The service offers huge convenience for the mobile subscribers and added value from the operator. The service can be used to make payments, send money home (like for ex-pats) or be used as a substitute for cheques. All the user has to do is just type an SMS with the amount and send it using the mobile’s address book.

How does Mobile Money Transfer work?

Consider the example of two subscribers, A and B who have registered their phone numbers and chosen a PIN.

1)    Subscriber A wants to send Rs.100 to subscriber B. He therefore composes a text message: “#Cash Rs.100″ and sends this message to subscriber B using his mobile’s built-in address book.

2)    Smart Services platform diverts this message to the #Cash Application Server for processing.

3)    Subscriber A is then sent a text message with information to call an IVR (Interactive Voice Response System).

4)    The IVR reads out the transaction to subscriber A, who then confirms the transaction is correct by entering their PIN.

5)    Rs.100 is debited from subscriber A’s bank account as a virtual ATM transaction.

6)    Rs.100 is credited to the bank.

7)    Subscriber B receives a text from subscriber A “I have paid you Rs.100″

The transfer is complete!

What is Mobile Money Transfer? is a post from: Money Guide India

---
Related Posts:

• What is NEFT/RTGS?
• What are Demand Drafts?
• How Can We Bank At Home Using Internet Banking?
• What is International Bank Account Number(IBAN)?
• What is Online Banking?

The balance sheets prepared for small companies or a person are simple balance sheets. But the balance sheets of huge companies are complicated and dense. If the large business has many sections or parts, they may prepare different balance sheets for every section.

The balance sheets are submitted in annual reports. Generally for evaluation or comparison, the balance sheet is offered with another balance sheet of a different point in time which is normally the previous year.

Types of Balance Sheets
Personal Balance Sheet

Following are the components that a personal balance sheet consists-

a. Current assets – for example cash in checking accounts and savings accounts.
b. Long term assets – for example common stock, real estate.
c. Current liabilities - for example loan debt, mortgage debt due, overdue.
d. Long term liabilities – for example other loan debt and mortgage.

Instead of using earlier costs, the present market costs of securities and real estate are used in balance sheet.

The difference between a person’s total assets and total liabilities is nothing but the personal net worth.

Small Business Balance Sheet

The components of the small business balance sheet are as follows -

a. Current assets – for example cash, accounts receivable and inventory.
b. Fixed assets – for example buildings, land, equipments.
c. Intangible assets – for example patents.
d. Liabilities – for example accounts payable, accrued expenses and long term debt.
e. Contingent liabilities – for example warranties. These are recorded in the balance sheet’s footnotes or appendix.

The equity of small business is equivalent to the difference between total assets and total liabilities.

What are the Different Types of Balance Sheets? is a post from: Money Guide India

---
Related Posts:

• Types of Joint Accounts
• What are Bank Statements?
• Mutual Funds – Dabble In Stocks With Less Risk
• What are Co-Operative Banks?
• How RBI Controls Other Banks

A wise investor is one who puts a share of today’s hard earned money in a money generating or multiplying scheme. Here is the list of most popular money investment schemes that throws out more money.

7. Equity-Linked Saving Schemes (ELSS)

ELSS is a saving scheme that explores the power of equities. The amount that you invested in the units of the fund is invested in the equity shares of the companies. Of course the risk involved is high, yet it yields highest return closer to 47%. This investment option actually diminishes the chance of possible liquidity.

Here goes more on this high- return investment option:

• Max limit is Rs. 1 lakh
• Lock-in period of 3 years
• Max returns even up to 47%
• High risk involved

6. Infrastructure Bonds

These are bonds issued by public financial institutions like IDBI and ICICI Bank. It can take form of shares, bonds or debentures. Unlike mutual fund bonds, the risk involved is less as the investment made are not market-linked. These are the perfect option for investors looking for to save taxes and invest in a diversified equity scheme.

Here it goes some features of infrastructure bond:

• Lock-in period of 3 years
• No tax saving in case money is taken back before the lock-in period
• Less risk involved
• Less dependent on market situation

5. Public Provident Fund (PPF)

PPF is an investment option that needs you to set aside some specific amount on a yearly basis. The best part is that you can even open one, even if you are not earning at all. PPF accounts can be opened at Head Post Offices or nationalized banks that handle PPF accounts.

Here goes a briefing of what all PPF has to offer:

• Min limit is Rs. 500 and maximum limit is Rs.70,000.
• Rate of interest is 8% p.a.
• Spans for a min of 15 years
• Restricted withdrawals, 50% of the balance standing at the end of the 4th year to be precise.

4. National Saving Certificates (NSC)

NSCs are a saving scheme which appears like a lighter form of PPF. These are certificates issued by Postal department and government of India. The beauty of this scheme is that it combines growth in money and tax benefits. It can make Rs. 1000/- grow to Rs. 1601/- in six years.

Here goes more on this smart long term saving option:

• Issued in denominations of Rs 100, Rs 500, Rs 1,000, Rs 5,000 and Rs 10,000
• Duration is 6 years
• High interest rate at 8% compounded half yearly
• No prescribed upper limit on investment

3. Life Insurance

Life Insurance schemes make sure that your loved ones can move forward with the life even when you can’t help them any more. Apart from this benefit that inherits, it offers tax deduction to you. Tax deduction means more money for investing. The life insurance policy is available from LIC and many private insurers.

Here it goes some facts about life insurance:

• Maximum Tax deduction limit for each year is Rs. 1 lakh for insurance investments
• Tax exemption for direct taxes and not for service taxes payable on insurance maturity
• Premium paid in any year should not exceed 20% of the sum incurred
• No deduction on any sum paid in excess of 20% of the sum incurred

2. Unit-Linked Insurance (ULIP)

ULIP is basically a combination of investment fund and insurance policy which includes UTI & mutual funds. Hence you can enjoy the goodness of investment funds that yields more returns, along with the insurance cover in a single investment option.

