AMITY BUSINESS SCHOOL, MUMBAI.

DHANISHA N LOLAM.
ENROLMENT NO – A70050220006.
MBA(B&F).
BATCH 2020 – 2022.
ASSIGNMENT – 1.
BANKING OPERATIONS.
FACULTY: GANESH SIR.
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TOPIC
Q.) Due to competition banks margin is shrinking. Banks are diversifying their activities from
the core business of lending. Discuss the various ancillary services rendered by banks.
Discuss taking examples of new generation PVT bank or a foreign bank.
ANSWER
Every bank provides different kind of services due to the emerging digital trends, adapting to
various technology and norms. There are two main banking services provided by the bank
first being primary function which include deposit and lending of funds to customers but with
increasing competition among banks just can’t rely on savings account investments or
investment schemes. So, banks have to involve themselves in other financial schemes to earn
profit, this is called as ancillary services. Therefore, the various ancillary services are as
follows:
1. Fund Transfer services
This is the oldest and the most traditional services provided by the banks. It consists
of further two more categories:
a. RTGS: The acronym of RTGS can be known as Real Time Gross settlement. It
does not take time to transfer funds as it is a real time and continuous transfer of
funds from individual to individual. RBI has laid a set of new rules with effect
from July,2019 by waiving off the processing charges. Here, the inward
transaction has no charge but the outwards transaction has charge levied.
b. NEFT: The acronym of NEFT is National Electronic Funds Transfer. In this an
individual can transfer funds from all over the nation from any bank to other
individual, corporate account or firm. There is also no minimum limit for
transferring of funds. It does take time to transfer funds in this type of transaction.
2. Custodial services: This service can most commonly be known as Locker Facility
provided by the bank. An individual can keep their valuable objects like jewellery,
documents etc, these services can be availed by paying a certain amount of money to
the bank and if lost or theft happens it is insured by the bank.
3. Pension services: In these services the Employee Provident Fund (EFT) helps to
distribute pension to employees through bank, a certain sum of amount is paid to the
 retired or superannuated employees. The process to receive the amount is that the
pensioner just has to open a bank account and forward their account number to the
concerned pension department.
4. Forex Services: It deals with foreign currency, conversion of foreign currency and
also expenditure like merchandise, traveling and sell the same to the bank as well. In
this a person can also receive or send currency from abroad through banks. Foreign
Exchange Management Act (FEMA), 1999 regulations have to be followed to do
avail these transactions in India.
5. Gold sale: Only a few banks provide this kind of services, here an individual can buy
gold for self-consumption or for their business. It can range from 1 gram of gold to 1
bar of gold. All commercial banks are providing gold bonds. This reduces the risk of
fraudulent gold.
6. Bank assurance: Bank guarantees are also called bank guarantees. It means loan the
agency ensures that the debtor's debt is paid. The bank guarantees to the other party
on behalf of the parties, it will live up to its promises. If that party does not comply
promise the bank will compensate the other party and recover the latter’s losses from
the other party who obtained a bank guarantee from the bank.
7. Card Services: It has become the most and frequently used services by an individual
apart from digital or e-banking. Through these services an individual can transfer
money to another without having to worry about hard cash or theft of that hard cash.
It is also called as Plastic Money. Debit card and credit cards are the example of these
services.
8. Investment Services: This can be called as mutual funds. In this bank collects large
investment amounts and then invent capital in a variety of ways. They usually collect
investment from investors and depositors and guide them if necessary, it risk of loss
in equity investment is reduced.
9. E-banking Services: Some of the other services are mentioned below
a. Notary Services: Banks are providing these services for verification of consumer’s
information known as KYC (know Your Consumer). As per RBI regulations it is
important to complete this process under all commercial bank operations. This
prevents from fraudulent or identification theft. Life certificates are also provided
by banks which can be used as id proof.
b. Internet banking: this is a facility provided by bank to consumers for online
banking transactions without the pain of visiting the bank and completing the
required task. Like ICICI bank has its own website where the consumer can raise
queries, transfer funds etc. to avail some services you need to pay a small amount
of fees
c. Mobile banking: this is the most enjoyed and frequent used services all over the
world. It is similar to internet banking. It is free of cost but it has its own
limitations. One can transfer funds through mobile banking.
10. Insurance Services: Banks provide several range of insurance schemes. It can be
anything your vehicle, health, theft in business etc, the companies who provide these
insurances are SBI, LIC etc. with the help of joint ventures.
11. Mail/Telex transfers: it is the transfer of money mail from the one bank account to
another bank account of the same branch but at different location of the bank. Mail
transfer is internally done through ordinary postal channel. Here the bank has to pay
 the amount to specific payee. Telex is basically when the mode of transfer is from
mail to machine that’s when it’s called as Telex services
12. Bank drafts: Article 85(A) of the Negotiable Investment Law stipulates that bank
drafts are pay the money that one office withdraws to the bank to other offices in the
same bank payables for on-demand orders. In other words, the bank draft represents
the payer guaranteed by the issuing bank. Bank drafts provide guarantee to the payee
payment. Bank draft is a check, and payment is guaranteed by the issuer’s bank. This
is a problem that occurs after confirming a sufficient amount in the payer’s account.
This is a more complicated process compare issuing bank checks.
13. Merchant services: It is a consultancy services provided by the bank to advice
bank’s clients regarding financial, managerial or anything related to banking and
financial services.