JAIIB PPB Unit 17 - Ancillary Sercices

Each bank has two main activities as the sourcing or borrowing of funds ( as deposits and capital from the market) and the deploying or lending  the funds as Loans and Investments): these form the traditional and core activities of all the banks.

Apart from these basic activities, the banks provide a variety of other services or products.The most popular ones are listed below.

1) Funds transfer service: Useful for sending and receiving money from all over the world.The products that cover these services are Demand Drafts, Bankers Checks/Pay orders, EFT(Electronic Funds Transfer ),etc.

2) Forex service: You can buy the foreign exchange for any purpose of expenditures like travel, buying merchandise,etc..and sell the same to the bank when you earn or receive from abroad . Of course, these forex transactions are subject to the rules and regulations prevailing in a country and they are  provided by only those bank branches which are approved by the Banking Authority or Regulator for this purpose.

3) Custodial Service: You can keep your valuables like jewels, documents, etc.. under this service which is commonly known as Locker facility(Safe Deposit Vaults in banking parlance. The bank will collect a nominal fee for the service.

4) Gold sale: You can buy pure gold for self consumption or for trading by the jewelry businesses. Here also, only a few selected branches of banks or banks are allowed to provide this. The products usually range from a coin to a 100 gm biscuit or bar.

5) Investment service: Invest your money in the mutual funds run by the banks. The service comes as Portfolio service( the decision to maximize the returns on your money is left with the banker or portfolio manager) and as Stand-alone product where the decision to get maximum returns is borne by you. Both have the plus and minus but these products are offered to suit the convenience of the investors. Portfolio means a basket of investments and securities in a combined form. Debt securities will yield interest income and equity investment will yield dividend income. Portfolio management means management of a combination of securities to get the most efficient portfolio.

6) Insurance sale: A range of insurance products covering the risk of life, health, assets like vehicle, credit and debit cards, travel etc. are offered by almost all the banks by themselves or in collaboration with the leading insurer companies ,which again may be  local or multinational  entities.

7) Card services: Primarily intended for safety and convenience purpose but now, has become a payment mode and a symbol of economic status. The card products usually are called as Debit card, Credit card .

8)  eBanking: also known as Netbanking or Internet banking is  the latest and most convenient facility of the banks .You can get id and password to operate your account online : for transfer of funds to another account in the same bank or another bank. You can keep the surplus funds in fixed deposit by using this facility. The best use of this facility is for shopping online.