Section I E Module Outline plan First Page Maharaja Surajmal Institute Affiliated to GGSIPU Delhi Course Bachelor of Business Administration Subject Module On Principles of Banking BBA B I Semester I Credit 4 July 2021 Module Contributor s Mr Paramveer Singh Ms Pooja Dabas 1 SYLLABUS B B A B I G G S INDRAPRASTHA UNIVERSITY B B A B I 105 Principles of Banking L 4 T P 0 Credits 4 Note Students are expected to have elementary knowledge of the topics specified in the syllabus Objective The course aims to acquaint the student with a basic and elementary knowledge of the business and corporate laws Course Contents Unit I No of Hrs 14 Money and Banking Nature Origin Functions of Money Evolution Of Banking Types of Banks Systems of Banking Mixed Branch Unit Group Chain Unit II No of Hrs 14 Reserve bank of India Establishment Organization functions and methods of credit control Clean note policy of RBI RBI policy on detection and impounding of counterfeit notes Unit III No of Hrs 14 Commercial Banking Meaning Functions Deposits Banker Customer Relationship KYC Guidelines Credit Principles of lending Different methods of Charging Unit IV No of Hrs 14 Emerging Trends in Banking Universal Banking Venture Capital Project Finance Merchant Banking Anti Money Laundering Electronic Money Transfer Systems ECS NEFT RTGS SIPS MICR Text Books 1 Sundaram Varshney Banking Theory Law and Practice Sultan chand sons 2004 2 Chaturvedi D D Anand Mittal Business Economics II Brijwasi Book Distributors 2005 3 Varshney Malhotra Principles of Banking Sultan Chand Sons 2005 Reference Books 1 Vaish M C Money Banking and International Trade New Age International Pvt Ltd 1997 2 Gordon E Natarajan K Banking Theory Law Practice Himalaya Publishing House 2003 2 3 Unit No I Meaning Banking Unit Name Page Number Chapter 1 Money Nature Origins Functions of money Chapter 2 Evolution of Banking Types of Banks Systems of Banking Mixed Branch Unit Group Chain II Reserve Bank of India Chapter 3 Establishment Organization functions and methods of credit control Clean note policy of RBI RBI policy on detection and impounding of counterfeit notes MCQS Descriptive Questions Glossary Key Words MCQS Descriptive Questions Glossary Key Words MCQS Descriptive Questions Glossary Key Words IV MCQS Descriptive Questions Glossary Key Words Commercial Banking IV Sorting Searching and Hashing Chapter 4 Meaning Functions Deposits Banker Customer Relationship KYC Guidelines Credit Principles of lending Different methods of Charging Lesson1 Lesson2 Glossary Key Words References and Further Readings Emerging Trends in Banking Chapter 5 Universal Banking Chapter 6 Venture Capital Project Finance Chapter 7 Merchant Banking Anti Money Laundering Chapter 8 Electronic Money Transfer Systems ECS NEFT RTGS SIPS MICR 5 20 21 35 36 39 40 41 43 62 63 66 67 68 69 78 79 82 83 84 86 88 89 92 93 97 98 106 107 109 111 112 4 Unit I 5 CHAPTER 1 Money Nature Definitions and Functions of Money 1 1 INTRODUCTION We are all familiar with money as we live in a monetary economy where money is used freely and widely in a settlement of various economic transactions We are so much accustomed to qoney now that it is difficult for us to imagine a modern society without money It will be interesting to know why and how this money came into being In this introductory unit you will study how money came into being its definition role importance actions and defects I 1 2 PROBLEMS OF BARTER SUSTBM Before the advent of money the activity of exchange was carried out through barter system In barter system people exchanged goods and services in their possession with goods and services available with others For example a farmer exchanged his surplus foodgrain over and above his own needs with the weaver for his surplus cloth This activity helped both the farmer and weaver to satisfy their wants The barter system of exchange worked well so long as human wants were simple and limited in number However in course of time human wants multiplied which led to specialisation of occupations This resulted in a lot of difficulties for exchange through the barter system Consequently need for a single and commonly acceptable medium of exchange was fell This ultimately led to invention and evolution of money In the barter system people Faced the following major problems I Lack of double coincidence or wants Barter requires double coincidence of wants For instance if A has a goat rind wants to exchange it for cloth Then he must find some person who has surplus cloth to offer while at the same time needs the goat which is offered by A Such coincidences were easy when human wants were simple and number of goods produced were limited But as number of goods multiplied such coincidences of wants became both difficult and time consuming With the advent of money this difficult by disappeared as one can now sell product for money and then with the help of that money he she can buy a goods and services of his her choice 2 Problem of a common measurement of value In the absence of money value of every commodity was to be ascertained in terms of all other goods For example how much wheat or milk or salt or rice needs to be offered in exchange for one meter of cloth If there were say 10 goods in a society people were required to determine and remember 45 values while if there were 100 goods there would be 4950 such values The number of exchange values required for transactions may be found by the expression n n 1 2 where n is number of goods However with money in circulation value of each commodity has to be expressed onIy in terms of money Hence in case of 100 goods in a monetary economy people will have to know only 100 values 3 Loss due to sub division of goods Many goods if sub divided will lose their value partially or sometimes wholly For example a table or a refrigerator or a TV set cannot be 6 sub divided into parts as in doing so they will lose their value In this situation a person who wants to exchange his TV for five or six commodities will find it difficult to get all these five or six desired goods from one person Hence he would need to sub divide the TV into five or six parts but by doing so TV will lose its value On the other hand if money is used as a medium of exchange there would not be any such problem as money is perfectly divisible 4 Difficulty in storage sf wealth It is very difficult to save and create wealth in the absence of money as many of the goods lack durability and all kinds of
View Full Document
Unlocking...