ATM-Mobile Banking-Garnishee Order-Bank Rate-Lien
Bankers Of the Article
ATM-Mobile Banking-Garnishee Order-Bank Rate-Lien
ATM
ATMs are electronic machines, which are operated by a customer himself to deposit or to withdraw cash from bank. For using an ATM, a customer has to obtain an ATM card from his bank. The ATM card is a plastic card, which is magnetically coded. It can be easily read by the machine. To operate an ATM card, the customer has to inset the card in the machine. He has to enter the pass word (number). If the authentication or pass word (number) is correct, the ATM permits a customer to make entries for withdrawal or for deposit. On completion of the transaction, the customer’s card is ejected from the ATM.
Advantages of Automated Teller Machines (ATMs)
- ATM provides 24 hours service: ATMs provide service round the clock. The customer can withdraw cash upto a certain a limit during any time of the day or night.
- ATM gives convenience to bank’s customers: ATMs provide convenience to the customers. Now-a-days, ATMs are located at convenient places, such as at the air ports, railway stations, etc. and not necessarily at the Bank’s premises. It is to be noted that ATMs are installed off-site. (away from bank premises) as well as on site (installed within bank’s premises). ATMs provide mobility in banking services for withdrawal.
- ATM reduces the workload of bank’s staff: ATMs reduce the work pressure on bank’s staff and avoids queues in bank premises.
- ATM provide service without any error: ATMs provide service without error. The customer can obtain exact amount. There is no human error as far as ATMs are concerned.
- ATM is very beneficial for travellers: ATMs are of great help to travellers. They need not carry large amount of cash with them. They can withdraw cash from any city or state, across the country and even from outside the country with the help of ATM.
- ATM may give customers new currency notes: The customer also gets brand new currency notes from ATMs. In other words, customers do not get soiled notes from ATMs.
- ATM provides privacy in banking transactions: Most of all, ATMs provide privacy in banking transactions of the customer.
Mobile Banking
Mobile banking (also known as M-Banking, mbanking) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). Mobile banking and Mobile payments are often, incorrectly, used interchangeably. The two terms are differentiated by their service provider-to-consumer relationship; financial institution-to-consumer versus commercial institution-to-consumer for mobile banking and payments, respectively. Mobile Banking involves using mobile devices gain to access financial services. Mobile payments on the other hand may be defined as the use of mobile devices to pay for goods or services either at the point of purchase or remotely.Bill payment is not considered a form of mobile payment because it does not occur in real time.
Bank Rate
Bank rate is the official minimum are at which the central bank discounts approved bills of exchange or advance loans against approved securities to the commercial bansk and the discount houses. Broadly speaking the bank rate is the lending rate of the central bank. When the bank rate is raised, the market rate of interest tends to rise. This discourages new loans and puts pressure on debtors to repay their existing loans. Thus a rise in the bank rate leads to contraction of credit.
What are the instruments that fall under the purview of Negotiable instrument Act, 1881?
According to the Negotiable Instruments Act, 1881 there are three types of negotiable instruments i.e., (a) Promissory note, (b) Bill of exchange and (c) Cheque. (a) Promissory Note: A ‘Promissory Note’ is an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or the order of certain person, or to the bearer of the instrument (Section 4 of NI Act). (b) Bill of exchange: According to Section 5 of NI Act, a bill of Exchange is “an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to order of, a certain person or to the bearer of the instrument”. (c) Cheque: A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand (Section 6 of NI Act).
A cheque is a bill of exchange which is always (i) Drawn on a banker specified therein and (ii) Payable on demand. Define Negotiable instrument according to the Negotiable instrument Act, 1881. According to section 13 of the Negotiable Instruments Act, 1881, “a Negotiable Instruments means a promissory note, bill of exchange, or cheque, payable either to order or to bearer whether the words ‘order’ or ‘bearer’ appear on the instrument or not.” According to section 14 of the Negotiable Instruments Act, 1881, “when a promissory note, bill of exchange, or cheque is transferred to any person so as to constitute that person the holder thereof, the instrument is said to be negotiated”.
Define Negotiable instrument according to the Negotiable instrument Act, 1881.
According to section 13 of the Negotiable Instruments Act, 1881, “a Negotiable Instruments means a promissory note, bill of exchange, or cheque, payable either to order or to bearer whether the words ‘order’ or ‘bearer’ appear on the instrument or not.” According to section 14 of the Negotiable Instruments Act, 1881, “when a promissory note, bill of exchange, or cheque is transferred to any person so as to constitute that person the holder thereof, the instrument is said to be negotiated”.
