Non-Banking Activities
All banks perform non-banking activities along alongside their traditional functions.
A banking concern cannot endure without performing the next non-banking activities:
- Banks assist their customers to brand utility payments alongside ease.
- They perform merchant banking for their customers.
- They render factoring services to their clients.
- They larn by mutual funds in addition to minimize investment risks.
- They termination gift cheques to the people.
- They bear feasibility study in addition to submit the feasibility report.
- They facilitate the percentage transactions past times maintaining demat accounts.
- They offering credit in addition to debit cards facility.
- They too offering leasing services.
- They give hire-purchase services to owners of diverse goods.
- They are directly allowed to offering insurance services.
- They render funds (capital) for starting novel ventures.
Now let's verbalize over of import non-banking activities performed past times banks.
1. Utility Payments
Banks brand utility payments for their customers. Utility payments include payment of an Electricity bill, Insurance premiums, telephone bill, H2O bill, etc. They too pay SIP (Systmatic Investment Plan) payments to Mutual funds for their customers. These payments are made past times using the Electronic Clearance Scheme (ECS). Banks accuse a small-scale (nominal) fee for making these payments.
2. Merchant Banking
Large banks perform merchant banking for their customers. They assist them to heighten finance. They give them advice most starting in addition to running a business. They assist their customers to brand a net turn a profit inwards the stock exchange. They fifty-fifty practise projection management. They too assist inwards expanding in addition to modernizing the concern of their clients. Today, banks assist to revive (cure) sick industries. They too assist inwards restructuring the business.
3. Factoring Services
Banks too render factoring services to their clients. Factoring is an understanding betwixt a banking concern (factor) in addition to a concern theater (client). Under this agreement, the concern theater sells goods in addition to services to their customers on credit. The banking concern (factor) purchases the customers' Bills Receivable or debtors concern human relationship from the concern firm. So, the concern theater is guaranteed payment for their credit sales. However, the banking concern (factor) decides whom to give credit in addition to how much credit to give.
4. Mutual Funds
Mutual funds are rattling pop because of expansion in addition to diversification of the fiscal sector. The Unit Trust of Republic of Republic of India (UTI) was the start fiscal establishment to start mutual funds inwards India. Many other banks directly bring mutual funds such every bit ICICI Mutual Fund, SBI Mutual Fund, HDFC Mutual Fund, etc. Mutual Funds are controlled past times SEBI. Mutual Funds are purchased past times investors because they offering minimum risk, maximum render in addition to liquidity. Mutual funds alongside their resources in addition to expertise invest on behalf of private investors giving them upper-case missive of the alphabet appreciation alongside minimum risk. Mutual funds release the NAV (Net Asset Value) of their funds daily. They too repurchase the units issued past times them based on their NAV. Investors who similar to play rubber become for mutual funds.
5. Gift Cheques
Gift cheques are printed inwards attractive colours in addition to designs. Gift cheques are issued past times banks to the public. They tin give these cheques every bit a introduce on auspicious occasions similar marriage, birthdays, retirements, promotion, anniversary, etc. They are usually issued for Rs. 11, 21, 51 in addition to 101. The purchaser makes total payment at the fourth dimension of purchase. Gift cheques are transferable past times mitt delivery. These cheques bring an croak date. If a gift banking concern check is lost, a duplicate is issued. These cheques are payable on demand. The payee tin claim the money at whatever branch of the issuing bank.
6. Feasibility Reports
Banks bear feasibility study on behalf of the client in addition to submit the feasibility report. This study shows chances of success of the project. Feasibility study is conducted earlier starting the projection or business. Conducting feasibility study is non compulsory, but it gives many benefits to the businessman. Banks similar IDBI or whatever commercial banking concern tin bear feasibility study inwards functional areas such every bit technical, managerial, fiscal in addition to economic. After completion of feasibility study, the banks submit a feasibility report. Based on this study the human being of affairs decides whether to practise the projection / concern or not.
7. Demat Account
Demat is a commonly used cite for dematerialization. Traditionally, shares were held inwards a physical form. Under dematerialization, shares are held inwards an electronic form. Demat concern human relationship is similar coin kept inwards a savings account. You tin deposit in addition to take away the total whenever yous want. The transactions inwards electronic shares are quick, rubber in addition to simple. The shares purchased past times a shareholder are transferred inwards his cite on the adjacent 24-hour interval of payout. Influenza A virus subtype H5N1 shareholder tin sell in addition to transfer his electronic shares from his business office / household through a broker. Most of the shares are nether demat. Banks facilitate the percentage transactions past times maintaining demat accounts inwards their branch.
8. Credit in addition to Debit Cards
Most large banks offering credit bill of fare facilities. Indian credit bill of fare marketplace position is growing at 30-35% per annum. ICICI, Citi, HDFC in addition to SBI are the leading banks that offering credit card facilities. Most of the banks too offering debit cards to their customers. With the assist of debit cards, the customers tin brand payments for the goods in addition to services. This total gets deducted from the remainder they handgrip alongside the banks.
9. Leasing Services
Indian banks offering leasing services. In March 1994, RBI permitted banks to displace into leasing finance provided next atmospheric condition are fulfilled:
- Specialized branches must live opened for doing this work.
- Banks may give lease finance upward to 10% of their total advances.
- Assets inwards leasing volition live treated every bit assets carrying 100% peril weightage.
10. Hire Purchase
Banks render hire-purchase services. They finance hire-purchase contracts. Here, the possessor of goods hires them to unopen to other political party for a surely stream in addition to for the payment of a specific installment. The transfer of goods is passed on to the user afterward a definite stream provided payment of all specified installments is clear.
11. Insurance
Banks are directly allowed to offering insurance services through split branches. Many Indian banks such every bit ICICI, IDBI, HDFC, etc., bring entered into unusual collaborations to render life insurance service inwards India. ICICI has joined Prudential Life, HDFC alongside Standard Life, IDBI alongside Fortis (now Federal) to render life insurance services to Indians.
12. Venture Capital Services
Banks similar ICICI, SBI, IDBI provides venture capital services. Here, banks render funds for starting novel ventures in addition to for high-risk businesses alongside high-profit potential. Venture upper-case missive of the alphabet helps businessmen to larn funds for highly risky projects. Venture upper-case missive of the alphabet agency to purchase shares inwards high-risk projects / businesses alongside high-profit potential.
