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Vinay Kumar asked:


These are very demanding times. Time has become one of the rarest commodities. We just can not afford to devote enough time to those common things like standing in the queues to open an account, deposit money or withdraw money when we need it. As per the earlier models of banking, these were very tedious and time consuming processes. But with the age of computerisation, mankind’s endeavour has been to save as much time as possible by mechanising the manual processes. It is great, because the time saved can be devoted to other more precious things in modern life. Instant banking solutions are just one of the many things which have made our lives easier manifold. With the help of online banking services, one can virtually get complete control over the bank and credit card accounts and that too without standing in long queues and the consequent waste of time. Whether you are sitting at home, are outside the country, you can do your banking tasks without any hassles anytime and anywhere as per your convenience.

Almost all the public and private sector banks in India have adopted the online method to increase their customer base. The clients can very easily watch their credit card balances and bank accounts and other banking transactions without wasting time by visiting the bank itself. Further one can transfer funds online to accounts in any bank in India. And still moving up on the path of efficiency, one can manage and create fixed deposits. One of the most important benefits of Internet banking is that the customers can get the demand drafts and cashier’s orders free of cost online. Also the clients can pay their insurance premiums and utility bills online.

The customers can very easily avail E-statements of their bank accounts and credit cards. And to allow proper management of ones investments the customers can buy, redeem or switch among mutual funds online. With the help of Internet banking services, one can stop cheques, pass orders for new cheque books and receive bonus reward points using the Internet banking services. To make the process of online banking services more efficient, registering for different banks’ Internet banking services is a very simple one-time task. One can register with any one of the combination like: a) 10 digit personal banking number (PBN) and the Phone banking PIN having six digits b) credit card ATM PIN and the credit card number c) ATM PIN and the credit card number d)debit card PIN and the debit card number.

For easily accessing your bank statements online, one can easily register for E-statements of ones bank account and credit cards in order to view the statements online. By switching over to E-statements you will be avoiding the paper-work, saving both on time and paper, which in turn will save the environment. By availing this facility, the customers are not troubled by delayed statements. Also by availing this facility one can remain updated on payment dates and card dues.

Using the online banking services you cam find out the fixed term deposit rate prevailing in the market in order to arrive at the most suitable plan for you. Further with the facility of online bill payment, the customers are saved of the trouble of billing queues. With the help of online bill payment service, one can pay his/her insurance premiums, electricity bills, gas charges, telephone and mobile bills through the online method.

Free mobile alerts enable the customers to forever stay informed of their bank account transactions. Most of the banks in India have started this service. One can get a free registration to start getting SMS alerts regarding the banking transactions, SMS reminders about the forthcoming payment dates and the dates and time of term deposit maturity.

Another important aspect of net banking is the facility of phone banking using which you can make balance enquiries enabling you to check account balances and credit bills. This process is perfectly secure and reliable.



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Addi asked:


 

The online bank is a wonderful thing. It has all the features of a traditional bank and also has some new features too. Hence people can use these features and simplify the way they handle their banking needs. Online banking services have thus given the power to human beings to operate at any time of the day as the websites operate 24 hours and 365 days every year.

The main features of online banking are many. The ability to check your accounts from anywhere makes the online banking feature amazing. The requirements are simple as these websites do not need any special type of software and are also quite simple to operate. They come with useful features like paying bills online and also acquiring bank statements without going to banks as these statements can be downloaded online.

There are not many differences in terms of functionality when it comes to online banking. The services that they offer are the same which are available in banks but the major difference is that these transactions do not require people to stand in counters and wait in a queue. All they have to do or normally do is to access the website of the bank and with just a few clicks of the mouse and few pushes on the buttons, you get to know many things. These things can be the amount of money that they have in their account, or making payments or even buying items with the help of the online shopping feature present in some of these websites. Then there are also services like management of loans and keeping specific financial history for individuals. Online banking services have thus been a boon rather than a bane and have entirely changed the way people now perceive banking services.

