1. Revise Lecture 27 1

2. Deposit Account 2

3. Banker and Customer Deposit Account The main banking activities consist of acceptance of deposit from the public for the purpose of lending to businessmen and others who may seek loans. Actually, the money deposited in any bank is mostly the saving of the people. Money may be needed in future for various purposes such as medical treatment, marriages and for other events. 3

4. Banker and Customer Deposit Account So people keep their savings with someone where it will both be safe and earn a return. A bank is a such place where money once deposited remains safe and also earns profit. 4

5. Types of deposit account 5

6. Banker and Customer Types of deposit account Bank deposits serve different purposes for different people. Some people cannot save regularly, they deposit money in the bank only when they have extra income. Some, mostly businessmen, deposit all their income from sales in a bank account and pay all business expenses out of the deposits. 6

7. Banker and Customer Types of deposit account Keeping in view these differences, banks offer the people the facility of opening different types of deposit accounts to suit their purpose and convenience. 7

8. Types of deposit account Accordingly, bank deposit accounts may be classified as; 1.Savings bank account 2.Current deposit account 3.Fixed deposit account 4.Recurring deposit account 5.Salary account 8

9. Withdrawal from deposit account 9

10. Banker and Customer Withdrawal from deposit account Customer deposit his savings for use in future. The need for money may arise any time. So customer should know how to get back your money from the bank. 10

11. Banker and Customer Withdrawal from deposit account Money can be withdrawn by using; 1.Withdrawal form 2.Cheque 3.ATM card 11

12. Types of Accounts Holders Banks are custodians of public money. Basically, the money is accepted as deposit for safe keeping. A bank account is a monetary account with a banking institution recording the balance of money for a customer. 12

13. Types of Accounts Holders Opening an account is the most common and the first service of the banking sector. There are different types of bank accounts in the Pakistan banking sector; 1.Bank savings account 2.Bank current account 3.Bank term deposits account 4.Bank online account 13

14. Types of Accounts Holders The due diligence process that the banker should follow will involve providing documentation verifying the customer’s identity, address, and information on his occupation or business and source of funds. A part of the due diligence process, the bank may also require an introduction from a person acceptable to the banker if they so deem necessary, and may need the customer’s recent photographs. 14

15. Types of Accounts Holders The bank reserves the right, at its sole discretion, to open any account and, at such terms, as the bank may prescribe from time to time. A bank has to deal with different types of account holders which are the following; 15

16. Types of Accounts Holders 1.Individual 2.Joint account holders 3.Illiterates 4.Minors 5.Married women 6.Non-resident accounts 7.Sole proprietorship 8.Partnership firms 16

17. Types of Accounts Holders 9. Joint stock company 10. Clubs, Associations and Societies 11. Trusts 12. Government departments 13. Local authorities 17

18. Types of Accounts Holders Payment of Pension 18

19. Types of Accounts Holders Payment of Pension Banks make pension payments on behalf of the government to the retired employees of Central and State Governments, Defence services, Railways and others. All prnsion payments are subject to rules and procedures prescribed by the government, SBP and concerned departments / organizations from time to time. 19

20. Types of Accounts Holders Payment of Pension A pensioner can open an account with cheque book facility and also give nomination in his pension account. Once the account is opened, no credit other than pension is permitted in the account. Pension accounts are allowed 50% concession in minimum balance requirements as well as in service charges. 20

21. Types of Accounts Holders Payment of Pension If the family pensioner is a widow, at the time of first payment of pension, a certificate to the effect that she has not re-married and an undertaking to the effect that if she re- married later, she will intimate the fact promptly to the pension-paying branch is required. 21

22. Types of Accounts Holders Payment of Pension The pension usually credited by the branch to the pensioner’s saving or current account during the last four working days of the month. Income tax at the prescribed rate is deducted from the pension amount, and net amount is payable to the pensioner’s account. 22

23. Merchant Banking 23

24. Merchant Banking – An Overview The financial services sector is an important constituent of the financial system and plays a significant role in the realm of economic development of a country. Merchant Banking is a prominent component of the financial sector of our country. 24

25. Merchant Banking – An Overview Merchant Banking provides specialist services including portfolio management, project financing and counselling, issue management and underwriting, mergers, acquisitions, venture capital financing, leasing and so on. 25

26. Merchant Banking – An Overview Merchant banking, although a non-banking financial activity, resembles banking function. The function of merchant banking which originated, and grew in Europe, was enriched by American patronage, and these services are now being provided throughout the world by both banking and non-banking institutions. 26

27. Merchant Banking – An Overview The word ‘Merchant Banking’ originated among the Dutch and the Scottish traders, and was later on developed and professionalized in Britain. 27

28. Merchant Banking – An Overview A set of financial institutions that are engaged in providing specialist services, which generally include the issue and underwriting, project financing, mergers, acquisitions, venture capital financing, acceptance of bills of exchange and other banking services, are known as ‘merchant bankers’. A merchant banker may specialize in one activity and take up other activities, which may be complementary or supportive to the specialized activity. 28

29. Merchant Banking – An Overview In the U.S., investment bankers cater to the needs of business enterprises carrying out merchant banking functions. The main functions of merchant banking are the following; 1.Corporate counselling 2.Project counselling 3.Pre-investment studies 29

30. Merchant Banking – An Overview 4. Capital restructuring 5. Credit syndication and project finance 6. Issue management and underwriting 7. Portfolio management 8. Working capital finance 9. Acceptance creat and bill discounting 10. Mergers, Amalgamations and takeovers 30

31. Merchant Banking – An Overview 11. Venture capital 12. Lease financing 13. Foreign currency finance 14. Fixed deposit broking 15. Mutual funds 16. Relief to sick industries 17. Project appraisal 31

32. Public Issue Management 32

33. Public Issue Management The management of securities of the corporate sector offered to the public on a regular basis, and existing shareholders on a rights basis, is known as ‘public issue management’. Issue management is an important function of merchant bankers and lead managers. 33

34. Public Issue Management The management of issues for raising funds through various types of instruments by companies is known as ‘issue management’. A fast growing economy like Pakistan offers tremendous scope for issue management and the merchant bankers provide their skills and expertise to companies in the management of capital issues. 34

35. Public Issue Management The general functions that form part of the capital issues management functions of merchant bankers as follows; 1.Obtaining approval for the issue from SECP 2.Arranging for underwriting the proposed issue 3.Preparation of draft and finalization of the prospectus and obtaining its clearance from the various agencies concerned 35

36. Public Issue Management 4. Preparation of draft and finalization of other documents such as application forms, newspaper advertisements and other statutory requirements 5. Making a choice regarding registrar to the issue, printing press, advertising agencies, brokers and bankers to the issue and finalization of the fees to be paid to them. 36

37. Public Issue Management 6. Arranging for press conferences and the investors conferences 7. Coordinating printing, publicity and other work in order to get everything ready at the time of the public issue 8. Complying with SECP guidelines after the issue is over by sending various reports as required by the authorities. 37