SOURCES OF FUND Prepared by: KP Gwachha (M.Phil.) W E L C O M E SOURCES OF FUND Prepared by: KP Gwachha (M.Phil.)

Friday, November 16, 2018

Friday, November 16, 2018

Friday, November 16, 2018

DEPOSIT The act of placing money with a bank is known as bank deposit. A deposit account is a bank account that pays interest but that imposes the requirement of notice before withdrawal can be effected; A deposit receipt is an acknowledgement by the bank that sums have been deposited and are being held for the account of the depositor; A certificate of deposit is a financial instrument providing a similar acknowledgement but where the claim of the depositor is transferable. Friday, November 16, 2018

DEPOSIT……. A deposit account is a savings account, current account or any other type of bank account that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank and represents the amount owed by the bank to the customer. Some banks may charge a fee for this service, while others may pay the customer interest on the funds deposited. Friday, November 16, 2018

FIXED DEPOSIT A fixed deposit the amount of fixed amount and fixed maturity with higher interest rate. In the emergency times, customers are permitted to borrow 90 percent of money in lieu of extra interest. Longer the time period of fixed deposit, higher the interest rate and vice versa. The depositor foregoes liquidity on the deposit and the bank can freely deploy such funds for loans/advances and earn interest. Main Features of Fixed Deposits are as follows: Friday, November 16, 2018

Features of Fixed Deposits A deposit receipt is issued by the bank branch accepting the fixed deposit- mentioning the depositor’s name, principal amount, maturity period and interest rate, dates of the deposit and its maturity etc. Fixed deposits is generally opened by individuals, sole trading, partnership and corporation. Bank must pay interest on fixed deposit and interest rate is highest among all deposit types. The deposits are for fixed time. These deposits are normally withdrawn after the maturity. Term deposits are not transferable. The interest rate and the maturity are specified on the fixed deposit certificate. Friday, November 16, 2018

REVOLVING DEPOSIT A revolving account is an account created by a lender to represent debts where the outstanding balance does not have to be paid in full every month by the borrower to the lender. The borrower may be required to make a minimum payment, based on the balance amount. The borrower normally has the discretion to pay the lender any amount between the minimum payment and the full balance. If the balance is not paid in full by the end of a monthly billing period, the remaining balance will roll over or "revolve" into the next month. Interest will be charged on that amount and added to the balance. Friday, November 16, 2018

INTEREST BEARING AND NON INTEREST BEARING Deposit accounts are attractive places to park cash for investors who want a safe vehicle for maintaining their principle, earning a small amount of fixed interest. The interest rate paid by financial institutions to deposit account holders. Deposit accounts include certificates of deposit, savings accounts and self-directed deposit retirement accounts. Friday, November 16, 2018

SAVING DEPOSIT Saving deposit is one of the deposits, which is collected from small depositors or low-income investors. The bank usually pays small interest to the depositors against their deposit. The depositors are allowed to withdraw their money by cheques to the amount prescribed by bank. Banks may impose certain restrictions on the deposits regarding the number of withdrawals and the amount of deposited in the given period. The interest rate on these deposits is low as compared to that of fixed deposits. Savings deposits are less volatile than current deposit. Savings accounts are normally opened in the name of individuals. Sole trading, partnership and Joint Stock Company are restricted to open savings accounts by unified directives. Friday, November 16, 2018

The features of the saving accounts Targeted to individuals who wish to deposits their savings. Saving deposit provides the stability to the overall deposit base of the bank due to the large number of deposits. Banks pay interest on savings deposits. Various types of savings deposits are introduced by the banks. For example, Ketaketi bachat khata, budabudi bachat khata etc. Only individual persons are eligible to open this account. To attract the customer, banks may offer various services like ATM/debit card, insurance, e-banking etc. Friday, November 16, 2018

FIXED DEPOSIT A fixed deposit the amount of fixed amount and fixed maturity with higher interest rate. In the emergency times, customers are permitted to borrow 90 percent of money in lieu of extra interest. Longer the time period of fixed deposit, higher the interest rate and vice versa. The depositor foregoes liquidity on the deposit and the bank can freely deploy such funds for loans/advances and earn interest. Main Features of Fixed Deposits are as follows: Friday, November 16, 2018