Here goes more on ULIP:

• Min limit is Rs. 15,000 with annual contribution of Rs. 1,000 and max limit is Rs. 2 lakhs with annual contribution of Rs. 20,000.
• Your age should be between 12 and 55 years 6 months.
• Exemption from wealth tax
• Service tax may be charged since it gives insurance cover

1. Home loans

Home loans are an attractive way of investing as it gives two visible benefits. You can actually own a home by paying in instalments at the same time it provides huge tax benefits. With the real estate sector booming you can easily fetch double of what you have invested in a while.

Here are some key points why home loans are attractive than the rest:

• Easy Availability from banks and other Financial Institutions
• Tax concessions
• Get tax deduction on repayment of the principal amount of a loan taken
• Interest paid on a loan is deductible from income from the property
• Interest paid on a new loan taken to repay the original housing loan is also allowed as deduction.

This is what the most successful investors recommend. It is entirely up to you to invest based on the combination of risk involved, returns and tax saving that suits your need.

Happy Investing!

Top 7 Ways to Invest Your Money Now for a Tension Free Life Ahead is a post from: Money Guide India

---
Related Posts:

• If You Don’t Invest Your Money Now, You’ll Hate Yourself Later
• Saving vs Investing – What is the Difference?
• Mutual Funds – Dabble In Stocks With Less Risk
• 4 Tips to Protect Your Cheques
• Privacy Policy

In older times, it was the sort like ATMs Cards of modern days. If you wanted cash, just sign a cheque assigned to yourself and produce at bank. Cashier will give you money treating this like any other cheque.

What makes a Self Cheque?

Any normal cheque can be used as self cheques. You just need to write “Self” in payee section to convert a normal cheque to self cheque. You’ll also need to sign at back of cheque with name for making it a valid self cheque. This is to ensure that the actual owner of the cheque is using it.

What is the advantage of Self Cheque over ATM Cards?

Well, that is a common question asked about self cheques. The answer is only valid if you need to withdraw large amounts.

The majority of ATMs in our nation has some imposed limit in maximum amount you can withdraw on a daily basis. The majority of these banks only allow you to withdraw up to Rs. 25000 per day. So what if you need more than this? By using self cheques, you can withdraw as much money your bank account permits.

You can also use self cheque at a different branch of your bank. However, some banks apply a limit in maximum amount you can withdraw at different branches. Even though there is a limit, you can still withdraw much more than using ATMs.

What are Self Cheques? is a post from: Money Guide India

---
Related Posts:

• 4 Tips to Protect Your Cheques
• How to Obtain Traveler’s Cheques?
• What is a Traveler’s Cheque?
• Joint Accounts FAQ
• How does a Cheque Clear?

About this Video

Paul Grignon’s 47-minute animated presentation of “Money as Debt” tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out.

For more information about Money as Debt, visit the official website:

http://paulgrignon.netfirms.com/MoneyasDebt/index2.htm

How Is Money Created? is a post from: Money Guide India

---
Related Posts:

• What are Demand Drafts?
• How RBI Controls Other Banks

Be an owner!

As one of the many owners, a stock holder has claims to everything the company owns. The claim is usually very small when compared to the company. This means that you own a tiny bit of every piece of furniture, every contract of the company and every trademark of the company. You are entitled to your share of the company’s earnings as well as any voting rights attached to the stock as an owner of the company.

The document that represents a stock is the Stock Certificate. Stock certificate is a fancy piece of paper which shows the proof of your ownership of a company. Because your brokerage keeps these records electronically, in today’s computer age, you won’t actually get to see this document. These shares are also known as holding shares “in street name”. This is done in order to make the shares easier to trade. Now, trading is done with a click of the mouse or a phone call unlike in the past, if a person wanted to sell his or her shares, that person had to physically take the certificates down to the brokerage. Now trading has become much easier. Being a shareholder of a public company you have one vote per share to elect the board of directors at annual meetings of the company. A shareholder does not have the right to call up the owner of the company and tell him how the company should be run. It does not mean that you have a say in the day-to-day running of the business by being a shareholder of the company.

The shareholders can vote to have the management removed from the company, at least in theory. This is when the company fails to increase the value of the firm for shareholders. It is a fact that ordinary individual investors don’t own enough shares to have a material influence on the company. The decisions are in most of the cases made by large institutional investors and billionaire entrepreneurs. There is no need to make fuss about not being able to manage the The idea behind this, after all, is that you do not want to have to work to make money! Being a shareholder of a company you are entitled to a portion of the company’s profits. You also have a claim on assets of the company. If you own more shares you are entitled to get more profit. These profits are usually paid in the form of dividends to the shareholders. In case the company of which you are a shareholder goes bankrupt then you can make a claim on assets it holds. In case of liquidation, you’ll receive what’s left after all the creditors have been paid. The fact that the importance of stock ownership is your claim on assets and earnings is the last point which is worth repeating since without this, the stock wouldn’t be worth the paper it’s printed on.

As a share holder of a company you have limited liability which means that as an owner of a stock, you are not personally liable if the company is not able to pay its debts. This is another extremely important feature of stock. Other companies such as partnerships are set up so that if the partnership goes bankrupt the creditors can come after the partners (shareholders) personally and sell off their house, car, furniture, etc. to get their investment back. On the other hand, all that stock owner stands to lose is the money he has invested, whatever happens. You will never lose your personal assets even if a company of which you are a shareholder goes bankrupt.

