1. Welcome to JAIIB Classes
PRINCIPLES OF BANKING
FUNCTIONS OF BANKS

2. BANKER-CUSTOMER RELATIONSHIP
DEBTOR-CREDITOR
CREDITOR-DEBTOR
AGENT-PRINCIPAL
LESSOR-LESSEE
BAILEE-BAILOR

3. KNOW YOUR CUSTOMER- KYC
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

4. KYC RULES The main rules are – Customer identification
Ceiling and monitoring of cash transactions
Internal Control Systems
Prevention of Terrorism Finance
Identification and Reporting of Suspicious Transactions
Adherence to Foreign Contribution Regulation Act (FCRA), 1976
Record Keeping
Training of staff and management

5. BANKER - CUSTOMER RELATIONSHIP
Deposit Accounts

6. Indian Banking - Significant events 1
Three presidency banks were established in Calcutta (1806) in Bombay (1840) and in Madras (1843)
In the early part of 20th century, on account of the Swadeshi movement a number of join stock banks were established by Indians like Bank of India, Bank of Baroda and Central Bank of India.
In 1921 the three presidency banks were merged and the Imperial Bank of India was created.
During the period 1900 to 1925 many banks failed, and the Government appointed in 1929 a Central Banking Enquiry Committee to trace the reasons for the failure of banks.
The Reserve Bank of India Act was passed in 1934 and the RBI came into existence in 1935 and RBI was nationalised in 1949
The Banking Regulation Act,1949 gave wide powers to RBI to act as the regulator for banks in India

8. Indian Banking - Significant events 1
Three presidency banks were established in Calcutta (1806) in Bombay (1840) and in Madras (1843)
In the early part of 20th century, on account of the Swadeshi movement a number of join stock banks were established by Indians like Bank of India, Bank of Baroda and Central Bank of India.
In 1921 the three presidency banks were merged and the Imperial Bank of India was created.
During the period 1900 to 1925 many banks failed, and the Government appointed in 1929 a Central Banking Enquiry Committee to trace the reasons for the failure of banks.
The Reserve Bank of India Act was passed in 1934 and the RBI came into existence in 1935 and RBI was nationalised in 1949
The Banking Regulation Act,1949 gave wide powers to RBI to act as the regulator for banks in India

9. Progress of banking in India
In the liberalised, privatised and globalised environment, banks opeating in India have diversified their banking activities by offering Para Banking facilities like
Merchant banking/Mutual funds
ATMs/Credit Cards/Internet banking
Venture capital funds
Factoring
Bancassurance

10. Non-Resident Accounts - 1

11. Foreign Currency Non-resident Deposit Accounts –FCNR (B)
FCNR (B) accounts
NRIs,PIOs,residing outside India can open FCNR (B) accounts
FCNR (B) accounts are maintained as fixed deposits in certain designated currencies
The designated currencies are:
US$, GBP, Japanese Yen, Euro, Cad$, Aus $
Maintained in Banks in India in the above
mentioned foreign currencies and interest is also earned in such foreign currencies
Repatriation of funds (principal, interest) is allowed

12. Loan Products – Fund Based

13. Loan Products –Non Fund Based

14. SERVICES OFFERED BY BANKS
Over and above the traditional role of a bank to take deposits and offer credit facilities Banks today offer the following services-
Internet Banking
Telephone Banking
Mobile Banking
On-line trading in shares
Bills payment on- line
Booking air/ railway tickets on- line
Bills payment on-line
Cash Management Services

15. SERVICES OFFERED BY BANKS - contd
9 On-line remittance facility-RTGS/NEFT etc
10 Sale of third party products – Mutual fund schemes/insurance
11Safe Custody
12 Safe deposit vault
13 Depository Services
14 tax payments on-line
15 Counseling Services

16. CASH MANAGEMENT SERVICES
In today's competitive market place, effective management of cash flows can make the difference between success and failure
The cash management product usually offers corporate customers fast track cheque collections, speedier release of funds and profitable funds management, at a reasonable cost
Payments received from buyers and made to suppliers of a corporate client are efficiently processed to optimise cash flow position and to ensure the effective management of business' operating funds
The flow of receivables and payables can also usually be seen on-line.

17. DEPOSITORY SERVICES
With a view to adding value to banking services and making available the numerous benefits of depository system to clients, banks in India offer Demat services through either Depositories viz.National Securities Depository Limited (NSDL) or Central Depository Services (India) Ltd. (CDSL) or both by becoming a sub-participant.
Services offered are usually at par with those offered by specialized organizations like Integrated etc

18. COUNSELLING SERVICES
The following are the usual objectives of counselling services provided by some banks.
Advising on gaining access to structured financial system including banking
Creating awareness among the public about financial management
Counseling people who are struggling to meet the repayment obligations and helping debt resolution
Helping in rehabilitation of borrowers in friendly and timely guidance not only to mitigate the immediate stress of the trapped individuals and their households, but also to help to infuse confidence in others who are in distress.

19. POWER OF ATTORNEY
Power of attorney (POA) also called letter of attorney is an authorization to act on someone else's behalf in a legal or business matter. The person authorizing the other to act is the principal, granter or donor (of the power), and the one authorized to act is the agent
A power of attorney may be special or limited to one specified act or type of act, or it may be general, and whatever it defines as its scope is what a court will enforce as being its scope. It may also be limited as to time.
The POA is usually stamped and notarised
The POA can be cancelled or amended by the donor at any time.However is responsible for all acts till he gives notice

20. MANDATE Usually an unstamped letter Addressed to a particular bank
Authorises a third party to act on his/her behalf
Issued for short/ temporary period
Not acceptable from limited companies/ cooperative societies

21. CHARGES
HYPOTHECATION
PLEDGE
MORTGAGE
ASSIGNMENT
LIEN
SET OFF

22. LIEN & SET OFF
A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary. It is a right to retain possession of specific goods or securities or other movables of which the ownership vests in some other person and the possession can be retained till the owner discharges the debt or obligation to the possessor.
The right of set off is also known as the right of combination of accounts .A bank has a right to set off a debt owing to a customer against a debt due from him.
Both the claim and the set-off must be mutual debts, due from and to the same parties, under the same right A claim by a person in a representative capacity cannot be set off against a personal claim

23. Garnishee Order
A garnishee order is an attachment order issued by a court
Example : A borrows money from B .A fails to repay the loan. B files a suit under Civil Procedure Code and the Court issues
a decree and attaches the funds in A’s bank account with Bank XYZ Ltd.
The order issued by the Court on bank XYZ Ltd is called a“Garnishee Order”
B is called the judgement creditor. A is the Judgement debtor. Bank XYZ Ltd is Judgement debtor’s debtor
It has 2 parts ‘order nisi’ , and ‘order absolute’

24. CHEQUES

25. NEGOTIABLE INSTRUMENTS Paying Banker:

26. NEGOTIABLE INSTRUMENTS
BANKER’S DUTIES
&
RESPONSIBILITIES
C0LLECTING
BANKER
COLLECTION OF
CHEQUES

27. Six Cs
Character
Capital
Capacity
Collateral
Condition
Compliance

28. Working Capital Cycle

29. FUND BASED FINANCE

30. Non-Fund Based Finance

31. Credit Management in Banks