Bridge financing
Bridge financing is a method of financing, used to maintain liquidity while waiting for an anticipated and reasonably expected inflow of cash. Bridge financing is commonly used when the cash flow from a sale of an asset is expected after the cash outlay for the purchase of an asset. For example, when selling a house, the owner may not receive the cash for 90 days, but has already purchased a new home and must pay for it in 30 days. Bridge financing covers the 60 day gap in cash flows. Another type of bridge financing is used by companies before their initial public offering, to obtain necessary cash for the maintenance of operations. These funds are usually supplied by the investment bank underwriting the new issue. As payment, the company acquiring the bridge financing will give a number of stock at a discount of the issue price to the underwriters that equally offsets the loan. This financing is, in essence, a forwarded payment for the future sales of the new issue.
Bridge financing may also be provided by banks underwriting an offering of bonds. If the banks are unsuccessful in selling a company’s bonds to qualified institutional buyers, they are typically required to buy the bonds from the issuing company themselves, on terms much less favorable than if they had been successful in finding institutional buyers and acting as pure intermediaries. There are 2 types of bridging finance. (a) Closed bridging and (b) Open Bridging. (a) Closed bridging finance is where you have a date for the exit of the bridging finance and are sure that the bridging finance can be repaid on that date. This is less risky for the lender and thus the interest rates charged are lower. (b) Open bridging is higher risk for the lender. This is where the borrower does not have an exact date for the bridging finance exit and may be looking for a buyer of the property or land.
Stale Cheque
A cheque, after 6 months from its date of issue is regarded as ‘Stale’ and such a cheque is not paid by a bank. Stale cheques are also called ‘out of date’ cheque. A cheque should be encashed as soon as possible.
Post-dated Cheque
A cheque bearing a future date is called post-dated cheque. A bank can not pay cheque before date of cheque. Post dated cheque is not paid by a bank.
Ante-dated Cheque
A cheque bears a date earlier to the date on which the cheque is drawn. For example, a cheque drawn on January 15 bearing date January 10 is an ante-dated cheque. Bank generally pay an ante-dated cheque.
Clearing House
Clearing house is an arrangement of the member banks which settle their inter-bank claims/ liabilities due to transfer of deposits by the customers from one bank to another. Banker’s clearing house is a common place usually located at the Central Bank or any other designated bank where officials of different banks settle their inter-bank claims daily through their accounts maintained by the Central Bank. This happens because each bank receives many cheques, drafts etc. drawn on other banks. Collection of those by sending officials to those bank is costly. So clearing/settling mutual claims and debts is done through clearing. In absence of Bangladesh Bank, Sonali Bank acts as the clearing house in our country.
GARNISHEE ORDER
A garnishee order is an order of a court asking the banker to stop either absolutely or partially the usual operation in the account of a particular customer, thereby attaching the funds of the account in the hands of third party or as the court may determine and direct for the disposal of such funds.
Clayton’s Rule
Clayton’s Rule is a presumption in relation to the distribution of monies from a bank account. The rule is based upon the deceptively simple notion of first-in, first-out to determine the effect of payments from an account, and will normally apply in the absence of evidence of any other intention. Payments are presumed to be appropriated to debts in the order in which the debts are incurred.
KYC (Know Your Customer)
Know your customer (KYC) norms are applicable to all customer accounts. It deals with not only to identify the customer but also to understand the activities of the customer, to ensure that the operations in the customer accounts are for genuine purpose.
Cash Credit
In this type of credit scheme, banks advance loans to its customers on the basis of bonds, inventories and other approved securities. Under this scheme, banks enter into an agreement with its customers to which money can be withdrawn many times during a year. Under this set up banks open accounts of their customers and deposit the loan money. With this type of loan, credit is created.
Demand loans
These are such loans that can be recalled on demand by the banks. The entire loan amount is paid in lump sum by crediting it to the loan account of the borrower, and thus entire loan becomes chargeable to interest with immediate effect.
Short-term loan
These loans may be given as personal loans, loans to finance working capital or as priority sector advances. These are made against some security and entire loan amount is transferred to the loan account of the borrower.
Over-Draft
Banks advance loans to its customer’s upto a certain amount through over-drafts, if there are no deposits in the current account. For this banks demand a security from the customers and charge very high rate of interest.