What are Stocks? is a post from: Money Guide India

---
Related Posts:

• Mutual Funds – Dabble In Stocks With Less Risk
• Why do Companies Issue Stock?
• If You Don’t Invest Your Money Now, You’ll Hate Yourself Later
• Top 7 Ways to Invest Your Money Now for a Tension Free Life Ahead
• What is Online Banking?

Deposits accepted by banks for a specified period of time are called time deposits. The minimum period for which term deposits can be accepted is 15 days according to the terms of RBI directives. The banks generally do not accept deposits for periods longer than 10 years.

Important Things to Look for in a Fixed Deposit

1. Interest on term deposits is paid by a bank based on the period of deposit. The bank normally pays higher interest for longer term deposits.

2. As the interest rates vary from time to time depending on market conditions, and banks have full discretion to fix their interest rates on deposits.

3. The changes made in the interest rates from time to time by a bank do not alter the interest paid on the existing deposits.

4. Interest payments are made on a quarterly basis even when the banks quote a certain percentage of interest per annum for a given period of time.

5. The depositor can either collect interest on every quarter or its discounted value at monthly rests or avail quarterly compounding benefits. He can also avail quarterly compounding benefits and receive the principal amount plus interest on maturity.

6. RBI has now allowed banks to quote higher rates of interest for individuals who deposit more than Rs.15 lacs.

7. For premature encashment of deposits from a bank, the bank is at their discretion to levy a penalty to the depositor. Banks generally pay interest to the depositor for the period which deposit has been kept with the bank and penalty can be charged for premature encashment.

8. On demand, against the fixed deposits, bank can allow loans. The bank can decide on the margin retained over the deposit outstanding and interest rate charged. This may vary from bank to bank.

On uncertain times of money markets, people tend to invest their money in term deposits to avoid further losses. In short, fixed deposits are only recommended if you are not interested in any other types of investment.

What are Fixed Deposits? is a post from: Money Guide India

---
Related Posts:

• NRI Fixed Deposits – Where Your Money Will Be In Safe Hands
• What are Bank Statements?
• What is a Traveler’s Cheque?
• How RBI Controls Other Banks
• How is Inflation Calculated?

Mutual funds are professionally-managed firms of collective investments. They collect money from many investors for trading and invest in stocks, bonds, short-term money market instruments, and/or other securities. The fund manager trades the fund’s underlying securities, realizing capital gains or losses, and collects the dividend or interest income from the trading. The investment proceeds are then passed along to the individual investors. In a mutual fund, the fund manager is also known as the portfolio manager. Net asset value per share (NAV) is calculated on a daily basis. Net asset value is the value of a simplest unit of the mutual fund. It is the total value of the fund divided by the number of shares currently issued and outstanding.

In the United States, a mutual fund is one of three basic types of investment companies available. Legally it is known as an “open-end company” which comes under the Investment Company Act of 1940. This is the primary regulatory statute governing investment companies. The mutual fund may be used as a generic term for various types of collective investment vehicle outside of the United States. This has exceptions of Canada since it follows the U.S. model.

Other forms of collective investment vehicle are prevalent in the United Kingdom and western Europe which is including the offshore jurisdictions. Collective investment vehicle are prevalent in the United Kingdom includes unit trusts, open-ended investment companies (OEICs), SICAVs and unitized insurance funds. The name “managed fund” is generally used instead of the term “mutual fund” in Australia and New Zealand.

You can consider a mutual fund as a company, a company that brings together a group of people together to invest their money in stocks, bonds, and other securities. In other words a mutual fund is nothing more than a collection of stocks and or bonds wherein each investor owns shares, which represent a portion of the holdings of the fund.

Mutual Funds – Dabble In Stocks With Less Risk is a post from: Money Guide India

---
Related Posts:

• Top 7 Ways to Invest Your Money Now for a Tension Free Life Ahead
• Why do Companies Issue Stock?
• If You Don’t Invest Your Money Now, You’ll Hate Yourself Later
• What are Stocks?
• What is NEFT/RTGS?

At some point or the other every company needs to raise money for its expansion or likewise. In order to raise money the company can borrow it from someone or can raise money by selling a part of the company. The company can borrow money by taking a loan from a bank or by issuing bonds. Both these methods are termed as debt financing where as selling part of the company for raising money is known as issuing stock.

Issuing stock is called equity financing. As it does not require the company to pay back the money or make interest payments along the way, issuing stock is more advantageous for the company. The people become share holders of the company by buying their shares with the hope that the shares will someday be worth more than what they paid for initially. The first sale of a stock is issued by the private company itself. This is called the initial public offering (IPO).

Debt vs. Equity – What is the difference?

The distinction between a company financing through debt and financing through equity is important. You are guaranteed the return of your money (the principal) along with promised interest payments when you buy a debt investment such as a bond. This is not the case with an equity investment. In an equity investment you assume the risk of the company not being successful. Just like a small business owner is not guaranteed a return, in an equity investment, a stock owner has the risk of the company not being successful. This means that you as a shareholder do not get any money until the banks and bondholders have been paid out first if unfortunately the company of which you are a shareholder goes bankrupt and liquidates. This is called absolute priority. Shareholders stand to lose their entire investment if the company isn’t successful and if the company is successful they earn a lot.

This means that there are risks involved. It must be emphasized that there are no guarantees when it comes to individual stocks. There is no obligation to pay out dividends even for those firms that have traditionally given them. It is seen that even though some companies pay out dividends to their investors many others do not. An investor can make money on a stock only through its appreciation in the open market without dividends. Your investment is worth nothing if any stock goes bankrupt. There is also a bright side although risk might sound all negative. You can get greater return on your investment if you take on greater risks. And this is the reason why stocks have historically been more popular than other investments such as bonds or savings accounts. An investment in stocks, over a long term has historically had an average return of around 10-12%.