The world of online banking is a very big one with the inclusion of nearly all the features of a typical bank. Hence these services include deposits like special savings account, security deposit, fixed term deposit and also loans as well as investments and also insurance. Then there are also features like Demat accounts and NRI services. The websites provide all the important information relating to these services. This information include things like the features, the benefits, the required documents and also the provision for applying online. Hence taking the example of a service such as a fixed term deposit, all the information that is needed is available on the website. Therefore users can get to know about the different tenures as well as the vivid types of plans and also whether withdrawal in partial amount before the completion of the time period is allowed. They are also given a detailed list of the terms and the conditions which are necessary to be followed if a person is interested in opening a fixed term deposit.

There are features like applying online for these various kinds of services and also information about the interest rates as well as the benefits. For a person interested in acquiring a fixed term deposit (FD) has the choice to go to different bank websites and use their online features. Hence he does not have to go to the bank and get bombarded with multiple opinions and incorrect information about the procedure to have a FD. He can take advantage of features like online access to his FD in order to have information on things such as the accumulated amount in his FD and also the remaining time period.

The effect of frauds and embezzlement is nullified when the user avails of online banking services. These online accounts are extremely safe with individual passwords for individual customers and also there are a number of tracking and safety network software which are instilled in the functioning of these websites. Hence the change is dominant in banking as it is in all other forms of human activity and online banking is here to stay.

 



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Finacle - Infosys asked:


Core banking replacement has, for long, been considered a strict no-no by banks. Established comfort level with existing technologies and processes, relatively comfortable margins that provided the luxury of overlooking operational inefficiencies, and finally, the fear of the unknown, have all ensured that banks steered clear of this subject. But the current competitive environment with increasingly demanding customers is forcing banks to take a reality check on their technology environment and ensure that their IT strategy is aligned to their business objectives. And core banking replacement is often the only solution to their problems. However, replacement of core banking solutions be it for large or small banks, global or regional is akin to a heart transplant. This can be one of the greatest challenge for any institution, which can either result in the bankleapfrogging to a high degree of differentiationand an enriched customer value proposition, or it can create considerable risks for the bank if the transition is not managed properly.

Successful banks are those that understand the potential of new technologies. They align themselves to fully leverage the powers of these technologies by focusing on the adaptive changes that make the technology transformation process successful…. The current competitive environment with increasingly demanding customers is forcing banks to take a reality check on the technology environment and ensure that their IT strategy is aligned to their business objectives. And core banking replacement is often the only solution.

Herein banks need to be mindful of challenges like vendor capabilities and dependency on legacy applications which are generally associated with core banking deployments and replacements. These challenges once understood and mitigated properly can result in the bank leapfrogging to a high degree of differentiation and providing an enriched customer value proposition. On the other hand, it can also create considerable risks for the bank if the transition is not managed properly.

This paper details the key factors banks need to focus on, to enable them to make the core banking transformation a successful experience.

Key Challenges in Core Banking Replacement



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Ramapati Singhania asked:


Many mutual and hedge funds, insurance companies, trading companies, expatriate individuals, intellectual property rights owners, property investors and just high net worth individuals use BVI banking offshore to pay fewer taxes and save wealth. There is no restriction on the nationality of the bank account owner, however most banks prefer that the individual accounts be opened along with corporate accounts, of companies incorporated in the BVI.

Privacy and confidentiality come as a given but we have to wait and see how the UK reacts to pressures from the EU for BVI bank disclosures. Banking secrecy is a fundamental cornerstone of BVI banking services. A clients background may be divulged by a BVI bank only if there is a criminal investigation carried out by local police authorities in-land or when ordered by a court in BVI.

Account holders are just charged with only a few thousand dollars every year for the license fees of banks. But 9/11 has changed the concept of privacy as it was accepted by us. Now governments, in the name of anti-terror laws have started usurping authority to look into anyones personal information for no strong reason.

