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Meaning of Banking Instrument

Banking instrument is an instrument in composing containing an unqualified request, tended to a financier, sign by the individual who has kept cash with the investor.

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Meaning of Banking Instrument

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  1. Introduction to Banking Instruments

  2. Banking instruments are defined as follows: • Banking instruments include cheques, drafts, bills of exchange, credit notes etc. • It is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, with the payer named on the document.

  3. – Cheques: • It is an instrument in composing containing an unqualified request, tended to a financier, sign by the individual who has kept cash with the investor, obliging him to pay on request a specific whole of cash just to or to the request of the certain individual or to the conveyor of the instrument. • Test of a check: There are different sorts of cheques:

  4. 1. Open Cheque: • When the words “or conveyor” showing up on the substance of the cheque are not crossed out, the check is known as a carrier check. • The cheque is payable to the individual indicated in that or to some other else who presents it to the bank for installment.

  5. 2. Crossed Cheque: • The crossing of cheque means drawing two parallel lines on the substance of the cheque with or without extra words like “and CO.” or “Record Payee” or “Not Negotiable”. • A crossed check can’t be encashed at the money counter of a bank yet it must be credited to the payee’s record.

  6. – Demand Drafts: • A request draft (DD) is a debatable instrument like a bill of trade. • A bank issues a request draft to a customer (drawer), coordinating another bank (drawee) or one of its own branches to pay a specific entirety to the predetermined party (payee).

  7. – Letters of Credit: • Revocable letters of credit give backer the change or cancellation right of the credit whenever without earlier notice to the recipient. C. • Unavoidable Letters of Credit. Permanent Letters of Credit can’t be corrected or scratched off without the understanding of the credit parties.

  8. – Voucher: • Vouchers are bonds with a specific financial esteem, qualifying the conveyor for reclaim them for particular products or administrations. • Vouchers are tokens which qualify the carrier for recover them for the products or administrations determined by the voucher.

  9. – Debit Card: • A card used to make an electronic withdrawal from assets on stored in a financial balance or in obtaining products through EDC (Electronic Data Capture) machine. • 1. The debit card number is as a rule of 16 digits. • 2. There are exchange charges past 5 quantities of exchanges in a month.

  10. – Credit Card: • A card issued by a money related organization giving the holder an alternative to acquiring stores, generally at the purpose of the offer. • Visas charge intrigue and are essentially utilized for transient financing. • There is the yearly expense, benefit charges, late installment charges and different charges connected to a Visa.

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