Customer Relationship

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 The Rights of a Banker
• The Right to Commission or Service Charge: Upon rendering services to their customers, the
bank has right to charge their customers a certain amount of fees. This is also known as
commission or service charges
• The Right to Interest: Under the conventional banking system, interest is regarded as benefit and
profit that a bank can charge and agreed with their customers. The interest is charged based on
express agreement concluded between the bank and the customer
• The Right to Repayment of Loan: In conclusion of a loan between the bank and a customer,
based on the agreed and stipulated contract between both of the parties, the bank is said to
have a right of repayment of the said loan, when it is due for the customer to repay
• The Right to Utilize Deposited Money: When a customer deposits his money into the bank, the
money ceases to become the money of the customer. The money is belonged to the bank on the
basis of debtor-creditor relationship. In which the customer is acted as the creditor and the bank
is in the position of a debtor. Upon a demand made by the customer, the bank must return the
demanded money plus with an agreed sum of interest. The customer cannot make any inquiry
from the bank in a matter of the utilization of the deposited money. It is clear that when the
money is deposited to the bank, the legal possession of the money already passed to the bank
and the bank has rights to appropriate the deposit
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 The Rights of a Banker
• The Right to Set Off: Right of set off is the right of the bank to combine the two accounts of the
same person where one account which is in credit balance and the other account is in debit
balance in order to cover a loan default. The banker can exercise the right of set-off only when
the money owed to him is a sum certain, which is due and where there is no agreement, express
or implied to the contrary.
• The Right of Appropriation: A customer may owe several distinct debts to the bank when the
customer deposits some money without specific instructions and is insufficient to discharge all
debts. The problem arises as to which debt this amount should be adjusted. In the absence of
any specific instructions, the bank has the right to appropriate the deposited amount to any loan,
even to a time-barred debt. But the banker must inform the customer about the appropriation. If
the customer has more than one account or has taken more than one loan from the banker, the
banker can appropriation these loans by the accounts.
• The Right to Lien: The right to lien is a right which is exercised by retaining a certain lawful
property which is belonged or owned by another person, until the said person settles the
indebtedness that he owes towards the bank.

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 The Rights of Banker
• The Right to Close the Account: If the bank believes that an account is not being operated
properly, it may close the account by sending a written intimation to the customer. But the notice
is mandatory. Without sending such notice, a banker cannot close any customer’s account.

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 The Obligations of Banker
The fundamental obligations of a banker towards its customers are:
• Obligation of Banker to Honor Checks: The bank has a statutory obligation to honor the
checks/cheques of its customers up to the amount standing to the credit of the customer’s
account.
• Obligation of banker to Maintain Secrecy: The banker must not disclose to any outsider the
details about the customer’s account, as such disclosures may adversely affect the credit and
business of the customer.
• Obligation of Banker to Maintain Proper Records: The banker is obligated to maintain an
accurate record of all the transactions(credits and debits) of the customers made with the bank.
• Obligation of Banker to Follow Customer’s Instructions: The banker is under a legal obligation to
follow the instructions of the customer. This is so because there is a contractual relationship
between the bank and the customer.
• Obligation of Banker to give Notice before Closing the Account: If a banker wishes to close the
customer’s account, it must give reasonable notice to this effect to the customer. Thus, a bank
cannot close a customer’s account on its own wish because it may have serious consequences to
the customer.
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 Types of Bank Customers
A bank customer can be defined as any legal entity like individuals or firms which interacts with and
uses the bank’s facilities.
We look at the types of bank customers based on these three criteria:
• Type of legal entity
• Size of business
• The type of account
Type of legal entity: A legal entity is something that has an independent existence in the eye of law.
We may have different entities that take the use of banking services. Therefore, they become a
bank’s customers. Here are some examples:
 Individuals
 Firms (such as a partnership, company or proprietorship)
 Government
 Bodies such as NGOs, Societies, etc.

