Ch. 06: Bank & Banking

TransactionsTopics;• Definition of bank

• Types of bank accounts

• Advancing of loans

• Cheques and its types

• Important banking terms

Definition of Bank

Process of opening a bank

account1. Formal Application: for opening a bank account,

customer fills an application form .

2. Obtaining Introduction: Before opening a bank account, banker may ask some formal questions

from the customer

3. Specimen Signatures: When the banker is satisifiedabout the customer, he takes specimen signatures

from the customer on a card “signature card”

Name of account holder:

SNAWER GILL____ Snawer

Snawer Snawer

4. Initial Deposit: For opening a bank account, first deposit may be minimum of Rs. 500 or Rs. 1000

5. Operating of account: When an account is opened, banker gives to the customer following books to operate it;

• Pay-in-slip book

• Pass Book

• Cheque Book

1. Pay-in-Slip Book: It is a book that contains blank printed form provided by the banker to its customer. It is used to deposit money into bank.

2. Pass Book: It is a book that is used to record all the banking transactions. All the amounts paid into bank and withdrawn from bank are recorded in it.

2. Cheque Book: It is a book that contains blank printed form provided by the banker to its customer. It is used to draw money from the bank.

Loans and advancesBank makes the following types of

loans.• Short-term loans (for 1 year)• Medium term loan (for 1-5 years)• Long term loan (for 5 to 15 years)

Bank Over draftSometimes, bank allows its trust

worthy clients to overdraw

money up to a certain limit, this

extra money is called overdraft.

Bank charge interest on this

money.

Cheque and its Types

Cheque

1. Bearer Cheque: A chequethat is payable to any person

who may present it at bank on which it is drawn.

2. Order Cheque: A cheque that is only payable to a person whose name is written on it. For the payment of this cheque, banker may demand identification from that person.

3. Crossed Cheque: A cheque on which two parallel lines are drawn on its face. A crossed cheque can not be cashed at bank counter. Amount is transferred from bank to bank.

4. Open Cheque: When a chequeis not croosed, it is said to be an open cheque. A crossed chequecan not be made an open chequewithout the signature of the accountholder.

5. Post dated Cheque: A chequethat contains any future date or a date yet to come is called post dated cheque.

6. Anti-dated Cheque: A chequethat contains any previous date on which it is drawn is called anti-dated cheque.

6. Stale Cheque: A cheque that contains six month old date on which it is drawn is called stale cheque.

6. Dishonoured Cheque: When a cheque is returned by the banker unpaid due to any reason is callleda dishonoured cheque

Dishonouring of cheque

• Signatures are different

• amount in words and figures differ

• alterations are not signed

• insufficient funds in account

• payment is stopped by accountholder

• Stale cheque (6 mont hold date)

• etc

ImportantTerms

Postal Order: It is a written

order by which one post

officer requests the other

post officer to pay a

specific amount of money

to a specific person.

Bank Draft: It is a written

order by which one Banker

requests the other banker

to pay a specific amount of

money to a specific

person.

Treasury Order: It is a

written order by the

Government department to

a particular “government

treasury” to pay a sum of

money to the person

whose name is written

therein.

Standing Order:

Sometimes, the banker

pays some expenses and

receives some incomes on

the behalf of the client.

This right of the bank is

called, standing order.