Besides performing the two essential functions of accepting deposits and lending and investing its funds-that constitute the business of banking, a modern banker renders a number of ancillary services also

These services fall under two broad categories-

Those which are rendered to a bank’s own customers, and

Those which are available to the public in general

Remittance of funds

With a network of their branches spread over the entire country banks are eminently suitable institutions for the remittance of funds from one place to another. Bank remittances are safe, swift, inexpensive and simple. The main instruments for transfer of funds are-

Mail transfers

Money can be sent through mail transfers to pay anybody who has an account in any other branch of the same bank.

Telegraphic transfers

To send money urgently banks may be requested for telegraphic transfers on payment of a nominal charge and telegram charges. Such facilities are available at selected branches only.

Bank drafts

For remitting money from one place to another, banks issue bank drafts or demand drafts on their branches at the place of destination.

Traveler cheques

A traveler cheque is another instrument issued by banks for the remittance of money from one place to another. It is issued for the convenience of the travelling public.

Safe custody of valuables

Banks render a valuable service by accepting the valuables of their customers for safe custody. Banks are well equipped with safes and strong rooms and hence are eminently suitable for rendering this service.

There are two ways to ensure safety of the customers’ valuables-

By accepting the valuables such as jewellery, documents, title deeds, etc for safe custody

By hiring out safe deposit vaults (lockers) to the customers.


Merchant banking

Merchant banking comprises in rendering services of no-banking nature to the industrial and business houses. The merchant banking division of a bank renders advisory services and assistance to entrepreneurs setting up new industrial ventures and also to existing units expanding or diversifying production.

The merchant banking division provides comprehensive services to its clients, which include the following-

Project counseling

Preparation of feasibility reports

Term finance obtaining government consent

As manger to new issues

Working capital

Modification and restructuring of capital base.

Joint ventures abroad

Credit cards

A credit card is an instrument which provides instantaneous credit facilities to its holder to avail a variety of goods and services at the merchant outlets. It is made of plastic and hence popularly called as ‘plastic money’.

There are thus three parties to a credit card-

The issuing bank

The card holder

The member establishments

Debit cards

A debit cards facilitates purchases/payments by the card holder in the same way as a credit cards does. The card holder presents the card to the merchant establishment after a purchase and signs on the payment slip.