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 Types of Bank Customers
Size of Business: We may also categorize the customers through the size of the business. This kind
of categorization is important. It helps the bank in segmentation. Usually, the most useful types of
bank customers banks are larger firms and rich individuals. These types of customers have a higher
average account balance. This provides the necessary cash for the banks to survive. Such customers
may also be sources of revenue through secured/unsecured loans. A bank may have dedicated
relationship managers assigned to handle such customers.
On the other hand, we have retail customers. These customers have smaller transactions and
smaller balances individually. However, on an aggregate level, they form a bulk of business for the
entire banking industry.
Bank accounts for specific customer segments: It is imperative that certain customer segments will
have a different need than others. For example, senior citizens may have a lot of cash savings to
keep in the bank with little liabilities. On the other hand, youth may have less cash but are heavy on
liability. Therefore banks may create accounts for special segments such as Women Account, Youth
Account, etc.
Banks may also have different categories of accounts for the specific needs of the customers. The
naming convention and the specific modalities may change from one country to another. However,
all the banks have some specific categories of account types. Some of these can include Savings
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 Know Your Customer (KYC)
KYC means to ‘know your customer’ which is an effective way for an institution to confirm and
thereby verify the authenticity of a customer. For this, the customer is required to submit all KYC
documentation before investing in various instruments. All financial institutions are mandated by
the RBI to do the KYC process for all customers before giving them the right to carry out any
financial transactions.
Essentially, the meaning of KYC is to establish an individual's identity and address through relevant
supporting documents, including photo IDs (for example, PAN card, Aadhar card), In-Person
Verification (IPV) and proof of address. KYC compliance is a mandatory exercise under the
Prevention of Money Laundering Act, 2002

(Cont. on next slide)

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 Know Your Customer (KYC)
Types of KYC
• Aadhaar-based KYC allows a customer to perform KYC using his Aadhaar details online. However,
he is allowed to invest only up to Rs. 50,000 every financial year per fund.
• In case the customer wants to invest more in a specific fund every year, he needs to get In-
Person-Verification done. The customer can either visit a fund house office or KYC kiosk for in-
person verification or authenticate using Aadhaar-biometrics by calling the KRA (KYC Registration
Agency) executive to his home/office. Some mutual fund houses allow customers to get their IPV
KYC done through video call where they have to display their original identity and address proof.
Once completed, the bar of Rs. 50,000 maximum investment amount is lifted for such customers.
Documents required for KYC: One has to submit some documents to authenticate identity and
address of the client/customer. The list of documents required include
• Proof of identity such as Unique Identification Number (UID (Aadhaar)/Passport/Voter ID
Card/Driving License, PAN Card with photo, etc.
• Proof of Address: Passport/ Voters Identity Card/ Ration Card, Utility Bill like Telephone Bill, etc.

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 Demand and Time Liability (DTL)
Banks are in the business of accepting deposits and deploying these funds by way of lending and
thereby earning profit in the process. The resources mobilised by the bank for lending are its
liabilities. Demand and time deposits from public form the largest share of bank’s liabilities.
Demand Liabilities: The demand liabilities for a bank include all those liabilities which are payable
on demand. Demand Liabilities of bank can include:
• Current Deposits
• Demand liabilities portion of savings bank deposits
• Balances in overdue fixed deposits, etc.

Time Liabilities: Time liabilities of a bank are those liabilities of a bank which are payable otherwise
on demand. Time Liabilities of bank can include:
• Fixed Deposits
• Cumulative and Recurring Deposits
• Portion of savings bank deposits, etc.
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 CASA
CASA stands for Current Account and Savings Account.
CASA deposit is the amount of money that gets deposited in the current and savings accounts of
bank customers. It is the cheapest and major source of funds for banks.
Banks offer mainly two types of accounts. These could be term deposits-
• Fixed or recurring deposits or
• Non-term deposits - like current or savings accounts.
A term deposit is valid for a fixed period of time and in return the bank pays interest at a fixed rate
with the condition that you do not touch the money in the interim. For example, you put in Rs
10,000 in a fixed deposit for a period of seven years and the bank pays you an interest at the rate of
12 per cent per annum.
On the other hand, current and savings accounts are used for daily operations and are valid as long
as the customer wants them to be. They have lower interest rates than term deposits depending on
the bank’s terms and conditions. Since interest rates are lower than term deposits, CASA is a
cheaper source of funds for banks. For this reason, financial experts also look at CASA ratio to
understand a bank’s financial health, as the same reflects the bank’s capacity to raise money with
lower borrowing costs.
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 CASA
Current account and Savings account (Also known as demand liability): The importance of them to
banks is free cash flow. The bank is not paying any interest rate on the current account and pays
lower interest rate (as compared to term deposits) to a savings account.
Hence, more the demand liabilities, the lower the cost for banks.
CASA Ratio:
The percentage of total bank deposits that are in a CASA is an important metric to determine the
profitability of a bank. The CASA ratio indicates how much of a bank’s total deposits are in both
current and savings accounts.
A higher ratio means a larger portion of a bank’s deposits are in current and savings accounts, rather
than term deposit accounts. This is beneficial to a bank because it gets money at a lower cost.
Therefore, the CASA ratio is an indicator of the expense to raise funds and, therefore, is a reflection
of a bank’s profitability or likelihood of generating profit.