It’s not just about privacy and taxes, banking BVI Offshore gives you all the luxuries that you can get in a world class bank. World class infrastructure, communication systems, modern day facilities like credit cards, internet, online banking and courier services are available in British Virgin Islands.

You will also be saved from the tensions of legal issues as someone rarely thinks of filing a suit in a far away country and even if someone does plan to, there is legal protection provided to you in the British Virgin Islands, as in other offshore tax havens. How to open a BVI offshore bank account and how long will it take? The answer is you dont need to worry! Since the procedure is very simple and only takes a few days once your Know Your Client documents have been received by us. But most accounts are opened for bvi offshore companies and their beneficiaries.

If you are planning to open a personal account then you will be required to provide

* a certified passport copy,

* local bank reference and

* notarized document(s) confirming your address.

For a company account you will need to provide

* bank reference,

* certified copies of Articles of Incorporation & Articles of Association,

* certified copy of your passport and

* an official approval from the board of director(s) of the company appointing you as their representative.

Do wish to open a BVI Bank?

There are very few international banks in the British Virgin Islands banking sector, basically to try and exclude money laundering. All BVI banks are regulated with the help of the banks and trust companies act 1990. It is mandatory for banks here to be supervised by the Inspector of Banks, Trusts and Companies, and also by an official of the Financial Services Commission [FSC].

This financial services commission or FSC was created on the 1st of January 2002 by the government as an independent regulatory body. As per the norms of this act banking licenses in British Virgin Islands are divided into three categories.

BVI banks can conduct banking business within and also outside BVI jurisdiction with a General Banking License and there would be no restrictions on the business itself. With the annual fee for this license being US$20,000, a bank wishing to do business should however have a minimum paid up capital of US $2 million and moreover the bank must deposit US $500,000.

The Class I restricted banking license requires a minimum paid up capital of US $1 million and the annual license fee is US $16,000 with the bank deposit being US $500,000. This license restricts banks from taking any deposits from any BVI resident except from another licensee or an IBC.

Similar to this license the Class II restricted banking license has the same fees and deposits. However BVI banks coming under this license can only take deposits or funds from those undertakings mentioned on their license.

There should be at least two directors in every bank and those banks and trust companies exempted from the provision of section 14 of the act shall have their names published in the Gazette every year in the month of January.

It is mandatory for banks to have a principal office with an authorized agent who has to act as an intermediary between the licensee and the commission. All banking licenses of BVI banks expire on the 31st of December every year and have to be renewed in January the following year upon payment of the annual renewal fee.

Apart from the above there are also certain other norms that BVI banks have to adhere to as per British Virgin Islands banking laws. Accounts of all banks irrespective of their banking license category, must be audited by an auditor annually or at times when asked by the Financial Services Commission.

Once audited, the accounts must be forwarded within three months from the end of the financial year to the commission. Extension might be given to certain banks depending on the prior written approval granted by the commission. If for some reasons a bank changes or replaces its auditor then the bank has to inform the commission about the change along with the reasons for effecting the change or replacement. Banks applying for a license to do banking business in British Virgin Islands also have to furnish various due diligence documents to the FSC to satisfy its requirements.



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Ann Knapp asked:


There was a day when personal banking required a trip to the bank, standing in often long lines, and making a transaction via a bank teller. Money was accessible only at a brick and mortar location. Any financial needs not taken care of by the end of the business day would have to wait until the next. Access to one’s money was dictated largely by the bank’s hours of operation.

Times have changed. Today, with the advent of the Internet, accessibility to one’s finances is more convenient than ever. With online banking there are no long lines or gas-guzzling drives to the bank. Transactions, bill payment and ordering new checks can all be accomplished with the click of a button in the comfort of one’s own home. ATMs allow instant access to cash. For some people, there is no brick and mortar bank behind their online accounts - their banking is conducted entirely with an Internet bank.

In fact, online banking has become the preferred transaction method for most of America’s banking customers. While an online transaction can take just under three minutes, it can take nearly 10 minutes at a bank to conduct that same transaction due to waiting in line and interacting with a branch teller.

