Page 19 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes In simple terms, a bank is an institution that accepts various types of deposits and then
advances money in form of loans to people requiring it.

RBI has also directed its own training centres and NABARD training centres to conduct
training programmes for RRBs staff in keeping with the requirements of the day.

National Housing Bank raises resources for the housing sector towards increasing new
housing stock and provides refinance to a large set of retail lending institutions. These
include scheduled commercial banks, scheduled state cooperative banks, special housing
finance institutions, apex cooperative housing finance societies and agriculture and rural
development banks.

SIDBI’s assistance flows to the transport, health care, hotel and tourism sectors,
infrastructure, etc, and also to professional and self-employed persons setting up small-
sized professional ventures.
Exim Bank encourages Indian consultants to gain and enhance their international exposure
by assisting them in securing assignments overseas.
UTI Mutual Fund has come into existence with effect from 1st February, 2003. UTI Asset
Management Company presently manages a corpus of over Rs. 34,500 crore.

The concept of insuring deposits kept with banks received attention for the first time in
the year 1948 after the banking crises in Bengal.

1.7 Keywords

Bank: A commercial institution licensed to receive deposits. Banks are mainly concerned with
making and receiving payments as well as supplying short-term loans to public and institutions.
In most countries, banks are supervised by the national government or the central bank like the
RBI.

Bancassurance: A French term referring to the selling of insurance through a bank's established
distribution channels. As a result, a bank can offer all banking, insurance, lending, and investment
products to a customer.
Bank statement: A periodic record of a customer's account that is issued at regular intervals,
showing all transactions recorded for the period in question.
Customer: A customer refers to individuals or households that purchase goods and services
generated within the economy.

Demand deposits: An account from which deposited funds can be withdrawn at any time without
any notice to the depository institution. This account allows the customer to "demand" money at
any time. Most savings accounts are demand deposits, accessible by the account holder at any
time.

Fixed deposits: A fixed deposit is meant for those investors who want to deposit a lump sum of
money for a fixed period; say for a minimum period of 15 days to five years and above, thereby
earning a higher rate of interest in return. Investor gets a lump sum (principal + interest) at the
maturity of the deposit.

Gross profit ratio: Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed
as a percentage. It expresses the relationship between gross profit and sales. Gross profit = Net
sales (Total sales-Returns) - Cost of goods sold (Opening stock + Purchases + Direct Expenses -
Closing stock).

14 LOVELY PROFESSIONAL UNIVERSITY