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 Alternative Delivery Channels in Banking Sector
Alternative Delivery Channel (ADC) means that channels which act as intermediaries between bank
and customer and leads to expand movement and execution of banking services. These Alternative
Delivery channels will help bank to reach wide range of customer across the country
Now a day most of the customers are moving out of branch banking to other channels. Considering
the use of internet, smartphone and mobiles provides suitable options for online purchase which
encourages customer to use online banking facilities. Using these channels customer can do his
banking transaction from his home, office and any other place. All the channels are contributing to
increase productivity of banking system.
The alternative delivery channels in banking sector can include the following:
• Internet Banking: In simple way internet banking is nothing but use of banking facility on your
computer or mobile with the help of internet. It is considered as modern form of banking.
Internet banking is a complete online banking system itself and facilitates you to do all banking
operations setting at your home. It also help you to transfer your fund or make bill payment from
any were at home.
(Cont. on next slide)

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 Alternative Delivery Channels in Banking Sector
The alternative delivery channels in banking sector can include the following:
• Internet Banking:
Uses of Internet Banking can include:
 Reduce frequent visit to branch: As internet banking makes the banking transaction at your
finger tip, it reduces frequent visit of bank branch
 Fund Transfer: It allows you to transfer fund from your own account to others account as well
as to your own other bank account.
 Online account opening: Through internet banking you can open account online
 Utility Bill Payment: You can pay all your daily utility bill online like light bill, gas bill, etc.
 New Cheque Book Request: Ordering new cheque book has become easy through internet
banking
(Cont. on next slide)

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 Alternative Delivery Channels in Banking Sector
The alternative delivery channels in banking sector can include the following:
• Mobile Banking: This assists you to initiate the banking operations on your mobile phone. ll
banks are providing their mobile banking application to their customer. You can use mobile
banking for instant fund transfer, payment of bill, view account balance etc. At the time of
demonetization when the banks were crowded; mobile banking was the first preference from
people for cashless transaction. Mobile banking is considered to be simpler and more convenient
method than any other method of transaction.
Use of Mobile Banking can include:
 Easy to access account information: This is the primary service provided through mobile
banking. Thus with the app available in your mobile you can better manage your fund. With
mobile app you can view your account balance, your transaction history, get e-statement i.e.
your loan statement or credit card statement.
 Fund Transfer: This is most used and in demand facility available with the mobile banking.

(Cont. on next slide)

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 Alternative Delivery Channels in Banking Sector
The alternative delivery channels in banking sector can include the following:
• Unified Payment Interface: UPI is real type system of payment developed by NPCI (National
Payment Corporation of India) and controlled by RBI and Indian Bank Association. UPI is a digital
payment system that facilitates instant digital fund transfer between two accounts. UPI is a
unifying platform that brings several banks under a single platform and brings all bank accounts
directly to the users’ mobile devices.
• E-Wallet: E-wallet is also known as Digital wallet and it is electronic software or online service
that allows you to transfer fund electronically to other. For this, the customer has to install the e-
wallet application and link it with his own bank account, after which the customer can make any
type of payment through that wallet.
Unified Payment Interface (UPI) transaction takes place directly from bank to bank. In contrast,
digital wallets act as an intermediary between bank accounts. These wallets play the role of the
bridge in the transfer of money from one account to another.
UPI uses virtual payment address and identity. While digital wallet uses your mobile number.