While some may have questioned the validity of online banking in the 1990s, it has proven to be one of the most valuable assets banks can offer their customers today. While fewer than one in seven Americans were online in 1995, two out of every three Americans are online today, according recent statistics. Americans are surfing the web, conducting e-commerce, and examining their bank statements from their personal computers at rates much faster than in the time those things could be accomplished apart from a computer.

With the advent of the Internet in the 1990s, confidence in this new form of collecting and transferring information was an obvious pathway for banks to pursue. It gave bank customers what they never had before — access to their money 24/7. Features have become more sophisticated and user friendly through the decade. Today’s banks offer online banking services which allow users to conduct a variety of transactions - everything from account to account transfers and paying bills to applying for a loan or making an investment. Especially convenient, online banking allows users to instantly view their accounts, balance the books, and monitor spending. And with the use of personal finance programs, data can be easily imported making personal financial management easier than ever. Some banking programs even allow users to monitor all of their accounts at one site regardless if they are with their main bank or with another institution.

Online banking has also opened doors for those shopping for a loan. Online lenders make applying for a loan easy and convenient, including everything a customers needs to make an application, including application forms and instant assistance on their website. The success of these types of services have allowed consumers to seek the best terms and have brought about a new level of competition between banks looking to expand their bottom line.

One of the most important features to the growth of online banking has been the development of protection barriers to safeguard users and their money. Personal Identification Numbers (PINs) and/or passwords have allowed users to authenticate and protect accounts and transactions.

Indeed, the Internet has proven to be a powerful and growing tool for today’s consumers. Through it, online banking has provided customers more control over their finances and freed up time that would have been spent standing in a bank line. But as with many things, precaution and education are important elements for online banking customers. At the end of the day, online banking succeeds only with the vigilance of the banks and their customers.



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bankingonly asked:


Deposit insured in India, if bank fails

                                     - S. C. Ojha

                     The depositors are secured in India if a bank fails. In India norms of banking is very strict and monitoring system is in direct control of country’s central bank Reserve Bank Of India.

                     In the beginning in 1961 an act came into existence the Deposit Insurance Act, 1961 and made effective on January1, 1962.  Up to 1977 two organizations the DIC & CGCI were looking after the function of deposit insurance and credit monitoring. The present Deposit Insurance and Credit Guarantee Corporation (DICGC) came into existence with merger of DIC & CGCI on July15, 1978.

Covered Banks

                  In 1968 co-operative banks have got protection under deposit insurance with some eligibility norms. Initially only commercial banks inclusive of State Bank Of India & its group and foreign banks operating in India were covered.

                 Presently all commercial banks, foreign banks working in India, local area banks, regional rural banks, all eligible urban co-operative banks( central, state & primary co-operative banks ) are covered under the Deposit Insurance Scheme.

The insurance coverage scheme is compulsory in India and no bank can withdraw from it.

Types of Deposit Covered

                      All types of bank deposit are covered under this scheme like savings, current account, fixed deposits, recurring deposits etc.

Deposit not covered

            Any amount due on account of and deposit received outside India, any amount, which has been particularly exempted by DICGC with the prior approval of RBI are not covered under this scheme. Govt deposits Central or State, Foreign Govt deposits, inter-bank deposits, deposits of State Land Development Banks  with State Co-Operative Bank are also not covered. 

Limit of Amount Covered

            Each depositor is insured upto a maximum of Rs. 1, 00,000(Rs one lac) per bank. Insurance cover is available customer wise not scheme wise.  The deposit kept in different branches of same are aggregated and total cover provided will be a maximum of Rs. one lac. All funds held in the same capacity in the same bank will be clubbed together for the purpose of insurance cover.   Joint account will be treated as separate account and will get cover. Each joint account with different combination treated as different entity and get insurance benefit separately. All joint accounts with same person’s combination will be treated as one customer account and the combined total will be insured upto Rs, one lac.