Why do Companies Issue Stock? is a post from: Money Guide India

---
Related Posts:

• Mutual Funds – Dabble In Stocks With Less Risk
• What are Stocks?
• How to Fill A Cheque?
• Top 7 Ways to Invest Your Money Now for a Tension Free Life Ahead
• What are the Different Types of Balance Sheets?

Types of Internet Banking Frauds

Phishing

Phishing operates by sending forged e-mail, impersonating an online bank that request personal banking or financial information. The e-mail thus sent will direct the user to a forged web site which is designed to look exactly like the original banking site. This site will ask the user to update their personal information. The information thus stolen is then used in other frauds as well as executing transactions.

The best way to avoid this type of internet banking fraud is to never provide personal banking information over the internet when it is requested through email. If you believe that you may have provided information over the internet to an illegitimate source, immediately contact your financial institution to have your password changed. It should be noted that because of same reason banks never request your personal information through email. Thus, if you receive a message claiming from a bank, it would probably be from a fraudster.

Identity Theft

Identity theft is another prominent type of internet banking fraud that can be extremely injurious to consumers. Identity theft in interner banking occurs when a criminal use specialized software(trojans & keyloggers) to record keystrokes on a victim’’s computer in order to decipher personal financial information about the person. These internet banking fraud criminals then use the stolen data to access the victim’s bank account to commit fraud.

You can be safe from this type of fraud by periodically checking your computer for spywares, trojans and viruses. It is also suggested to use a personal firewall to prevent any un-wanted program from accessing internet.

Un-Protected Online Transactions

Internet banking fraud can also occur when consumers make online purchases over an unprotected website. If your privacy remains un-protected, criminals can use the stolen data to commit banking frauds.

This type of fraud is becoming a rarity by the introduction on new generation browsers like FireFox 3 , IE 7 & Google Chrome. These browsers will warn you if you are visiting an un-protected website. In older browsers, you can view the digital SSL certificates of these websites. If these digital certificates are not from a reliable authority, you can be sure that the website you are visiting is an un-secured website.

Conclusion

Nowadays we have several countermeasures which help to avoid attacks. The use of class-3 card readers is a measure to avoid manipulation of transactions by the software in signature based online banking variants. Digital certificates are used against phishing and pharming. Users should use virus scanners and should be careful with downloaded software or e-mail attachments to protect the system from Trojan horses.

Internet Banking Frauds – How To Prevent It? is a post from: Money Guide India

---
Related Posts:

• Internet Banking – How Does It Work?
• What is Online Banking?
• How Can We Bank At Home Using Internet Banking?
• 4 Tips to Protect Your Cheques
• Privacy Policy

Let us see what this is about..

Customers are allowed to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society. There are many common features and capabilities for online banking in common, but some are application specific.

The common features of online banking are broadly classified into two. They are:

Transactional Features

Performing financial transactions which include:

1. Funds transfer between a customer’s own checking and savings accounts or to another customer’s account.
2. Electronic bill presentment and payment-EBPP.
3. Loan applications and transactions like the repayments.
4. Investment sale or purchase.

Non-transactional Features

This includes Bank statements like the online statements, check links, support tickets, etc. Certain banks also allow you to request new cheque books, new debit cards etc using the net banking system. There are some banks that allows you to link your demat / credit card / loans etc to one interface thus providing easier access to all the information when you need it.

For business users, banking institution provides some additional features including:

1. The support of multiple users having varying levels of authority
2. Wire transfer.
3. Approval process of transaction.

The other important feature of internet banking is: Personal financial management support – Importing data into a personal finance program such as Quicken, Turbo Tax, or Microsoft Money. To allow the customers to monitor all of their accounts in one place whether they are with their main bank or with other institutions some online banking platforms have account aggregation.

How Can We Bank At Home Using Internet Banking? is a post from: Money Guide India

---
Related Posts:

• What is Online Banking?
• Internet Banking – How Does It Work?
• Internet Banking Frauds – How To Prevent It?
• Privacy Policy
• What is Core Banking?

How to fill a Demand Draft?

The method of filling a Demand draft.

We have to provide certain information to the bank for buying a DD. For this we have to fill in an application form which asks for the following information:

• The type of instrument needed.
• The mode in which the money is paid i.e. through a bank account or in cash.
• The mode in which you will pay money to the bank i.e. by debiting to your account or by cash.
• The concerned place where the money is to be paid.
• Name of the Sender.
• Name of the recipient.
• The amount which is to be transferred.

The Demand draft for the amount will be provided by the counter clerk when we present the application form along with the cheque on our account or if cash is deposited for the same amount.

Things to be noted while handling a Demand Draft.

1. The particulars like the name of the beneficiary, amount, and the place where payable etc. in the DD should be the same as what we have filled in the application form.
2. The spellings of the beneficiary’s name should be exactly the same.
3. We must get the Demand Draft crossed for security.
4. If the DD amount is more than Rs. 50,000 then the PAN number will be necessary.
5. The charge for taking a demand draft varies with the bank. If we have to take the DD for a large sum then it is better to reach for the bank which charges less.

What are Demand Drafts? is a post from: Money Guide India

---
Related Posts:

• What is Inflation?
• What are Current Accounts?
• How RBI Controls Other Banks
• What is a Joint Account?
• What are Fixed Deposits?

The code consists of 11 Characters. The first 4 characters of the code (4!A) represent the entity; Fifth position has been defaulted with a ‘0′ (Zero) for future use; and the Last 6 character (6!X) denotes the branch identity. The RBI has identified the IFSC code to be used for various payment system projects within the country. IFSC would cover all networked branches in the country in the due course. The banks would be in need of a single identifiable unique code when all the banks start participating in electronic payment system and at that time IFSC would serve the purpose effectively.

You can get IFSC codes of all banks in India from RBI website.

