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Chapter 10

Chapter 10. Finance and Banking. Introduction. In the commercial world, we seldom use cash in transactions. Different payment methods have been developed since the banking activities become more and more important in the modern society.

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Chapter 10

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  1. Chapter 10 Finance and Banking

  2. Introduction In the commercial world, we seldom use cash in transactions. Different payment methods have been developed since the banking activities become more and more important in the modern society.

  3. Methods of Payment in Trade and Other Transactions • Cheque • Cashier order • Bank draft • Telegraphic transfer 1. Through Commercial Banks: • Autopay • Standing order • Direct debit • Letter of credit (L/C)

  4. Methods of Payment in Trade and Other Transactions • Postal remittance service • PayThruPost service 2. Through Post Offices:

  5. Methods of Payment in Trade and Other Transactions • Promissory note • Bill of exchange 3. Other Methods of Payment : • Cash • Credit card • Debit card • Smart card

  6. Components of a cheque Payee’s name Payt. Amt. Payt. Date Drawer’s signature/chop Cheng Siu Ming A/C # Bank code Chq. stub chq. # Branch code

  7. Advantages of Using Cheques • Safety • Flexibility • Convenience • A proof of payment Can you think of some disadvantages of using cheques?

  8. Types of Cheques • Bearer cheque • Order cheque • Uncrossed cheque / Open cheque • Crossed cheque: • General crossing • Account payee only • Not negotiable • Not negotiable, account payee only

  9. Endorsement • Transfer to a third party • Types: • Blank endorsement • Endorsement to order Dates of Cheque • Post-dated cheque • Stale cheque • Antedated cheque

  10. Reasons for Not Honouring a Cheque • Insufficient fund • Stale cheque • Post-dated cheque • No signature • Signature not matching the bank record • Not countersigned on alteration, etc. Any other reasons?

  11. Commercial Banks and Finance Companies in HK • Deposit-taking institutions: • Licensed banks • Restricted licence banks • Deposit-taking companies Please give an example for each type of institution.

  12. Comparison of the Financial Institutions Institution Comparison Licensed banks Restricted licence banks Deposit-taking companies 1. Name Bank Restricted licence bank Bank 2. Minimum paid-up capital HK$150M HK$100M HK$25M 3. S/A, C/A, T/D account services All Only T/D Only T/D 4. Minimum deposit amount No restriction HK$500,000 HK$100,000

  13. Comparison of the Financial Institutions Institution Comparison Licensed banks Restricted licence banks Deposit-taking companies 5. Min. deposit maturity No restriction No restriction 3 months 6. Interest rates No restriction 7. Licensing authority Hong Kong Monetary Authority 8. Regulations Restricted by the Banking Ordinance 9. Supervised and audited by Hong Kong Monetary Authority

  14. <=> Borrowers Bridge Depositors Services of Commercial Banks 1.Accepting Deposits: • Savings account • Current account • Time deposit account • Foreign currency account

  15. Services of Commercial Banks 2. Granting Loans: • Overdraft • Personal loan • Business loan • Secured loan • Trade financing • Syndicated loan I need money!

  16. Services of Commercial Banks • 3. Remittance Services: • Bank draft / Demand draft • Telegraphic transfer • 4. Other Services: • Automatic teller machine (ATM) • Money exchange • Trustee service • Safe deposit box • Gift cheque • Traveller’s cheque

  17. Latest Development of Banking Services Phonebanking Investment consultancy service Internet banking services All-in-one monthly statements

  18. The Position of HK in the International Financial Market • Major centre of foreign exchange • A strong presence of internationalfinancial institutions • The second largest stock market in Asia • Good regulatory framework • As a window for Mainland China • The host of international meetings

  19. Factors Contributing to HK’s Role as a Famous Financial Centre • Favourable geographical position • Regulatory framework • Good communication facilities • Qualified workers for the financial sector • Economic factors

  20. END OF THIS CHAPTER CHEERS

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