JAIIB

OCTOBER 08/2007
WELCOME TO VIRTUAL CLASS
ROOM SESSION
PRINCIPLES OF BANKING
MODULE B

BANKER-CUSTOMER
RELATIONSHIP
DEBTOR-CREDITOR
CREDITOR-DEBTOR
AGENT-PRINCIPAL
LESSOR-LESSEE
BAILEE-BAILOR

FAQs
KYC:

Know Your Customer

Know your customer norms are applicable
to all customer accounts. It deals with not
only to identify the customer but also
to understand the activities of the customer,
to ensure that the operations in the customer
account/s is/are for genuine purpose

Garnishee Order
A garnishee order is issued by a court
Ex: Mr X borrows money from Mr Y and fails to

repay.
Mr Y files a suit against Mr X, under the Civil
Procedure Code and the Court issues a decree
and attaches the funds in Mr. Xs bank account
with bank A.
The order issued by the Court on bank A is
known as Garnishee Order
Mr Y is the judgement creditor
Mr.X is the Judgement debtor. Bank A is
Judgement debtors debtor

NEGOTIABLE
INSTRUMENTS

BANKERS DUTIES &

RESPONSIBILITIES
PAYING BANKER
PAYMENT OF
CHEQUES

PAYMENT IN
DUE COURSE

APPARENT
TENOR

PAYMENT IN WITHOUT
GOOD FAITH NEGLIGENCE

CHEQUES
BEARER
ORDER
CROSSED
OPEN

NEGOTIABLE
INSTRUMENTS
BANKERS DUTIES

&
RESPONSIBILITIES
C0LLECTING
BANKER
COLLECTION OF
CHEQUES

HOLDER IN
DUE
COURSE

CONSIDERATION

TITLE

IBEFORE
MATURITY

WORKING CAPITAL OPERATING

CYCLE
RAW
MATERIAL

CASH

SEMI FINISHED
PRODUCTS

BILLS
REALISED

BILLS
PAYABLE

FINISHED
PRODUCTS
CREDIT
SALES

DEPOSIT ACCOUNTS
CURRENT

CERTIFICATE

SAVINGS

DEPOSITS

FLEXI

FIXED

RECURRING

CERTIFICATE OF DEPOSIT

CD IS A MONEY MARKET INSTRUMENT

ISSUED AT A DISCOUNT
MINIMUM AMOUNT IS Rs. One LAKH
MINIMUM PERIOD OF CD 15 DAYS
MAXIMUM PERIOD OF 1 YEAR
DIFFERS FROM FD
a) Prepayment not allowed
b) Loan is not allowed

CHARGES
HYPOTHECATION
PLEDGE
MORTGAGE
ASSIGNMENT
LIEN
SET OFF

FUND BASED FINANCE

CASH CREDIT

BILLS
FINANCE

OVERDRAFT
LOANS
&
ADVANCES

TERM
FINANCE

RETAIL
FINANCE

Non-Fund Based Finance

LETTERS OF
CREDIT

BANK
GUARANTEE

CO-ACCEPTANCE
OF BILLS

Non-Resident Indian Accounts

Who is a Non Resident Indian?

1)An Indian citizen who resides outside India on

account of
a) Employment/business/vocation
and
b) staying outside India for an uncertain
period
2)A person of Indian origin but a citizen in
any other country except Pakistan/Bangladesh
if at any time holding an Indian passport

6 Cs

CHARACTER
CAPTIAL
CAPACITY
COLLATERAL
CONDITION
COMPLIANCE

Claytons Case
Applicable

only to a
a) joint a/c and or a partnership a/c
b) running c/c and o/d a/cs
c) Not to two different a/cs
(Right of set off is applicable)
Based on the concept of Appropriation

FAQs

Distinguish -Cash Credit and Overdraft

Both CC and OD forms part of working
capital finance
CC is granted against moveable goods
(inventory/semi finished goods/goods etc)
OD is granted against paper security
(Fixed deposit receipts/shares/book debts)

ALL THE BEST & THANK

YOU
T.M.C.VARADARAJAN
TEL : 022-25638965 (R)

022-66364206 (O)
e.mail: t.varadarajan@scotiabank.com

tmc_varadarajan@yahoo.co.in