What is IFSC? is a post from: Money Guide India

---
Related Posts:

• No related posts

Online banking is rapidly gaining popularity, as more and more customers recognize its advantages. Most banks charge fewer fees if you use their online services. You could even avoid receiving paper statements if you like, and conduct 95% of your business online.

Internet Banking for Online Purchases

In a typical set up, the procedures for doing online purchases would go something like this:

• Make the purchase you want.
• Select the payment option using internet banking.
• You have to enter your User ID and Login Password.
• Then select the Bank using which we desire to pay.
• Your transaction password should be entered.
• Your selected account will be debited by the purchase amount.

The service provider will deliver the goods/services bought in due course as per their delivery norms.

Payment of Bills through Internet Banking

A typical procedure for bill payments would be like this:

1. If you are registered for Personal Internet Banking all you have to do is to simply log on and select “Pay Bills.”
2. From the menu choose ‘Add a Payee’ to create your ‘payee’ list i.e. the companies or the people you wish to pay. Enter the name, address and account number for each (keep your current bills handy for this purpose. Internet Banking will store the new payee information so we will only have to enter it once.
3. Log on to Internet Banking when you want to pay a bill, select the appropriate ‘payee’ from our list, then enter the amount and the date we want the payment to be processed.
4. That is all what you have to do. The bill payment will be processed on the date you selected.

Thus, if your bank provides online banking, opt for it. You will certainly find internet banking easier than visiting the bank personally.

Internet Banking – How Does It Work? is a post from: Money Guide India

---
Related Posts:

• How Can We Bank At Home Using Internet Banking?
• Internet Banking Frauds – How To Prevent It?
• What is Online Banking?
• Privacy Policy
• What is Core Banking?

The instant funds transfer system, known as the Real Time Gross Settlement(RTGS) cannot be used for an amount below Rs. 1 lakh by the banks as per the instructions of the banking regulator, the Reserve Bank of India. RBI has asked banks to offer National Electronic Fund Transfer (NEFT) which provided T+0 and T+1 settlement system depending on the time a customer gives instruction to the bank for transferring the fund for small transactions.

RTGS vs NEFT

The main difference between NEFT and RTGS is that the NEFT works on net settlement basis and RTGS works on gross settlement basis. The NEFT involves four settlement cycles a day 9.30 am, 10.30 am, 12 pm and 4 pm and RTGS facilitates online transfer. If a customer has given instruction to its bank to transfer money through NEFT to another bank in the morning hours, money would be transferred the same day and if the instruction is given later during the day the money would be transferred next day.

All commercial banks have put in place the RTGS facility, only 43 banks have purchased the software required to facilitate NEFT based transaction. The RTGS facility is available in over 25000 branches, while NEFT is available in about 37000 branches. RBI had instructed banks that all branches which had RTGS enabled should also provide NEFT by December 2006. The RBI had also planned to discontinued EFT-Electronic funds Transfer. This is because EFT is available only in 15 locations where RBI has its clearing house. The customers can access the RTGS facility only up to 3 pm and inter-bank transactions are possible up to 5 pm at present.

What is NEFT/RTGS? is a post from: Money Guide India

---
Related Posts:

• What is IFSC?

Functions of the Reserve Bank of India

1. The financial system is regulated and supervised by the Reserve Bank of India.

2. The guidelines according to which the banking operations within which the country’s banking and financial system functions are defined by the RBI. By monitoring the functioning of other banks, it tries to protect depositors’ interests and provides cost-effective banking services to the public. If a customer has a problem and the bank does not solve the customer’s problem, Reserve bank of India can approach them through the Banking Ombudsman Scheme.

3. RBI regulates the foreign exchange inflow and outflow, by the Foreign Exchange Management Act, 1999 of RBI. All money transfer out of India, is subject to limits defined by the RBI. The money transfer could be either for personal or for trade purposes.

4. Currency notes and coins of various denominations are issued by The Reserve Bank of India. It destroys damaged currency notes not fit for circulation and also issues and exchanges coins. To prevent circulation of fake currency, the design of the currency is periodically modified.

5. The banker to the Government of India is the RBI. Merchant banking function for the central and the state governments are performed by the RBI. Reserve bank of India is the banker to all Government departments of India. For example, in Mumbai, the tax refunds drawn on the Reserve bank of India are issued by the Income tax department.

6. All major banks bank with the RBI. Banking accounts of all scheduled banks in India is maintained by the RBI. RBI provides insurance on deposits for up to Rs 1 lakh in scheduled banks. If cash withdrawn from scheduled banks, cash withdrawal tax is applicable. Smaller co-operative banks do not usually fall under the category of scheduled banks. According to the RBI lending rates, the bank interest rates increase or decrease.

7. The gold trade is also regulated by the Reserve Bank of India. In India. Currently 17 Indian banks are involved in the trade of gold. In order to curb illegal trade in gold and increase competition in the market, applications have been invited by the RBI from more banks for direct import of gold.

8. Know your customer guidelines has been issued by the RBI for non-banking finance companies (NBFC ) in March 2006. Customer whose outstanding credit is more than Rs 1 lakh or deposit balance with the NBFC is less than Rs 50,000 need not provide all the documents to the bank. The customers will be categorized as low risk, medium risk and high risk. One of the largest NBFC in India is Sahara India.

9. To maintain the exchange rate of Indian Rupee versus foreign currencies like the US Dollar, Euro, Pound sterling, and Japanese yen, RBI buys and sells foreign currencies. Their website provides the trends in exchange rate values for these currencies.

10. RBI sets the maximum interest rate Indian banks can offer on NRI dollar deposits depending on the liquidity in the money markets. Banks can offer an interest rate equal to the London Interbank Offered Rate (LIBOR) from March 2006 onwards. LIBOR is an international benchmark rate on dollar deposits.