De-registration of a bank & Liability of DICGC 

                 If bank is prohibited from receiving deposit, or it’s licence is cancelled by RBI or it is wound up compulsorily or voluntarily or it is ceases to be a banking company or on amalgamation or merger or reconstruction where acceptance of deposit not permitted, the registration of an insured bank stands cancelled. In such situation liability of DICGC is limited to extent of deposits as on the date of cancellation.

             In another situation DICGC cover is limited upto date of cancellation where a bank fails to deposit the premium amount for three consecutive periods. 

Payment of Insurance Premium

            Depositors have no liability to pay insurance premium. Deposit insurance premium is fully paid & born by the insured bank. Now DICGC increased the premium rate from 5 paise per Rs. 100 per annum to 10 paise per Rs.100 per annum since April 2005. The premium is payable half yearly in advance in April & October. The premium payment is compulsory to pay latest by 31st may & 31st October.

Payment of Insured amount

            If a bank fails or goes into liquidation, the DICGC is liable to pay to each depositor up to Rs. one lac. The payment will be made through liquidator within two months from the date of receipt of claim from the liquidator.

            In case of amalgamation or reconstruction or merger with another bank, the claim will be paid to concerned existing bank by the DICGC. The claim will be payable to transferee bank within two months from the date of claim list submission. In such case, the difference amount between the full amount of deposit or the limit of insurance, which ever is less and the amount received under amalgamation/reconstruction scheme will be paid.

           The above deposit insurance scheme came into force keeping the view to protect the interest of small depositors of the country. Now feel free to enjoy opening your account in different banks and get your deposit secured more & more.  

Historical data related to bank failure in India

                At present upto march ’08 there are 2356 banks including public sector, private & co-operative banks in India are protected under scheme of DICGC. In previous three years no instance of failure of any major bank in India.

             A number of co-operative banks have failed due to various reasons in previous years. From 01.04.06 to 30.09.08 there are 63 co-operative banks are failed and all qualified customers get payment from DICGC. In these failure banks Gujarat is on number one with 25 banks and Maharashtra is on 2nd position with 10 banks. The size of failure banks are a little bit and not in percent. It is magic of Indian economy and strategic control of the system that Indian banks are protected well.

More insurance cover expected

            In USA in a temporary phenomenon all deposit accounts are insured up to at least $250,000 per depositor until December 31, 2009 at the place of regular insurance coverage $ 1,00,000 . Unlimited insurance coverage also provided for entire amount to all non-interest bearing transaction deposit account on temporary basis up to 31.12.09 for strengthen banking system and making confidence in depositors in USA.

          Likewise USA, in India govt may think. In present context of global economic scenario for more protection of public deposit in the country, limit of insurance coverage is required to be increased to Rs. 2.5 lac from present Rs. 1 lac . 

It will more beneficial for depositors in India if RBI can liberalize banks to get additional deposit insurance cover on higher premium for their depositors for attracting more deposits and strengthening the economy.

                                                                                          contact@bankingonly.com



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Boris Tomson asked:


A banker or bank is a financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money.

The first modern bank was founded in Italy in Genoa in 1406, its name was Banco di San Giorgio .Many other financial activities were added over time. For example banks are important players in financial markets and offer financial services such as investment funds. In some countries such as Germany, banks are the primary owners of industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of cross share holding entity known as zaibatsu. In France “Bancassurance” is highly present, as most banks offer insurance services (and now real estate services) to their clients. http://banks-banking.blogspot.com

Banks have influenced economies and politics for centuries. Historically, the primary purpose of a bank was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold. For centuries, the banking industry only dealt with businesses, not consumers. Banking services have expanded to include services directed at individuals, and risk in these much smaller transactions are pooled. http://banks-banking.blogspot.com

Origin of the word

The name bank derives from the Italian word banco “desk/bench”, used during the Renaissance by Florentines bankers, who used to make their transactions above a desk covered by a green tablecloth. However, there are traces of banking activity even in ancient times. In fact, the word traces its origins back to the Ancient Roman Empire, where moneylenders would set up their stalls in the middle of enclosed courtyards called macella on a long bench called a bancu, from which the words banco and bank are derived. As a moneychanger, the merchant at the bancu did not so much invest money as merely convert the foreign currency into the only legal tender in Rome—that of the Imperial Mint.

