Fundamentals of Banking & Finance (Exam Preparation)

#1 course for banking & finance

Course Contents: Important Questions & Answers

MODULE 1: Evolution of Banking

1.1 Origin, Meaning and Definition of 'Bank'

1.2 Evolution of Banking

• Europe

• USA

• Asia

MODULE 2: Functions of Bank

2.1 Primary Functions:

• Accepting Deposits:

  • Demand deposits: Current and Savings

  • No Frills Account

  • Time deposits: Recurring and Fixed deposits

  • Flexi Deposits (Auto Sweep)

• Granting Loans and Advances:

  • Term Loan

  • Short term credit

  • Overdraft

  • Cash Credit

  • Purchasing and Discounting of bills

2.2 Secondary Functions:

• Agency Functions:

  • Payment and Collection of Cheques, Bills, and Promissory notes

  • Execution of standing instructions

  • Acting as Trustee, Executor

• General Utility Functions:

  • Safe Custody

  • Safe deposit vaults

  • Remittances of funds

  • Pension Payments

MODULE 3: Procedure for Opening and Operating Deposit Account

3.1 Procedure for Opening Deposit Account:

• Know Your Customer (KYC) Norms

• Application form

• Introduction

• Proof of residence

• Specimen signature

• Nomination and their importance

3.2 Procedure for Operating Deposit Account:

• Pay-in slips

• Withdrawal slips

• Issue of passbook (Current, Savings, Recurring deposits)

• Issue of cheque book

• Issue of fixed deposit receipt

• Premature encashment of fixed deposits and loan against fixed deposit

• Recurring deposits: Premature encashment and loan against recurring deposit

3.3 Closure of Accounts and Transfer

• Closure of accounts

• Transfer of accounts to other branches/banks

3.4 Types of Account Holders:

• Individual Account Holders: Single, Joint, Illiterate, Minor, Married Woman, Non-Resident Accounts

• Institutional Account Holders: Sole Proprietorship, Partnership Firm, Joint Stock Company, Hindu Undivided Family, Clubs, Associations, Societies, Trusts

MODULE 4: Methods of Remittances

4.1 Demand Drafts, Bankers' Cheques, and Truncated Cheques

4.2 Mail Transfer and Telegraphic Transfer

4.3 Electronic Funds Transfer (EFT):

• RTGS

• NEFT

• SWIFT

MODULE 5: Lending Principles, Credit Creation, and Balance Sheet of a Bank

5.1 Lending Principles:

• Safety

• Liquidity

• Profitability

• Diversification of risks

• Conflict between liquidity and profitability

5.2 Multiple Credit Creation:

• Process

• Limitations

5.3 Balance Sheet of a Commercial Bank

MODULE 6: Negotiable Instruments

6.1 Definition, Meaning, and Characteristics:

• Promissory Note

• Bill of Exchange

• Cheques

6.2 Types of Cheques:

• Bearer

• Order

• Crossed

6.3 Types of Crossing:

• General

• Special