Banking Services and Operations

The bank shall not be liable to compensate customers for delayed credit, if some unforeseen event (including but not limited to civil commotion, sabotage, accident, fires, natural disasters or other “Acts of God”, war, resulting in damage to the bank’s facilities or of its correspondent bank(s), etc.) beyond the control of the bank prevents it from performing its obligations within the specified service delivery parameters.

The credit facilities given by the banks where actual bank funds are not involved are termed as 'non‑fund based facilities'. These facilities are divided in three broad categories as under

Letters of credit

Guarantees

Co‑acceptance of bills/deferred payment guarantees. 

Bank issues a credit on the request of an applicant.

Issuing bank is the bank who opens letter of credit. Letter of credit is created by issuing bank who takes responsibility to pay amount on receipt of documents from supplier of goods. (beneficiary under LC).

Advising bank is another party involved under Letter of Credit. Advising bank, as a part of letter of credit, takes responsibility to communicate with necessary parties under letter of credit and other required authorities. The advising bank is the party who sends documents under Letter of Credit to opening bank.

Confirming bank is one of the other parties involved in Letter of Credit. Confirming bank confirms and guarantees to undertake the responsibility of payment or negotiation acceptance under the credit.

Negotiating bank is one of the main parties involved under Letter of Credit. Negotiating Bbnk, who negotiates documents delivered to bank by beneficiary of Letter of Credit. Negotiating bank is the bank who verifies documents and confirms the terms and conditions under Letter of Credit on behalf of beneficiary to avoid discrepancies

Reimbursing bank is one of the parties involved in an Letter of Credit. Reimbursing bank is the party who authorised to honor the the reimbursement claim of negotiation/ payment/ acceptance.

Retail banking, also known as consumer banking, is a typical mass-market banking in which individual customers use local branches of larger commercial banks. Services offered include savings and checking accounts, mortgages, personal loans, debit/credit cards and certificates of deposit (CDs). In retail banking, the focus is on the individual consumer. 

As a part of business, banks issue guarantees on behalf of their customers for various purposes. The guarantees executed by banks comprise both performance guarantees and financial guarantees. The guarantees are structured according to the terms of agreement (security, maturity and purpose).

Cash management is the corporate process of collecting and managing cash, as well as using it for (short-term) investing. It is a key component of ensuring a company's financial stability and solvency.

Customer profitability (CP) is the profit that the firm makes from serving a customer or customer group over a specified period of time, specifically the difference between the revenues earned from and the costs associated with the customer relationship in a specified period.

As per Sec. 13 of “Banking Companies Acquisition and Transfer of Undertakings Act, 1970”, "every corresponding new bank shall observe, except as otherwise required by law, the practices and usages customary among bankers and, in particular, it shall not divulge any information relating to or to the affairs of its constituents except in circumstances in which it is, in accordance with law or practices and usages customary among bankers, necessary or appropriate for the corresponding new bank to divulge such information”. Maintaining secrecy is implied terms of the contract with the customer which bank enters into with the customer at the time of opening an account.

Letter of Credit is a type of non-funded service. Some of the value added services are

a. Syndication Services Forex Desk

b. Real Time Gross Settlement Money Market Desk

c. Cash Management Services Derivatives Desk

d. Channel Financing Employees Trusts

e. Corporate Salary Accounts Cash Surplus Corporates

f. Reimbursement Account Tax Collection

g. Bankers to Right/Public Issue Online payment of Gujarat VAT 

Basel II uses a "three pillars" concept

(1) Minimum capital requirements (addressing risk)

(2) Supervisory review

(3) Market discipline