1) History of Banking Derived from two words.

Banque ( French ) = Chest ( Safekeeping ) Banca ( Italian ) = Bench ( Transactions ) First institution resembling a modern bank appeared in Venice in 1135 A.D. ouse . By 1250 there were 80 Bankhouses in Florence alone a Bankh

As markets became more complex, there was a need for a monetary policy and a cur rency, thus Central Banks emerged. 1674 Bank of Sweden 1694 Bank of England 2) BARTER SYSTEM: Barter is a system of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchang e, such as money. 3) BANK :Banking is defined as Acceptance of deposits of money from public for the purpose of Lending or Investment, repayable on demand or otherwise and withdrawa ble by cheque, draft, or otherwise. Define 3-6-3 rule Slang used to refer to an "unofficial rule" under which the ba nking industry once operated, which alludes to it being noncompetitive and simpl istic. The 3-6-3 rule describes how bankers would give 3% interest on depositors' accounts, lend the depositors money at 6% interest and then be playing golf at 3p m. This alludes to how a bank's only form of business is lending out money at a higher rate than what it is paying out to its depositors. This difference between interest earned and paid is called Spread. 4) Functions of a Bank: Accepting Deposits from public/others (Deposits) Lending money to public (Loans) Transferring money from one place to another (Remittances) Eg: NEFT,RTGS Acting as trustees Keeping valuables in safe custody Government business 5) 1. What is RTGS System? Ans The acronym "RTGS" stands for Real Time Gross Settlement. RTGS system is a f unds transfer mechanism where transfer of money takes place from one bank to ano ther on a "real time" and on "gross" basis. This is the fastest possible money t ransfer system through the banking channel. Settlement in "real time" means paym ent transaction is not subjected to any waiting period. The transactions are set tled as soon as they are processed. "Gross settlement" means the transaction is settled on one to one basis without bunching with any other transaction. Conside ring that money transfer takes place in the books of the Reserve Bank of India, the payment is taken as final and irrevocable. 2 How RTGS is different from Electronic Fund Transfer System (EFT) or National E lectronics Funds Transfer System (NEFT)? Ans EFT and NEFT are electronic fund transfer modes that operate on a deferred n

et settlement (DNS) basis which settles transactions in batches. In DNS, the set tlement takes place at a particular point of time. All transactions are held up till that time. For example, NEFT settlement takes place 6 times a day during th e week days (9.30 am, 10.30 am, 12.00 noon. 1.00 pm, 3.00 pm and 4.00 pm) and 3 times during Saturdays (9.30 am, 10.30 am and 12.00 noon). Any transaction initi ated after a designated settlement time would have to wait till the next designa ted settlement time. Contrary to this, in RTGS, transactions are processed conti nuously throughout the RTGS business hours. 6)IN BANKING, All Deposits are liabilities All Loans & Investments are assets 6) Important banking terms: a) Asset b) Liability c) Demand deposit(Eg: savings account, current account), Time deposit(Eg: Term deposit, recurring deposit),loan against deposit(customer can avail loan against the term deposit kept at the bank.The total amount of the loan wouldbe 75% of principal & interest amount and the rate of interest would be 2% more than the deposit rate),Flexi deposit(combination of time and demand d eposit.The customer gets the benefit of interest rate of time deposit and the fl exibility of withdrawal of demand deposit) d) different types of account savings account current account deposit account overdraft account cash credit e) Loan : demand loan, term loan f) NOSTRO ACCOUNT(INDIAN BANK WITH FOREIGN BANK.FOR INDIAN BANK ,IT'S A NOSTRO A CCOUNT) VOSTRO ACCONT(FOREIGN BANK WITH INDIAN BANK ,FOR THE INDIAN BANK , IT'S A VOS TRO ACCOUNT) 7)Types of banks: a)RETAIL BANK :Retail bank is a typical mass-market bank where individual custom ers use local branches of larger commercial banks. Services offered by these banks include- savings, ch ecking accounts, mortgages, personal loans, debit cards and credit cards, consumer dura ble loans, loans against equity share, loans to subscribing to initial public offer (IPO), bill payment services, mutual funds, investment advisory services. B)Wholesale banking refers to the banking services provided to other financial i nstitutions. banking. B2B Banking! Banking Informally, they can be called business-to-business services between merchant banks and other financial institutions, is also known as wholesale banking. Difference between wholesale banking and retail banking

Wholesale banking serves larger clients, primarily corporate entities or other f inancial institutions. On the other hand, retail banking is targeted at individual consum ers and small to medium sized enterprises. Generally, most commercial banks have both wholesale as well as retail banking activities conducted through respective divisions. 3)CENTRAL BANK 4)DEVELOPMENT BANK(IDBI-INDUSTRIAL DEVELOPMENT BANK OF INDIA) NABARD(NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT) 5)Investment banking: An investment bank is a financial institution that assists individuals, corporat ions, and governments in raising capital by underwriting and/or acting as the cl ient's agent in the issuance of securities. An investment bank may also assist c ompanies involved in mergers and acquisitions and provide ancillary services suc h as market making, trading of derivatives and equity securities, and FICC servi ces (fixed income instruments, currencies, and commodities).