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 Alternative Delivery Channels in Banking Sector
The alternative delivery channels in banking sector can include the following:
ATM, Debit card and Credit Card: Now a day’s plastic money becomes more popular among the
younger generation. This plastic money includes ATM card, debit card and credit card. These cards
are also known as payment card that every financial institution issues to their customer. Plastic
money is mainly used for online transactions. These cards are most commonly used alternative
delivery channels in banking sector. These cards allow cardholder to transfer money electronically
from there account and also help to complete the payment transaction at the time of shopping.
Difference between ATM, Debit and Credit Card:
With ATM card, the customer can only withdraw money from the ATM machine.
The Debit card is used for depositing and withdrawing money and at the place where debit card is
accepted, the customer can complete his transaction by swap of debit card.
Credit Card: This card looks like a debit card. This card gives the customer a limit to use every
month. This limit has to be repaid within a specific time period.

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 Remittances & Funds Transfers
Bank Remittance and Bank Transfer are two concepts you may have heard of while making
different types of payments.
Although similar, there is a fine line of difference between the two. Both of them are modes of
transferring money
The term 'remittance' is derived from 'remit', meaning 'to send back'. A bank remittance refers to
the funds sent or transferred to another entity or account as payment for services or a product.
Remittances can also be personal money transfers made to family and friends overseas and any sort
of business payments.
A bank transfer instructs the bank to send money from one account to another via online banking.
This can happen either locally or internationally.

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 Remittances & Funds Transfers
Methods:
• Drafts: It is a negotiable instrument available at any bank and is widely used for effective transfer
of money. The individual making the payment submits a request for a bank draft with their
financial institution. Once the request is submitted, the bank reviews the individual’s account to
see if he or she has sufficient funds to transfer. If the individual has sufficient funds, the bank
approves the request, withdraws funds from the individual’s account, and issues a bank draft for
an equivalent amount. Once the payee presents the bank draft for payment, his or her identity is
verified with the name on the bank draft. After the identity verification process, the funds are
deposited into the payee’s account.
• Personal Cheque: It is also a negotiable instrument and is an effective way of sending money.
However, it can be delayed as bank has to verify the amount available in the senders account for
debiting the money.
• Wire Transfer & Telegraphic Transfer: In this the sender has to visit their local bank or other such
type of agencies and are required to tell information like receiver bank account details. After the
information acquired from sender the institution initiates the wire transfer and sends the
message to the receiver institution
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 Remittances & Funds Transfers
Methods:
• Wire Transfer & Telegraphic Transfer (cont.): Telegraphic Transfer as a term originates from
when people used to move money using telex: sending printed messages by cable. No one does
that anymore. Now, the term is often used synonymously with wire transfer.
The most common way of wire transfer is through the SWIFT or Society for Worldwide
Interbank Financial Telecommunications system. SWIFT is a vast messaging network banks and
other financial institutions use to quickly, accurately, and securely send and receive information,
such as money transfer instructions. More than 11,000 global SWIFT member institutions sent an
average of 42 million messages per day through the network in 2021, marking an increase of
11.4% over 2020.
Let's assume a Bank of America Corp. (BAC) branch customer in New York wants to send money
to their friend who banks at the UniCredit Banca branch in Venice. The New York customer can
walk into their Bank of America branch with their friend’s account number and UniCredit Banca’s
unique SWIFT code for its Venice branch. Bank of America will send a payment transfer SWIFT
message to the UniCredit Banca branch over the secure SWIFT network. When Unicredit Banca
receives the SWIFT message about the incoming payment, it will clear and credit the money to
the Italian friend’s account.
 Remittances & Funds Transfers
Methods:
• Pay order is a financial instrument which is issued by the bank on customer’s behalf giving an
order to pay a particular amount to a particular person in a same city. It is a type of payment
which gets cleared in the same branch of the bank which issued it whereas demand drafts are a
mode of payment which gets cleared in any branch of the issuing bank. In pay order, it is pre-
printed that this instrument is non-negotiable.
• NEFT: The National Electronic Funds Transfer (NEFT) is an electronic payment system that
facilitates direct one-to-one payments across the country. Using this facility, you can
electronically transfer funds from any bank branch to any individual having an account with any
other bank branch in the country that is a part of the NEFT scheme. It is a 24*7 available service
of funds transfer wherein the transaction gets processed in batches of half an hour. The RBI has
not specified any minimum or maximum limit on the transfer amount.