11. Percentage of deposits that banks in India should keep with RBI is known as the Cash Reserve Ratio (CRR). The CRR which is currently 5%, also depends on the liquidity in the money markets. The rate at which RBI absorbs funds from banks is the reverse repo rate.

12. The opening /installation of ATM (Automatic Teller Machines) is also regulated by the RBI. It is trying to increase the density of the ATMs in rural areas. The RBI supplies fresh currency notes for ATMs.

13. Transactions related to cheques, drafts and pay orders are settled in clearing houses. There are about 1050 clearing house out of which 567 clearing houses are managed by the The State Bank of India, mainly in the smaller cities and towns.

14. In April of every year the annual monetary policy is announced.

15. Banks like ICICI bank charge Rs 100 for clearing an outstation cheque from metro cities (Mumbai, Delhi, Chennai, Kolkatta), but it costs banks only 50 paisa for clearing through the RBI clearing system. Even though RBI has asked banks to display the service charges on their website, only 5 banks have complied so far.

16. The opening of branches by banks are regulated by RBI and ensures that they follow the Know Your Customer guidelines.

RBI is Bankers’ Bank

The Reserve Bank of India acts as the bankers’ bank. Every scheduled bank was required to maintain with the Reserve Bank a cash balance equivalent to 5% of its demand liabilities and 2% of its time liabilities in India, according to the provisions of the Banking Companies Act of 1949. The distinction between demand and time liabilities was abolished by an amendment of 1962, and cash reserves equal to 3% of their aggregate deposit liabilities have to be kept by the banks as has been asked for by the RBI. The Reserve Bank of India can change the minimum cash requirements of other banks.

On the basis of eligible securities the scheduled banks can borrow money from the Reserve Bank of India. At times of need or stringency by rediscounting bills of exchange, the banks can get financial accommodation from the RBI. Reserve Bank becomes not only the banker’s bank but also the lender of the last resort since in times of banking crisis the Reserve Bank of India is expected to come to the help of commercial banks.

RBI is Controller of Credit

The Reserve Bank of India has the power to influence the volume of credit created by banks in India which means that it is the controller of credit. This is being done through open market operation or by changing the Bank rate. Reserve Bank of India can ask any particular bank or the whole banking system not to lend financial support to a  particular groups or persons on the basis of certain types of securities according to the Banking Regulation Act of 1949. Selective controls of credit are increasingly being used by the Reserve Bank since 1956.

Indian money market is controlled by the many more powers of the Reserve Bank of India. A license from the Reserve Bank of India to do banking business within India has to be obtained by every bank. On stipulated conditions not being fulfilled, the RBI has powers to cancel the licenses also. Before a new branch of any bank be opened. it has to get the permission of the Reserve Bank. A weekly return showing in detail its assets and liabilities must be sent to the Reserve Bank by every scheduled bank. This power of the RBI to call for information is also intended to give it effective control of the credit system. Another power of the Reserve Bank is the power to inspect the accounts of any commercial bank.

Reserve Bank of India, as the supreme banking authority in the country, therefore, has the following powers:
a) The cash reserves of all the scheduled banks are in the hands of the RBI.
b) Through quantitative and qualitative operations, it controls the credit operations of other banks.
c) Through the system of licensing, inspection and calling for information, the RBI controls the banking system in the country.
d) By providing rediscount facilities to scheduled banks, it acts as the lender of the last resort to other banks.

By all these methods RBI controls the whole financial system of India.

How RBI Controls Other Banks is a post from: Money Guide India

---
Related Posts:

• About Money Guide India
• If You Don’t Invest Your Money Now, You’ll Hate Yourself Later
• Banks in India
• What are Co-Operative Banks?
• What is NEFT/RTGS?

SWIFT was founded in Brussels in 1973. It operates a world wide financial messaging network. It was started to establish common standards for financial transactions and a shared data processing system and worldwide communications network. The messages between banks and other financial institutions are securely and reliably exchanged through SWIFT. Fundamental operating procedures, rules for liability etc., were established in 1975 and the first message was sent in 1977. SWIFT also markets software and services to financial institutions, much of it for use on the ISO 9362 and SWIFT Net Network, and the bank identifier codes are popularly known as “SWIFT codes”.

For example, SWIFT code for ICICI Bank is : ICICINBBCTS

The SWIFT network is used by majority of the international interbank messages. SWIFT does not facilitate funds transfer so the financial institutions would need a corresponding banking relationship for financial transactions. SWIFT linked 8,332 financial institutions in 208 countries as of December 2007.

SWIFT has offices around the world. It is supported by 239 banks in 15 countries. SWIFT headquarters are located in La Hulpe, Belgium, near Brussels. We can find a large community of people interested in SWIFT in the SwiftCommunity.net.

SWIFT is a cooperative society under Belgian law and is owned by its member financial institutions.

What is SWIFT Code? is a post from: Money Guide India

---
Related Posts:

• What is IFSC?
• What is International Bank Account Number(IBAN)?

At present in India we have 88 scheduled commercial banks (SCBs) – 28 public sector banks in which the Government of India has a stake, 29 private banks of which the government does not have a stake they may be publically listed and traded on stock exchange, and there are 31 foreign banks. These banks have a combined network of over 17,000 and ATMs 53,000 branches. About 75 percent of total assets of the banking industry are held by the public sector banks as per the reports of ICRA Limited which is a rating agency and according to it the private and foreign banks hold 18.2% and 6.5% respectively.

Commercial Banks

The commercial banks in India are classified as foreign banks and Regional rural banks.

Foreign banks

The list of foreign banks in India is given below.

