Foundation Course

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FDN-BN101-DB

Foundation Course in Banking – I

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Table of Contents
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1.1 1.2 1.3 1.4 1.5 1.5.1 1.5.2 1.5.3 1.6

Evolution of Banking ________________________________________ 6 What is banking? ______________________________________________________6 History of Banking _____________________________________________________7 Services Offered by Banks ______________________________________________10 Trends in Banking Services _____________________________________________12 Classification of Banking Systems________________________________________13 Central Banking System__________________________________________________13 Commercial Banking System ______________________________________________19 Classification of Commercial Banking Services ________________________________21 Structure of Financial System____________________________________________22

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2.1 2.1.1 2.1.2 2.2 2.2.1 2.2.2 2.3 2.3.1 2.3.2 2.4 2.4.1

Introduction to Retail Banking

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Types of Deposit Accounts ______________________________________________26 Savings Account_____________________________________________________

___27 Current Account ________________________________________________________27 Overview of Lending Process ____________________________________________27 Loan Origination_________________________________________________

_______27 Loan Servicing _________________________________________________________31 Credit Appraisal in the Retail Market ______________________________________31 Traditional Approaches __________________________________________________32 Modern Approaches__________________________________________________

___34 Retail Payment System _________________________________________________38 A Standardized Payments Model ___________________________________________39

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2.4.2 2.4.3 2.4.4 2.4.5 2.5 2.5.1

Types of Inter-bank Transfers _____________________________________________40 Check Payment System __________________________________________________42 Automated clearing House (ACH) System ____________________________________45 Debit and Credit Card System _____________________________________________48 Private Banking or Wealth Management ___________________________________50 Products in Wealth Management ___________________________________________55

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3.1 3.2 3.2.1 3.2.2 3.2.3 3.2.4 3.2.5 3.2.6 3.2.7 3.3 3.3.1 3.3.2 3.4 3.5 3.5.1 3.5.2 3.5.3 3.6

Wholesale Banking

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Commercial Credit Products_____________________________________________58 Fund Based Credit Facilities _____________________________________________59 Lines of Credit _________________________________________________________60 Revolving Loans_______________________________________________________

_60 Term Loans ___________________________________________________________6

1 Syndicated Loans/Club Loans _____________________________________________62 Export-Import Finance ___________________________________________________63 Factoring ____________________________________________________________

_64 Bill Discounting_________________________________________________

________64 Structuring of Loans ___________________________________________________66 Fixed Rate Vs Floating Rate ______________________________________________66 Types of Repayment ____________________________________________________68 Concept of Default _____________________________________________________69 Non-Fund Based Credit facilities _________________________________________70 Letter of Credit or Documentary Credit_______________________________________70 Types of LCs __________________________________________________________75

Guarantee ____________________________________________________________

81 Non-Credit Fee Based Products/Services __________________________________84

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3.7

Cash Management Services _____________________________________________85

3.7.1 Collection Services or Receivables Management...
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