Latest Banking Trends in 2024

What is a bank?

A bank is a financial institution that deals in money and credit and transacts in currency. Deposits public money and distributes the deposited money in the form of loans. Protects and transfers public money with security.

Provide the facility of cheques, demand drafts, ATMs, Debit Cards, Credit Cards, etc. to the public. Pays a low rate of interest on deposits and charges a higher rate of interest on loans. This difference of interest is called the profit of the bank. Banks play a major role in maintaining the economic stature of a country.

Features of the Bank:

Banks play a crucial role in the financial system by offering a wide range of services that cater to individuals, businesses, and governments. Here are some key features of banks:

1. A bank is a financial institution.
2. It deals in currency and credit.
3. Accepts deposits from the public.
4. Provides loans.( Banks provide a variety of loan products, including personal loans, home loans, car loans, and business loans.)
5. Transfers money from one place to another.
6. Conserves money.
7. Pays low rate of interest on deposits.
8. Charges higher rate of interest on the loan given.
9. The facility of cheque, demand draft etc. is provided.
10. Banks facilitate foreign exchange transactions for international trade and travel.
11. They offer trade finance services, including letters of credit and export financing, to support international trade.
12. They provide customer service through various channels, including phone, email, chat, and social media, to address queries and resolve issues.
13. They facilitate digital payment solutions, including mobile wallets, UPI, and contactless payments.
14. They provide financial advisory and wealth management services to help customers achieve their financial goals.

Key Functions of a Bank:

1. Accepting Deposits:
   • Banks accept money from individuals and businesses in the form of savings accounts, checking accounts, and fixed deposits. These deposits are kept safe and can earn interest over time.
2. Providing Loans:
   • Banks lend money to individuals, businesses, and governments for various purposes, such as purchasing homes, funding businesses, and financing projects. These loans generate interest income for the bank.
3. Facilitating Payments:
   • Banks provide payment services that include issuing checks, processing electronic funds transfers (EFT), and managing credit and debit card transactions. They also offer online and mobile banking services.
4. Investment Services:
   • Many banks offer investment products such as mutual funds, stocks, and bonds. They provide financial advice and portfolio management services to help customers grow their wealth.
5. Safekeeping and Custodial Services:
   • Banks offer safekeeping services for valuable items, documents, and securities. They provide secure storage facilities such as safe deposit boxes.
6. Foreign Exchange:
   • Banks facilitate currency exchange for international trade and travel. They provide foreign exchange services and help manage currency risk.
7. Wealth Management:
   • Banks offer wealth management and financial planning services to high-net-worth individuals, helping them manage their assets, plan for retirement, and achieve their financial goals.

Importance of Banks:

• Economic Stability:
  • Banks play a crucial role in maintaining economic stability by providing liquidity to the economy, facilitating payments, and supporting businesses through lending.
• Financial Inclusion:
  • Banks help promote financial inclusion by providing access to banking services for individuals and businesses, especially in underserved areas.
• Resource Allocation:
  • By intermediating between savers and borrowers, banks help allocate resources efficiently, supporting economic growth and development.

Banks are essential institutions in the financial system, providing a wide range of services that facilitate economic activity, promote financial stability, and support the overall growth and development of the economy.

Latest Banking Trends in 2024

As of 2024, the banking sector in India is experiencing several significant trends driven by technological advancements, regulatory changes, and evolving consumer preferences.

RTGS

Real-Time Gross Settlement can be defined as a system where the funds are transferred on a ‘real time’ basis which means funds are transferred individually on a transaction-by-transaction basis (without netting). ‘Real Time’ means the processing of instructions at the time they are received; ‘Gross Settlement’ means that the settlement of funds transfer instructions occurs individually.

• RTGS is available only at the bank branches with CBS enabled.
• RTGS transactions are processed individually.
• RTGS is available 24x7x365. with effect from December 14, 2020.
• The RTGS system is primarily meant for large-value transactions. The minimum amount to be remitted through RTGS is ₹ 2,00,000/- with no upper or maximum ceiling.
• To transfer funds through the RTGS system following charges are imposed:

a) Inward transactions – Free, no charge to be imposed.
b) Outward transactions:
(i) ₹ 2,00,000/- to 5,00,000/- : not exceeding ₹ 25/-; (exclusive of tax, if any).
(ii) Above ₹ 5,00,000/- : not exceeding ₹ 50/-. (exclusive of tax, if any).