1. ABN AMRO Bank
2. Abu Dhabi Commercial Bank Ltd
3. American Express Bank
4. Antwerp Diamond Bank
5. Arab Bangladesh Bank
6. Bank International Indonesia
7. Bank of America
8. Bank of Bahrain & Kuwait
9. Bank of Ceylon
10. Bank of Nova Scotia
11. Bank of Tokyo Mitsubishi UFJ
12. Barclays Bank
13. BNP Paribas
14. Calyon Bank
15. ChinaTrust Commercial Bank
16. Cho Hung Bank
17. Citibank
18. DBS Bank
19. Deutsche Bank
20. HSBC (Hongkong & Shanghai Banking Corporation)
21. JPMorgan Chase Bank
22. Krung Thai Bank
23. Mashreq Bank
24. Mizuho Corporate Bank
25. Oman International Bank
26. Société Générale
27. Standard Chartered Bank
28. State Bank of Mauritius
29. Scotia
30. Taib Bank
31. Regional Rural Banks (RRBs)
32. Adhiyaman Grama Bank
33. Alaknanda Gramin Bank
34. Aligarh Gramin Bank
35. Avadh Gramin Bank
36. Aryavart Gramin Bank
37. Balasore Gramya Bank
38. Ballia Kshetriya Gramin Bank
39. Banaskantha Mehsana Gramin Bank
40. Bareilly Kshetriya Gramin Bank
41. Baroda Uttar Pradesh Gramin Bank
42. Bijapur Grameena Bank
43. Bilaspur-Raipur Kshetriya Gramin Bank
44. Bolangir Anchalik Gramya Bank
45. Bundelkhand Kshetriya Gramin Bank
46. BundiChittorgarh KshetriyaGraminBank
47. Cauvery Grameena Bank
48. Chaitanya Grameena Bank
49. Chambal Kshetriya Gramin Bank
50. Champaran Kshetriya Gramin Bank
51. Chhatrasal Gramin Bank
52. ChhindwaraSeoniKshetriyaGraminBank
53. Chitradurga Gramin Bank
54. Cuttack Gramya Bank
55. Damoh Panna Sagar Kshetriya Gramin Bank
56. Devipatan Kshetriya Gramin Bank
57. Dhenkanal Gramya Bank
58. Dungarpur Banswara Kshetriya Gramin Bank
59. Ellaquai Dehati Bank
60. Farrukhabad Gramin Bank
61. Gaur Gramin Bank
62. Gurgaon Gramin Bank
63. Hadoti Kshetriya Gramin Bank
64. Himachal Gramin Bank
65. Hissar-Sirsa Kshetriya Gramin Bank
66. Indore Ujjain Kshetriya Gramin Bank
67. Jaipur Nagaur Aanchalik Gramin Bank
68. Jamnagar Rajkot Gramin Bank
69. Jamuna Gramin Bank
70. Jhabua-Dhar Kshetriya Gramin Bank
71. Kakathiya Grameena Bank
72. Kalpatharu Grameena Bank
73. Kamraz Rural Bank
74. Kanpur Kshetriya Gramin Bank
75. Kapurthala Ferozpur Kshetriya Gramin Bank
76. Kashi Gomti Samyut Gramin Bank
77. Kisan Gramin Bank,Budaun
78. Kolar Gramin Bank
79. Krishna Grameena Bank
80. Kshetriya Gramin Bank, Hoshangabad
81. Kutch Grameen Bank
82. Malaprabha Grameena Bank
83. Mandla Balaghat Kshetriya Gramin Bank
84. Manjira Grameena Bank
85. Marwar Ganganagar Bikaner Gramin Bank (Previously : Marwar Gramin Bank)
86. Mewar Aanchalik Gramin Bank
87. Nagarjuna Grameena Bank
88. Netravati Grameena Bank
89. Nimar Kshetriya Gramin Bank
90. North Malabar Gramin Bank
91. Panchmahal Vadodara Gramin Bank
92. Pandyan Grama Bank
93. Pinakini Grameena Bank
94. Pragjyotish Gaonlia Bank
95. Prathama Bank
96. Raigarh Kshetriya Gramin Bank
97. Rani Lakshmi Bai Kshetriya Gramin Bank
98. Ratlam Mandsaur Kshetriya Gramin Bank
99. Rayalaseema Grameena Bank
100. Rewa-Sidhi Gramin Bank
101. Sahyadri Gramin Bank
102. Samyut Kshetriya Gramin Bank
103. Sangameshwara Grameena Bank
104. Shahjahanpur Kshetriya Gramin Bank
105. Shivpuri Guna Kshetriya Gramin Bank
106. South Malabar Gramin Bank
107. Sree Anantha Grameena Bank
108. Sri Saraswati Grameena Bank
109. Sri Visakha Grameena Bank
110. Surat Bharuch Gramin Bank
111. Thar Aanchalik Gramin Bank
112. Tripura Gramin Bank
113. Tungabhadra Gramin Bank
114. Vidur Gramin Bank

The foreign banks and the Regional rural banks are again classified as Public sector banks and private sector banks. The lists are given below.

Public Sector Banks

The public sector banks are again classified into two and they are the State Bank of India, its associate banks and the Nationalised banks.