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 Remittances & Funds Transfers
Methods:
• RTGS: The acronym 'RTGS' stands for Real-Time Gross Settlement*. RTGS is a funds transfer
system based on a gross settlement concept where money is moved from one bank to another in
real-time. RTGS is primarily designed for high transaction amounts. As such, while there is no
maximum limit on the transfer amount, you need to transfer a minimum of INR 2 lakhs at a time.
RTGS is especially useful when the transaction amount is high, and payment needs to be
processed immediately.
* Gross settlement means transactions are handled and settled individually, so multiple
transactions aren't bunched or grouped together.

• IMPS: Immediate Mobile Payment Services(IMPS) is a real-time instant inter-bank funds transfer
system managed by National payment corporation of India. IMPS is available 24/7 throughout
the year including bank holidays, unlike NEFT and RTGS.
While NEFT and RTGS were introduced by RBI (Reserve Bank of India), IMPS was introduced by
National Payments Corporation of India (NPCI).

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 Remittances & Funds Transfers
Methods:

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 The Negotiable Instruments Act
The Negotiable Instrument Act was promulgated in the year 1881 which was introduced to ease
the growth of banking and commercial transactions. The basic purpose was to legalize the system of
negotiable instruments. The Act was enforced during British rule and to date, most of the provisions
still remain unchanged.
The Ministry of Finance is the nodal organization that regulates the system related to negotiable
instruments.
The process of transfers from one person to another in dealings of monetary value in terms of legal
documents is the negotiable instrument.
A negotiable instrument is a signed written document. The purpose of this document is to transfer
the specific amount of money to the assigned person. The instrument bears the promise to pay the
sum of money at an assigned future date or on-demand as the case may be. One of the common
examples that we can see in our day-to-day life is a draft that is the specific amount of money
payable by the payer or the personal check.

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 The Negotiable Instruments Act
Let us have a look at the purpose of the Negotiable Instrument Act:
• The Act aims to create the legal provisions for the negotiable instruments system that is currently
in operation throughout the country
• The Act defines every subject related to the negotiable instruments for better clarity and
understanding
• The Act provides the penal provisions for effective implementation of the negotiable instruments
process among the parties
• The Act protects the right of the parties when they discharge their obligations diligently.
• The Act eliminates all kinds of discrepancies or hurdles that may arise between the parties
• The Act mentions different conditions about the transaction systems and laid down its specific
provisions.
• The Act regulates the different negotiable instruments like promissory notes, Bills of Exchanges,
and cheques

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 The Negotiable Instruments Act
• Promissory Notes: This transaction generally takes place between the debtor and the creditor.
The debtor creates the instrument promising the amount of money on a specified date.
• Bills of Exchange: This is just the opposite of the promissory notes as this is an order from the
creditor to the debtor. Here, the creditor makes the instrument that instructs the debtor to pay
the payee a certain amount of money. The bill is created by the creditor.
• Cheque: In this, the bank is instructed by the debtor to pay a certain amount of money to the
assigned payee.

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 Asset Liability Management
Asset/liability management is the process of managing the use of assets and cash flows to reduce
the firm’s risk of loss from not paying a liability on time. Well-managed assets and liabilities increase
business profits. The asset/liability management process is typically applied to bank loan portfolios
and pension plans.
The concept of asset/liability management focuses on the timing of cash flows because company
managers must plan for the payment of liabilities. The process must ensure that assets are available
to pay debts as they come due and that assets or earnings can be converted into cash.
ALM is an ongoing process that continuously monitors risks to ensure that an organization is within
its risk tolerance and adhering to regulatory frameworks. The adoption of ALM practices extends
across the financial landscape and can be found in organizations, such as banks, pension funds,
asset managers, and insurance companies.
By strategically matching assets and liabilities, financial institutions can achieve greater efficiency
and profitability while reducing risk.

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