• RTGS transfer cannot be revoked. (cancel)

Advantages of RTGS

RTGS offers many advantages over the other modes of funds transfer:

• It is a safe and secure system for funds transfer.
• RTGS transactions/transfers have no amount cap.
• The system is available on all days when most bank branches are functioning, including Saturdays.
• There is real-time transfer of funds to the beneficiary account.
• The remitter need not use a physical cheque or a demand draft.
• The beneficiary need not visit a bank branch for depositing the paper instruments.
• The beneficiary need not be apprehensive about the loss/theft of physical instruments or the likelihood of fraudulent encashment thereof.
• Remitter can initiate the remittances from his / her home/place of work using internet banking if his / her bank offers such service.
• The transaction charges have been capped by RBI.
• The transaction has legal backing.

Latest Banking Trends in 2024

NEFT

National Electronic Funds Transfer (NEFT) is a nationwide centralized payment system owned and operated by the Reserve Bank of India (RBI). It is an electronic payment system that is used for transferring money from one person to another in batches.

IFSC or Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank branch participating in the NEFT system. It’s a 11-digit code with the first 4 alpha characters representing the bank, and the last 6 characters representing the branch.

The 5th character is 0 (zero). IFSC is used by the NEFT system to identify the originating/destination banks/branches and also to route the messages appropriately to the concerned banks/branches.

• The NEFT system is available round the clock throughout the year on all days, i.e., on 24x7x365 basis.
• NEFT presently operates in batches on half-hourly intervals throughout the day.
• No charges to be levied for Inward transactions at destination bank branches for giving credit to beneficiary accounts.
• NEFT transactions are processed in batches.
• A person with no bank account can transfer the maximum amount of ₹50,000. (a person who does not have a bank account can remit funds through NEFT to a beneficiary having a bank account, with another NEFT member bank. It can be done by depositing cash at the nearest NEFT-enabled branch of any bank, by furnishing additional details such as complete address, telephone number, etc. Such cash remittances will, however, be restricted to a maximum of ₹50,000 per transaction.)
• In order to transfer the funds by the mean of NEFT, a sender has to pay the following charges:
  • For transactions up to ₹ 10,000: not exceeding ₹ 2.50 (+ Applicable GST).
  • For transactions above ₹ 10,000 up to ₹ 1 lakh: not exceeding ₹ 5 (+ Applicable GST).
  • For transactions above ₹ 1 lakh and up to ₹ 2 lakhs: not exceeding ₹ 15 (+ Applicable GST).
  • For transactions above ₹ 2 lakhs: not exceeding ₹ 25 (+ Applicable GST)
• If the NEFT transaction is not credited or returned within two hours after batch settlement, then the bank is liable to pay penal interest to the affected customer at the current RBI LAF Repo Rate plus two percent for the period of delay / till the date of credit or refund, as the case may be, is afforded to the customers’ account without waiting for a specific claim to be lodged by the customer in this regard.

Latest Banking Trends in 2024

EFTS

An electronic funds transfer system (EFTS) is a transfer system in which money can be transferred to business or individual accounts without requiring paper money to change hands. Electronic funds transfer systems are used for payroll payments, debit or credit transfers, mortgage payments, or other payments.

EFTS functions similarly to a debit card system: It operates as though the loaning library is the retailer, the borrowing library is the consumer, and EFTS is the clearinghouse service that enables the financial aspects of the transaction.

CBS

Core Banking Solution (CBS) is the networking of bank branches, which allows customers to manage their accounts, and use various banking facilities from any part of the world.

Net Banking Or E-Banking

Internet banking, also known as online banking or e-banking or Net Banking is a facility offered by banks and financial institutions that allow customers to use banking services over the internet. Customers need not visit their bank’s branch office to avail each and every small service.

Features of E-Banking:

1. E-banking services are available round the clock.

2. E-banking services can be used by those bank customers who have been authorized for this.

3. Banking transactions are conducted through electronically connected devices.

4. A bank customer may use either his own computer resource for conducting specified banking transactions or may use computer resources available at the cyber café.

5. There is no face-to-face contact.

6. The bank staff and the client must understand e-banking technology.

Latest Banking Trends in 2024

Mobile Banking

Mobile banking is the act of making financial transactions on a mobile device (cell phone, tablet, etc.). In other words, Mobile banking can be referred to the use of a mobile device to carry out financial transactions.

The service is provided by some financial institutions, especially banks. Mobile banking enables clients and users to carry out various transactions, which may vary depending on the institution.