Features of Fixed Deposits A deposit receipt is issued by the bank branch accepting the fixed deposit- mentioning the depositor’s name, principal amount, maturity period and interest rate, dates of the deposit and its maturity etc. Fixed deposits is generally opened by individuals, sole trading, partnership and corporation. Bank must pay interest on fixed deposit and interest rate is highest among all deposit types. The deposits are for fixed time. These deposits are normally withdrawn after the maturity. Term deposits are not transferable. The interest rate and the maturity are specified on the fixed deposit certificate. Friday, November 16, 2018

CALL DEPOSIT Call deposit is also known as hybrid deposit. It is the combination of current and fixed deposit to meet the customer’s requirement in flexible manner. Due to increasing competition, this deposit is introduced. Call deposit mainly serves the need of appropriate assets liability management of the banks and financial institutions. Normally the practice of inter bank borrowing and lending activities are conducted through this product. Friday, November 16, 2018

The features of call deposits Generally opened by firms, corporation and bank and financial institutions. Bank pays certain rate of interest to the depositors. The deposit is not maturity specific. The depositor generally is entitled to withdraw any amount upon request. The interest rates are generally dependent on the negotiation between the client and the bank. Friday, November 16, 2018

NON-INTEREST BEARING A deposit account which does not earn interest on the money in the account. A non-interest-bearing account is often used as a basic or starter checking account, frequently for children or teens who are only storing a small amount of money. Another advantage of these accounts is that in some cases, a non-interest-bearing account will have limited or no fees. Friday, November 16, 2018

CURRENT DEPOSIT It is also known as demand deposits. Under this deposit, any amount may be deposited. There are no restrictions regarding the number of withdrawals or the amount of the withdrawals. The bank does not pay any interest on such deposits but sometimes bank may charges a small amount on the customers having current account. Traders and businessman keep their money with the bank under current accounts. Friday, November 16, 2018

The features of current deposits Normally opened by business firms. Banks do not pay any interest on these accounts. Cheques / Bills collection and purchase facilities may also be granted to the current account holders as per agreement. No restriction on the number and amount of withdrawals or deposits. Volume of deposits is highly volatile. Friday, November 16, 2018

MARGIN DEPOSIT This deposit is made for holding margin money of the customers as deposits to avail various facilities from the bank. It is non interest bearing deposit. Customers are not allowed to withdraw any amount from such accounts till the expiry of the availed facilities. Margins are required for letter of credit (LC), guarantee, remittance and some other facilities. Friday, November 16, 2018

CAPITAL OR EQUITY Friday, November 16, 2018

Friday, November 16, 2018

DEBT AND EQUITY CAPITAL Friday, November 16, 2018

1. Reserves The amount of paid up share capital of the banking institutions is the long term sources of financing. Amount credited in share capital by issuing bonus shares utilizing the accumulated profit and reserves. This head includes authorized capital, issued capital, paid up capital, proposed bonus shares and calls in advance. Friday, November 16, 2018

2. Reserve and Funds Licensed institution shall include the amounts received from allocation of profits in connection with maintaining reserves or created from any other process and the amount reserved without allocation in profit/loss account in this heading. Friday, November 16, 2018

Assets Revaluation Reserve. Other capital reserve: General/Statutory Reserve Fund: (the amount transformed from appropriation of net profit according to the Banks and Financial Institutions Act, 2006 shall be included.) Capital Reserve Fund: Share Premium Capital Reserve Assets Revaluation Reserve. Other capital reserve: Friday, November 16, 2018

c) Dividend Equalization Fund d) Accumulated Profit/Loss e) Capital Equalization Fund f) Other Reserve Fund Friday, November 16, 2018

BORROWING: SHORT TERM VERSUS LONG TERM Accruals and Deferred income Trade credit Bank loan ( transaction loan, Line of credit & Revolving credit ) Money market credit (Commercial paper, banker acceptance ) Inventory financing Account receivable financing Friday, November 16, 2018

Friday, November 16, 2018