Money Laundering
Money Laundering Prevention Act, 2002 defines money laundering as properties acquired or earned directly or indirectly through illegal means; illegal transfer, conversion and concealment of location of the properties earned through legal or illegal means or assistance in the said acts. There are three main stages of money laundering. These are:
- Placement: The physical disposal of the initial proceeds derived from illegal activity e.g. depositing the money earned by theft, robbery, bribery or hijacking to a bank account.
- Layering: Separating illicit proceeds from their sources by creating complicated layers of financial transactions designed to disguise the audit trail and provide anonymity e.g. electronic transfer of the fund to a fake firm, issuing overseas bank draft, purchasing travelers cheques, transfer of fund from one bank account to various names of different bank branches.
- Integration: It means the provision of apparent legitimacy to property gained in an unlawful way. If the layering process is complete, integration process place the laundered proceeds back into the economy in such a way that they re-enter the financial system appearing as normal business fund e.g. sale of flat/house/land purchased by illegal income.
Reasons:
- a) Criminals conduct their operations for financial gains. They have to bear expenditures like operating expenses, purchasing services of the corrupt officials etc,
- b) Criminals hide the sources of their wealth and they always try to disguise the ownership or control of the wealth, and
- c) Criminals conceal the proceeds from investigation or seizure.
SET-OFF
Set-off means the total or partial merging of a claim of one person against another in a counter claim by the latter against the former. It is in effect the combining of accounts between a debtor and a creditor so as to arrive at the net balance payable to one or the other. It is a right which accrues to the banker as a result of the banker customer relationship. Set-off arises when a debtor or his creditor wishes to arrive at the net figure owing between them when separate accounts or debt are involved.
Essential Requirements of Set-off:
- a) Mutual debts for sums certain.
- b) Debts must be due immediately.
- c) Debts must be in the same right.
- d) No agreement to the contrary.
Notice of Set-off
As already stated the right of set-off accrues to the banker as a result of banker customer relationship. When a customer opens two or more accounts it may be his intention to keep them separate. So his different accounts can not be arbitrarily combined without proper notice to the customer. Under such situation, it is advisable to take prior letter of set-off so that a banker can combine them at its discretion without giving the customer any notice. It also serves as a proof that the bankers right of set-off exists and the customer has not waived it. However, in actual practice the bank sends a notice to the customer as soon as the right of set-off is exercised.
Automatic Right of Set-off
The following are the situations where the banker’s right of set-off automatically accrues and no notice of set-off is necessary: (1) On the death, insanity or insolvency of the customer. (2) On the insolvency of a partner of a firm. (3) On receipt of a garnishee order. (4) On the winding up of a company. (5) On receipt of notice of assignment of the credit balance of the customer.
Banker’s Right of Set-off
The decision and judgment in different cases reveal that the following cases where the branches can exercise the right of set off.
(a) To combine two or more accounts of the same customer in the same branch of a bank.
(b) To combine two or more accounts of a customer maintained in different branches of the same banks.
(c) To adjust the surplus amount of the sale proceeds or realization of the securities held as cover for one particular debt for liquidation of any other debt after realization of that particular debt.
CRR vs. SLR
Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with the central Bank. If the central bank decides to increase the CRR, the available amount with the banks comes down. Central bank uses the CRR to drain out excessive money from the system. Currently, commercial banks are required to maintain with the Bangladesh Bank an average cash balance, the amount of which shall not be less than 6% of the total of the Net Demand and Time Liabilities (NDTL) of them. On the other hand, Statutory Liquidity Requirement (SLR) is the amount of liquid assets, such as cash, precious metals or other approved short-term securities, that a commercial bank must maintain in its reserves. Currently, commercial banks are required to maintain 19% of the total of the Net Demand and Time Liabilities (NDTL) in the form of cash, precious metals or other approved securities.
Holder for Value vs. Holder in due course
Holder for value: Person in possession of a negotiable instrument for which value has been given Holder in due course: Person in possession of bill – that is complete and regular – taken in good faith and for value – no notice of any defect of transferor – no notice of previous dishonor.
Retail banking vs. Wholesale banking
Retail Banking is typical mass-market banking where individual customers use local branches of larger commercial banks. Services offered include: savings and checking accounts, mortgages, personal loans, debit cards, credit cards, and so forth. Wholesale Banking is banking services between merchant banks and other financial institutions.