Traditional banking activities

Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers’ current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM. http://banks-banking.blogspot.com

Banks borrow money by accepting funds deposited on current account, accepting term deposits and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current account, by making installment loans, and by investing in marketable debt securities and other forms of money lending.

Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account. Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to http://banks-banking.blogspot.com

Definition

Cathay Bank in Boston’s ChinatownThe definition of a bank varies from country to country.

Under English common law, a banker is defined as a person who carries on the business of banking, which is specified as:

conducting current accounts for his customers

paying cheques drawn on him, and

collecting cheques for his customers.

In most English common law jurisdictions there is a Bills of Exchange Act that codifies the law in relation to negotiable instruments, including cheques, and this Act contains a statutory definition of the term banker: banker includes a body of persons, whether incorporated or not, who carry on the business of banking’ (Section 2, Interpretation). Although this definition seems circular, it is actually functional, because it ensures that the legal basis for bank transactions such as cheques do not depend on how the bank is organised or regulated. The business of banking is in many English common law countries not defined by statute but by common law, the definition above. In other English common law jurisdictions there are statutory definitions of the business of banking or banking business. When looking at these definitions it is important to keep in mind that they are defining the business of banking for the purposes of the legislation, and not necessarily in general. In particular, most of the definitions are from legislation that has the purposes of entry regulating and supervising banks rather than regulating the actual business of banking. However, in many cases the statutory definition closely mirrors the common law one. Examples of statutory definitions: “banking business” means the business of receiving money on current or deposit account, paying and collecting cheques drawn by or paid in by customers, the making of advances to customers, and includes such other business as the Authority may prescribe for the purposes of this Act; (Banking Act (Singapore), Section 2, Interpretation).

“banking business” means the business of either or both of the following:

receiving from the general public money on current, deposit, savings or other similar account repayable on demand or within less than [3 months] … or with a period of call or notice of less than that period; paying or collecting cheques drawn by or paid in by customers

Since the advent of EFTPOS (Electronic Funds Transfer at Point Of Sale), direct credit, direct debit and internet banking, the cheque has lost its primacy in most banking systems as a payment instrument. This has lead legal theorists to suggest that the cheque based definition should be broadened to include financial institutions that conduct current accounts for customers and enable customers to pay and be paid by third parties, even if they do not pay and collect cheques.

Accounting for bank accounts

Bank statements are accounting records produced by banks under the various accounting standards of the world. Under GAAP and IFRES there are two kinds of accounts: debit and credit. Credit accounts are Revenue, Equity and Liabilities. Debit Accounts are Assets and Expenses. This means you credit credit accounts to increase their balances and you debit debit accounts to increase their balances. This also means you debit your savings account everytime you deposit money into it (and the account is normally in deficit) and you credit your credit card account everytime you spend money from it (and the account is normally in credit).

However, if you read your bank statement, it will say the opposite- that you have credited your account when you deposit money, and you debit when you withdraw it. If you have cash in your account you have a positive or credit balance and if you are overdrawn it will say you have a negative or a deficit balance. The reason for this is because the bank, and not you, has produced the bank statement. Your savings might be your assets, but it is the bank’s liability, so your savings account is a liability account which is a credit account and should have a positive credit balance. Your loans are your liabilities but the bank’s assets so they are debit accounts which should have a negative balance. Below where bank transactions, balances, credits and debits are discussed, they are done so from the viewpoint of the account holder which is traditionally what most people are used to seeing.

