Ancillary Services in Banking

Ancillary Services in Banking – Ancillary Services provided by a Bank

All banking services can be roughly classified into two groups. The first is primary services, which include taking demand deposits and providing loans to consumers according on their needs.

Banks offer a wide range of auxiliary services, or supporting services, in addition to their regular primary activity. Let’s examine a few of their most crucial services.

Payment services

It denotes a money transfer from one bank branch to another, either within the same bank or among separate banks. [Ancillary Services in Banking]

Local transfers can be made using Bankers Cheques (BC), while transfers between financial institutions can be made using Demand Drafts (DD), Telegraphic Transfers (TT), Mail Transfers (MT), National Electronic Fund Transfers (NEFT), and Real Time Gross Settlements (RTGS) for a fee. The customer must complete all required fields for the remittance, including

  • Type of remittance, such as by filling out DD/TT/MT, etc.
  • Address and name of the recipient.
  • Name of the branch where the transfer should be made.
  • Name, address, and, if necessary, a customer’s account number.

Keeping Services

  • The facility is commonly referred to as a safe deposit box.
  • Customers are given the option to store their valuables and critical documents in a locker that has been particularly made. On them, a predetermined rental is assessed.
  • Individuals (who are not children), businesses, limited companies, certain associations, and societies may rent lockers.
  • A year is the minimum rental time for lockers.
  • Lockers come in four sizes: small, medium, big, and extra large, each with a distinct rental price.
  • An individual hirer has access to the nomination facility.
  • Banks have the right to impose fines in cases of past-due rent.

[Ancillary Services in Banking]

Currency Services

  • A person needs foreign currencies when they travel to other countries or want to purchase any goods from abroad.
  • These currencies are offered by the bank to its clients.
  • Only authorised bank branches are able to carry out these operations, and all transactions are completed over the counter.
  • A person has the option of sending foreign currency to banks when earning or receiving it from overseas.
  • These currency exchange transactions are carried out in accordance with the policies and guidelines set forth by the central banks of the individual nations.
  • Foreign Exchange Management Act (FEMA), 1999 restrictions apply to all transactions in India.

Payment Services

The introduction of card services was initially done for convenience and safety reasons, but today it is the most widely used method of payment. Customers receive credit cards and debit cards, which are the two most common forms of cards issued by the bank. [Ancillary Services in Banking]

A credit card holder can purchase goods or services from a merchant establishment where such an arrangement is allowed by using their card. The cardholder is then sent a bill outlining the debts that must be settled within 30–40 days. It has a set interest rate.

Credit cards and debit cards are equivalent. The only distinction is that as each transaction is notified, a certain amount of dues is debited from the cardholder’s account.

Banking services online

Performing any task or activity without being physically present in the bank branch is currently the most popular way to conduct banking business.

It’s sometimes referred to as internet banking or online banking. Sitting in front of a computer or smartphone screen allows one to perform a variety of tasks. [Ancillary Services in Banking]

For instance, moving money between accounts at the same bank or at different banks, keeping excess cash in a fixed deposit account, shopping online, etc. The only thing required of him or her is to use the ID and PASSWORD provided by the bank to log into their virtual account.

Services for insurance

  • The risk of practically every part of a person’s life is covered by a variety of insurance products that banks offer, including life, health, valuable assets like personal vehicles, debit and credit cards, and others.
  • It is also referred to as Bancassurance because it involves a collaboration between a bank and an insurance provider.
  • The clientele of the bank is where the insurance firm sells its various products.
  • Both businesses benefit financially from this cooperation. By offering the products, banks can generate more money, and the insurance firm can grow its clientele.
  • ICICI Prudential, Bajaj Allianz, etc. are few examples.

Additionally, some banks provide investment services to their business clients. Services for portfolios is another name for it. They advise their clients specifically on how to make wise investments or raise money for their businesses. These services are also available to any individual consumer from their particular bank. [Ancillary Services in Banking]


In India Farm Credit is Regulated By

In India Farm Credit is Regulated By – This essay makes an effort to examine the problems with agricultural loans in India. The analysis shows that the disbursement of loans to the agricultural sector is still insufficient. It seems that the banking industry is still reluctant to offer credit to small and marginal farmers for a number of reasons.

Farm credit in India refers to the financial services and loans provided to farmers and agriculture-related businesses. The government of India, through various state-owned and private banks, provides farm credit to support the agriculture sector and help farmers meet their financial needs, such as purchasing seeds, fertilizers, and machinery, as well as covering production and operating costs. The primary objective of farm credit in India is to increase agricultural productivity and ensure food security, as agriculture is one of the largest employers in the country.

There are various farm credit schemes and programs available in India, including short-term and long-term loans, crop loans, and other financial services such as insurance and marketing support. The government has set a target to provide adequate and timely credit to farmers to meet their cultivation and other needs, and it is continuously working to increase the availability and accessibility of farm credit in the country.

The situation necessitates coordinated efforts to increase financing flowing to agriculture as well as exploring new innovations in product design and delivery techniques through improved use of technology and related processes.

The flow of credit to agriculture might be greatly increased by facilitating financing through processors, input dealers, NGOs, etc. that are vertically integrated with the farmers, especially through contract farming, for supplying them with essential inputs or processing their produce. [In India Farm Credit is Regulated By]

The growth of the Indian economy depends heavily on agriculture. About two thirds of the population depends on it, and it contributes about 19% of GDP. The unique position Indian agriculture occupies in the macroeconomic system and its contribution to the reduction of poverty serve as further evidence of the significance of farm finance as a crucial input to agriculture.

The Government of India and the Reserve Bank of India (RBI) have played a crucial role in developing a broad-based institutional framework for meeting the sector’s rising credit requirements because they recognise the significance of the agriculture sector in India’s development.

A target of 18% of net bank credit has been set for the industry, and agricultural policies in India are periodically reviewed to keep up with the sector’s changing needs. The agriculture sector is a significant portion of the priority sector lending of scheduled commercial banks (SCBs). [In India Farm Credit is Regulated By]

Within the total GDP growth target of 9%, the agriculture sector’s target was set at 4% in the Approach Paper to the Eleventh Five Year Plan. In this situation, it is crucial that institutions provide timely, adequate, and reasonable loans to farmers.

The development of institutional credit to agriculture can be roughly divided into four distinct phases: 1904–1969 (the dominance of co-operatives and the establishment of the RBI), 1970–1975 (the nationalisation of commercial banks and the establishment of Regional Rural Banks (RRBs)), 1975–1990 (the establishment of NABARD), and from 1991 onward (financial sector reforms).

The Cooperative Societies Act, passed in 1904, served as the impetus for institutional involvement in the field of agricultural lending. The development of the institutional framework for agricultural financing was strengthened by the RBI’s formation in 1935. [In India Farm Credit is Regulated By]

The RBI was maybe the first central bank to show interest in issues pertaining to agriculture and agricultural lending, and it still does so today (Reddy, 2001).

The absence of simultaneity between the realisation of income and the act of spending, the lumpiness of investments in fixed capital construction, and stochastic spikes in capital needs and saving that come along with technical advancements all contribute to the demand for agricultural loan.

From the standpoint of its contribution to the acceleration of agricultural growth, credit, as one of the essential non-land inputs, has two dimensions: availability of credit (the quantum) and distribution of credit.

This essay examines the changes in agricultural credit in Section I, the distribution of institutional credit by State in Section II, current legislative measures in Section III, issues and concerns in Section IV, future implications in Section V, and concluding observations in Section VI. [In India Farm Credit is Regulated By]