The State Bank of India commands the largest banking resources in India. It has seven associate banks. The SBI and its associate banks are listed below:

State Bank of India

1. State Bank of Bikaner & Jaipur
2. State Bank of Hyderabad
3. State Bank of Indore
4. State Bank of Mysore
5. State Bank of Patiala
6. State Bank of Saurashtra
7. State Bank of Travancore

Nationalised Banks

The New Bank of India have merged with the Punjab National Bank so now altogether there are 19 nationalised banks in India and the names of nationalised Banks are given below:

1. Allahabad Bank
2. Andhra Bank
3. Bank of Baroda
4. Bank of India
5. Bank of Maharashtra
6. Canara Bank
7. Central Bank of India
8. Corporation Bank
9. Dena Bank
10. Indian Bank
11. Indian Overseas Bank
12. Oriental Bank of Commerce
13. Punjab & Sind Bank
14. Punjab National Bank
15. Syndicate Bank
16. Union Bank of India
17. United Bank of India
18. UCO Bank
19. Vijaya Bank

There is a third group included in the public sector banks of India by RBI and it is:

Public Sector Banks

Industrial Development Bank of India (IDBI) Ltd.
IDBI and IDBI Bank Ltd. have been merged to form Industrial Development Bank of India (IDBI) Ltd. Under the Reserve Bank of India Act, 1934 the IDBI is notified as a scheduled bank by the Reserve Bank of India. The IDBI is categorized under a new sub group “other public sector bank” by the RBI.

Private Sector Banks

Under the Commercial banks the private sector banks are again classified as old private sector bank and new private sector bank. The names of banks under each are listed below.

The old private sector banks are:

1. Bank of Rajasthan Ltd.
2. Dhanalakshmi Bank Ltd.
3. Federal Bank Ltd
4. ING Vysya Bank Ltd.
5. Jammu and Kashmir Bank Ltd.
6. Karnataka Bank Ltd
7. Karur Vysya Bank Ltd
8. Ratnakar Bank Ltd.
9. SBI Commercial and International Bank Ltd.
10. South Indian Bank Ltd.
11. United Western Bank Ltd.

The new Private Sector Banks are:

1. Bank of Punjab Ltd. (since merged with Centurian Bank)
2. Centurion Bank Ltd.(now called Centurian Bank of Punjab)
3. Development Credit Bank Ltd.
4. HDFC Bank Ltd.
5. ICICI Bank Ltd.
6. IndusInd Bank Ltd.
7. Kotak Mahindra Bank Ltd.
8. UTI Bank Ltd/AXIS Bank.
9. Yes Bank Ltd.

Banks in India is a post from: Money Guide India

---
Related Posts:

• What are Co-Operative Banks?
• What is IFSC?
• How is Inflation Calculated?
• How RBI Controls Other Banks
• What is NEFT/RTGS?

Current Account is primarily meant for businessmen, firms, companies, and public enterprises etc. that have numerous daily banking transactions. In a Current Account, a customer can deposit any amount of money any number of times. He can also withdraw any amount as many times as he wants, as long as he has funds to his credit.

Current account holders can enjoy regular financial instruments like cheque books, bank statements and ATM cards. However, these accounts won’t have any transaction limits as in savings bank accounts.

A current account also comes with overdraft facility, which allows you to borrow money from bank and pay interest only for the time you use the money. However, each current account has imposed limits up to which a customer can take overdraft.

These business accounts are meant neither for the purpose of earning interest nor for the purpose of savings, but for convenience of the business; hence they do not bear interest. Instead, a customer can deposit or withdraw any amount of money any number of times, subject to availability of funds. However, legal heirs of a deceased person are paid interest at the rates applicable to Savings bank deposit from the date of death of the account holder till the date of settlement.

In USA, current accounts are called checking accounts. Because money is available on demand these accounts are also referred to as demand accounts or demand deposit accounts in certain countries.

What are Current Accounts? is a post from: Money Guide India

---
Related Posts:

• What are the Different Types of Balance Sheets?
• What are Cheque Books?
• What is a Joint Account?
• What is International Bank Account Number(IBAN)?
• Internet Banking – How Does It Work?

Internet banking takes normal banking one step further. It helps customers to access their accounts online. They can make transactions and make changes in their personal details in the account sitting right at home. Every major bank also offers information online, on the services provided by them.

Every major bank offers an internet banking service through which we can register. Charges for registration depend on the bank: there may or may not be charges for registering. Usually for personal internet banking the registration is free, but there may be a fee for business internet banking.

The security procedures would also vary from bank to bank. The security set up usually consists of a unique number or password issued by the bank and a 6-10 digit number which is to be set up yourself.

You can also transfer money online, from one account to another. If the other account is within the same bank, the amount will be transferred overnight. If the transfer is to an account in another bank, it may take over three working days.

Internet banking has its own advantages and disadvantages:

Internet Banking Advantages

The advantages of Internet banking are obvious. Business people can access their personal and business account information while saving a trip to the bank. You can check your balance whenever you need to, even if the bank is closed. The advantages of using internet banking are listed below.

1. Available for 24 hours a day, 7 days a week.
2. No need to stand in queues.
3. The account can be operated from anywhere – all you need is a computer with internet access.
4. Integrated security.
5. You can apply for a majority of the services such as loans, savings accounts, mortgages, etc., on-line.
6. It can be used for paying bills through on-line which saves both time and money on postage.
7. Through internet banking we can easily compare services offered by different banks. We can buy financial products and apply for loans by choosing the best bank for us to apply by such comparison.
8. We can even buy insurance online through Internet banking services.
9. Stocks and bonds and other investments can be managed with online banking from our home or office independent of a financial intermediary like a stockbroker.

Internet Banking Disadvanatages

1. The internet connection costs should be met by the customer while using the service.
2. The account cannot be accessed if there is a failure in the internet connection.
3. The bank and the account holder would not be having any personal interaction.
4. Working through the internet banking can be slow with a 56K modem.
5. You cannot deposit physical cash into your account, online. For that you need to visit the bank.
6. For obtaining cash floats or to use an ATM machine to withdraw cash we will have to visit the bank personally.

What is Online Banking? is a post from: Money Guide India

---
Related Posts:

• Internet Banking – How Does It Work?
• How Can We Bank At Home Using Internet Banking?
• Internet Banking Frauds – How To Prevent It?
• What is NEFT/RTGS?
• What are Bank Statements?