If you have cash in your account you have a positive or credit balance and if you are overdrawn it will say you have a negative or a deficit balance. The reason for this is because the bank, and not you, has produced the bank statement. Your savings might be your assets, but it is the bank’s liability, so your savings account is a liability account which is a credit account and should have a positive credit balance. Your loans are your liabilities but the bank’s assets so they are debit accounts which should have a negative balance. Below where bank transactions, balances, credits and debits are discussed, they are done so from the viewpoint of the account holder which is traditionally what most people are used to see in http://banks-banking.blogspot.com



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Boris Tomson asked:


How to find Banks Related articles : banks-banking.blogspot.com

Commercial banking was first introduced in the US in the late 1700’s and early 1800’s. They were set up with a profit motive and were usually structured as a joint stock company. In the beginning, only a few commercial banks gained charter from their respective states. The emergence of commercial banks in the US has resulted in the economic growth of the nation as these banks contribute a great deal to the treasury.http://banks-banking.blogspot.com

Commercial banks vary greatly in size from the “money center” banks that offer a wide range of traditional and non-traditional services, including international lending to various regions. In the US, the number of small financial banks continues to decline while the number of bigger ones continues to grow.

Commercial banks receive huge revenues from various sources. Their assets and liabilities are typically managed in a way that the revenue is maximized and liquidity is maintained. However, the fluctuation in the rates of interest all over the world makes it unpredictable for commercial banks to estimate their revenue.

Commercial banks make a great deal of revenue by tracing their revenue sources to many different functions. Modern banking includes functions such as foreign exchange, payment of interest and granting of loans. Commercial banks also offer various other functions such as opening savings account, safe deposit boxes and trust services.

The apex bank of the country regulates the rates of interest charged by a commercial bank. Although most commercial banks control a tremendous quantum of wealth, it is only allowed to hold on to a fraction of it. The rest has to be sent out for circulation in the economy.

In the US, there are many commercial banks and the functions of these banks are critical to the nation’s economy. The activities of these banks in certain functions such as the interest rate are monitored by the apex bank to ensure transparency and secure the overall interests of the tax-paying citizen.http://banks-banking.blogspot.com

Banking provides detailed information on Banking, Banking Jobs, Banking Services, Commercial Banking and more. Banking is affiliated with Bank Student Credit Cards.



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Ramapati Singhania asked:


An offshore bank is generally in a low tax jurisdiction (or a tax haven) that provides financial and legal advantages. These advantages typically include:

* greater privacy (see also bank secrecy, a principle born with the 1934 Swiss Banking Act)

* less restrictive legal regulation

* low or no taxation (i.e. tax havens)

* easy access to deposits (at least in terms of regulation)

* protection against local political or financial instability

While the term originates from the Channel Islands “offshore” from Britain, and most of them are located in island nations to this day, the term is used figuratively to refer to such banks regardless of location e.g. Switzerland, Luxembourg and Andorra in particular are landlocked.

Offshore banking has often been accused of helping the underground economy and organized crime, via tax evasion and money laundering; however, legally, offshore banking does not prevent assets from being subject to personal income tax on interest. Except for certain persons who meet fairly complex requirements, the personal income tax of many countries makes no distinction between interest earned in local banks and those earned abroad. Persons subject to US income tax, for example, are required to declare on penalty of perjury, any offshore bank accounts which they may have.

Following September 11, 2001, there have been many calls for more regulation on international finance, in particular concerning tax havens and their banks, and clearing houses. Defenders of offshore banking have criticized these attempts at regulation. They claim the process is prompted, not by security and financial concerns, but by the desire of domestic banks and tax agencies to access the money held in offshore accounts.

They cite the fact that offshore banking offers a competitive threat to the banking and taxation systems in developed countries, suggesting that Organisation for Economic Co-operation and Development (OECD) countries are trying to stamp out competition.

Advantages of offshore banking

* Such entities provide access to politically and economically stable jurisdictions. This may be an advantage for those resident in areas where there is a risk of political turmoil who fear their assets may be frozen, seized or disappear. However, developed countries with regulated banking systems offer the same advantages in terms of stability but not of taxation.