Latest Banking Trends in 2024

Tele Banking

Telephone banking is a service provided by a bank or other financial institution, that enables customers to perform financial transactions over the telephone, without the need to visit a bank branch or automated teller machine.

Latest Banking Trends in 2024

Automatic Teller Machine (ATMs)

ATM Stands for Automatic Teller Machine. It is a machine through which a customer can withdraw and deposit money. In order to use the machine, a consumer needs to insert or swipe his/her debit card and input the Personal Identity Number (PIN).

These machines allow you to undergo self-serviced transactions without the help of an actual teller and without having to visit the bank branch. The ATMs perform 24×7×365.

Latest Banking Trends in 2024

Debit and Credit Card

Debit Card: A debit card is a physical card that allows a user to withdraw the amount of money that he/she has deposited into the bank. It deducts money directly from the consumer’s bank account linked to the card.

Every debit card contains a 16-digit card number and a confidential card verification value (CVV). A debit card can be used to withdraw money from ATMs and it can be used to make online payments through credit card-powered platforms.

Credit Card: A Credit card is a payment card that allows a user to borrow money from the card issuer up to a certain limit which is based on the reputation of the borrower.

It contains the information of the cardholder such as the Cardholder’s name, expiry date, a unique 16-digit card number, a card verification value (CVV), and signature. There is no need for a user to deposit money in his/her bank account.

Generally, there are 4 major types of credit card providers named Master Card, Visa, Discover, and American Express.

Latest Banking Trends in 2024

POS (Point of Sale)

POS stands for Point of Sales. POS transactions usually occur whenever a buyer pays a certain amount offline or online to purchase goods from a seller. The purpose of POS is to monitor and record all transactions between a buyer and a seller.

A POS system refers to the combination of hardware and software required to accept and process different forms of digital payments. The hardware includes a card acceptance machine and the software handles the remaining payment methods, processing, and other peripheral value-added services.

Latest Banking Trends in 2024

Unified Payment Interface (UPI)

Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood.
It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and convenience.

E-Cheque

An electronic check, or e-check, is a form of payment made via the Internet, or another data network, designed to perform the same function as a conventional paper check.  It contains the information that a paper cheque would.

Virtual Debit Card/Digital Debit Card

A virtual credit card is an electronic card that can be created using the bank’s net banking facility, by providing one’s credit or debit card details.
A “virtual card” is stored on your phone and can be used to pay contactless in stores or online, but has its own unique card number, expiry date, and CVV. (Card verification value)

Latest Banking Trends in 2024

Bank Draft

“Bank Draft” is an order to pay money drawn by one of a bank upon another office of the Same Bank for a sum of money payable to order on demand.

It’s a paper document that looks a lot like a regular cheque. The main difference is that someone who receives a bank draft has a guarantee that the funds are available, as opposed to a regular cheque, which could bounce. Bank drafts are made out to the person receiving the money.

Characteristics of a bank draft
1) It is also an unconditional Instrument like other Negotiable Instruments which contain an order to pay.
2) A bank draft is drawn by one office of a bank upon another office of the same bank. Sometimes, it is drawn by a bank upon another bank also.
3) A sum of money Payable by bank Draft must be certain.
4) The payee of the draft must be certain. It must be payable to order on demand. The payee has a right of endorsement. According to Section 85(A) of the Negotiable Instrument Act 1881, It is not payable to bearer.
5) Any Person can receive the bank draft by depositing the sum of money in the bank. On deposit of the Sum of money, the Bank issues the draft to the person concerned. The bank charges also the Commission on the issue of the Draft.

Latest Banking Trends in 2024

 

Components of Business Environment CBSE/ISC Class 12

E-Business: Meaning, Features and Types

Immediate Payment Service(IMPS):

IMPS is an innovative real-time payment service that is available round the clock. This service is offered by the National Payments Corporation of India (NPCI) that empowers customers to transfer money instantly through banks and RBI-authorized Prepaid Payment Instrument Issuers (PPI) across India.

IMPS provides robust & real-time fund transfer which offers an instant, 24X7, interbank electronic fund transfer service that can be accessed on multiple channels like Mobile, Internet, Branch, ATM, and SMS. IMPS is an emphatic service which allow transferring of funds instantly within banks across India which is not only safe but also economical. Currently on IMPS, 871 members are live which includes banks & PPIs.

Latest Banking Trends in 2024

Objectives of IMPS