Question on Different Types of Banks
- What is the difference between Nationalised bank and Private Bank?
Those banks where the Government holds the majority stake (more than 50% of the shares) are known as public sector banks. A nationalised bank is formed by taking a bank and its assets into the public ownership and same to be “nationalised” under the “Banking Companies (Acquisition and Transfer of Undertaking) Bill”.
And those where private institutions/individuals hold more than 50% of the shares are known as private sector banks.
- What is Payment Bank?
A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk. In simple words, it can carry out most banking operations but can’t advance loans or issue credit cards. It can accept demand deposits (up to Rs 1 lakh), offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers.
Airtel has launched India’s first live payments bank, Paytm is the second such service to be launched in the country. India Post Payments Bank is the third entity to receive payments bank permit after Bharti Airtel and Paytm.
The main objective of payments bank is to widen the spread of payment and financial services to small business, low-income households, migrant labour workforce in secured technology-driven environment.
With payments banks, RBI seeks to increase the penetration level of financial services to the remote areas of the country.
- What is Private Banking?
Private banking is personalized financial and banking services that are traditionally offered to a bank’s wealthy high net worth individual (HNWI) clients.
Private banking institution assists the high net-worth individual in investing his/her money in exchange for commissions and fees.
The term “private” refers to the customer service being rendered on a more personal basis.
It does not refer to a private bank, which is a non-incorporated banking institution.
Question on different types of Accounts and Instruments
- How many different type of accounts are in bank?
Traditionally banks in India have four types of deposit accounts, namely Current Accounts, Saving Banking Accounts, Recurring Deposits and, Fixed Deposits. However, in recent years, due to ever increasing competition, some banks have introduced new products, which combine the features of above two or more types of deposit accounts.
- What is different between saving account and current account?
Saving accounts are one of the most popular deposits for individual accounts. These accounts not only provide cheque facility but also have lot of flexibility for deposits and withdrawal of funds from the account. Most of the banks have rules for the maximum number of withdrawals in a period and the maximum amount of withdrawal. However, banks have every right to enforce such restrictions if it is felt that the account is being misused as a current account. Till 24/10/2011, the interest on Saving Bank Accounts was regulared by RBI and it was fixed at 4.00% on daily balance basis. However, wef 25th October, 2011, RBI has deregulated Saving Fund account interest rates and now banks are free to decide the same within certain conditions imposed by RBI.
Current Accounts are basically meant for businessmen and are never used for the purpose of investment or savings. These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day. Most of the current accounts are opened in the names of firm / company accounts. Cheque book facility is provided and the account holder can deposit all types of the cheques and drafts in their name or endorsed in their favour by third parties. No interest is paid by banks on these accounts. On the other hand, bank charges certain service charges, on such accounts.
- What is BSBDA?
Under the guidelines issued on August 10, 2012 by RBI: Any individual, including poor or those from weaker section of the society, can open zero balance account in any bank. BSBDA guidelines are applicable to “all scheduled commercial banks in India, including foreign banks having branches in India”.
All the accounts opened earlier as ‘no-frills’ account should be renamed as BSBDA. Banks are required to convert the existing ‘no-frills’ accounts’ into ‘Basic Savings Bank Deposit Accounts’.
The ‘Basic Savings Bank Deposit Account’ should be considered as a normal banking service available to all customers, through branches .
The aim of introducing ‘Basic Savings Bank Deposit Account’ is very much part of the efforts of RBI for furthering Financial Inclusion objectives.
- What is Cheque?
Cheque is a negotiable instrument instructing a Bank to pay a specific amount from a specified account held in the maker/depositor’s name with that Bank.A bill of exchange drawn on a specified banker and payable on demand.“Written order directing a bank to pay money”.
- What is demand Draft?
A demand draft is an instrument used for effecting transfer of money. It is a Negotiable Instrument. Cheque and Demand-Draft both are used for Transfer of money. You can 100% trust a DD. It is a banker’s check. A check may be dishonored for lack of funds a DD can not. Cheque is written by an individual and Demand draft is issued by a bank. People believe banks more than individuals.
- What is the difference between Cheque and Demand Draft?
Cheuqe is a negotiable instrument instructing a bank to pay a specific amount from a specific account held in the maker/depositor name with that Bank. Issuer account balanced once check is honored and credited to receiver bank account. Cheque can be bounced.
A demand draft is an instrument used for effecting transfer of money. It is a negotiable instrument. Balance is deducted from account once Draft is issued from account. DD cannot be bounced.