* Some of them may operate with a lower cost base and can provide higher interest rates than the legal rate in the home country due to lower overheads and a lack of government intervention. Advocates of offshore banking often rightly characterize government regulation as a form of tax on domestic banks, reducing interest rates on deposits.

* Offshore finance is one of the few industries, along with tourism, in which geographically remote island nations can competitively engage. It helps developing countries source investment and create growth in their economies, and can help redistribute world finance from the developed to the developing world.

* Interest is generally paid by them without tax deducted. This is an advantage to individuals who do not pay tax on worldwide income, or who do not pay tax until the tax return is agreed, or who feel that they can illegally evade tax by hiding the interest income.

* Some offer banking services that may not be available from domestic banks such as anonymous bank accounts, higher or lower rate loans based on risk and investment opportunities not available elsewhere.

* Offshore banking is often linked to other structures, such as offshore companies, trusts or foundations, which may have specific tax advantages for some individuals.

* Many advocates of offshore banking also assert that the creation of tax and banking competition is an advantage of the industry, arguing that tax competition allows people to choose an appropriate balance of services and taxes.

Critics of the industry, however, claim this competition as a disadvantage, arguing that it encourages a “race to the bottom” in which governments in developed countries are pressured to deregulate their own banking systems in an attempt to prevent the offshoring of capital.

Disadvantages of offshore banking

* Offshore banking has been associated in the past with the underground economy and organized crime, through money laundering.

* Following September 11, 2001, tax havens and their banks, along with clearing houses, have been accused of helping various organized crime gangs, terrorist groups, and other state or non-state actors. However, offshore banking is a legitimate financial exercise undertaken by many expatriate and international workers.

* Offshore jurisdictions are often remote, so physical access and access to information can be difficult. Yet in a world with global telecommunications this is rarely a problem for customers. Accounts can be set up online, by phone or by mail.

* Offshore private banking is usually more beneficial to those on higher incomes, because of the costs of establishing and maintaining offshore accounts. However, simple savings accounts can be opened by anyone and maintained with scale fees equivalent to their onshore counterparts. The tax burden in developed countries thus falls disproportionately on middle-income groups. Historically, tax cuts have tended to result in a higher proportion of the tax take being paid by high-income groups, as previously sheltered income is brought back into the mainstream economy.

Banking services

It is possible to obtain the full spectrum of financial services from these banks, including:

* deposit taking

* credit

* wire and electronic funds transfers

* foreign exchange

* letters of credit and trade finance

* investment management and investment

Custody

* fund management

* trustee services

* corporate administration

Not every bank provides each service. Banks tend to specialize between retail services and private banking services. Retail services tend to be low cost and undifferentiated, whereas private banking services tend to bring a personalized suite of services to the client.



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Finacle - Infosys asked:


Core banking replacement has for quite some time been considered fraught with high risks. The costs are potentially bordering on the prohibitive and many still believe that their present in-house systems are satisfactorily serving the purpose. But the wind is changing direction and fast. There is a rising acknowledgement of the fact that banks, irrespective of size and geography, face the dual challenge of cutting costs and increasing their internal efficiencies. This is done with the ultimate aim of improving margins which are clearly under strain. Though it is easy to select a vendor for implementing a solution, the challenging part is carrying the project through to a successful implementation. Current requirement is for an experienced vendor with impeccable implementation credentials who has in the past managed all such challenges well. Banks thus need to take a holistic view while considering the replacement of their core banking platform.

It is important that banks take a holistic view while considering the replacement of their core banking platform. While the benefits of implementing packaged solutions built on modern technology are all too obvious, one cannot deny that such an exercise is fraught with risks. The risks can be mitigated and managed - a good starting point would be for the bank to recognise the different risks and consider strategies to mitigate them.

Risks need to be mitigated and managed and following this line of thought, this paper delves into the risks that banks should take cognizance of before embarking on what is clearly going to be the single biggest technology initiative within the bank.

Managing Risks In Core Banking Replacements



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