LIEN
Lien is the right of a creditor in possession of goods or securities belonging to a debtor to retain them until a debt due from the latter is paid. Lien differs from other forms of charges in respect that it does not arise out of an implied or express agreement. The right of lien arises in law out of business dealings between the parties. Lien gives to a person only a right to retain the possession of goods and not the power to sale unless such a right is expressly conferred by statute (e.g. to unpaid seller or pawnee) or by custom or usage. The conditions for right of exercise of lien are (a) creditor’s possession of goods/securities in the ordinary course of business (b) the debtor has a lawful debt due to discharge to the creditor (c) there must not be any contract to the contrary.
Kinds of Lien : There are two kinds of lien.
(a) Particular lien and
(b) General lien.
Particular lien
A Particular lien arises, Where goods can be retained by the creditor in respect of a Particular debt only. For example, a tailor has a particular lien for his charges on the shirt made for his customer.
General lien
Under Section 171 of the contract Act, 1872, bankers, factors (mercantile agents), wharfingers, attorneys of High court and policy brokers can, in the absence of a contract to the contrary, exercise lien and retain security for a general balance of account any goods bailed to them. So general lien confers a right to retain goods and securities not only in respect of a particular debt but in respect of the general balance due by owner of the goods and securities.
Banker’s lien
As a general rule, the right of lien does not give the creditor any power to sale the relative goods/securities retained. The position, however, seems to be different in the case of bankers. Convention and legal decisions have further extended the implications and scope of this right. In Brenda VS, Barrette (1846) 12C1.and Fin 787 stated that bankers have a general lien on all securities deposited with them as bankers by a customer, unless there be an express contract, or circumstances that show an implied contract, inconsistent with lien. A bankers lien is more than a general lien; it is an implied pledge. Thus, the banker can exercise all the rights of a pledgee in case of a banker’s lien. In the event of default by a customer, he may proceed to sale the goods/securities retained but after giving a reasonable notice.
Negative lien
The banker sometimes asks a borrower to execute a letter declaring that his assets are free from encumbrance at the time the advance is made. The borrower also undertake that the assets stated in the said letter shall not be encumbered or disposed of without the bank’s permission in writing so long as the advance continues. This undertaking is known as a negative lien. The banker cannot directly realize his debts from such assets. But due to the above impositions, bankers interest are to certain extent protected.
Accommodation Bill
A bill of exchange without any consideration or quid pro quo is known as accommodation bill. In this case, a person signs a bill and makes himself liable, without receiving any value in return, such as, an advantage or a benefit. The purpose of accepting such a bill is to accommodate the drawer who is temporarily in need of funds. The acceptance enhances the liquidity of the instrument, which can be discounted by the drawer with a bank.
Pledge
When a customer takes loan against jewels he pledges the jewel to the bank. Similarly a customer availing loan on key cash credit basis pledges the goods to the banker by keeping them in a godown under lock and key control of the bank. Pledged goods are to be insured and the pledgee (banker) has to take reasonable care to protect the property pledged.
Lien
The right of one person to retain possession of goods owned by another until the possessor’s claims against the owner has been satisfied. The lien may be general, when the goods are held as security for all outstanding debts of the owner, or particular, when only the claims of the possessor in respect of the goods held must be satisfied.
Cash Credit vs. Overdraft
Both CC and OD forms part of working capital finance. But Cash Credit is granted against moveable goods (inventory/semi-finished goods/goods etc.) whereas Overdraft is granted against paper security (Fixed deposit receipts/shares/book debts).
Loans vs. Advances
A loan is granted for a specific time period. Generally, commercial banks grant short-term loans. But term loans, that is, loan for more than a year, may also be granted. The borrower may withdraw the entire amount in lump sum or in installments. However, interest is charged on the full amount of loan. Loans are generally granted against the security of certain assets. A loan may be repaid either in lump sum or in installments. Advances differ from loan in the sense that loans may be granted for longer period, but advances are normally granted for a short period of time. Further the purpose of granting advances is to meet the day to day requirements of business. The rate of interest charged on advances varies from bank to bank. Interest is charged only on the amount withdrawn and not on the sanctioned amount.
1 thoughts on “ATM-Mobile Banking-Garnishee Order-Bank Rate-Lien”
You made your point! [url=https://theessayswriters.com/#]best dissertation[/url] how to write personal essay for college