Question

Discuss the two key issues bank management must deal with, in managing the public’s deposits, and what are these banks doing about it.

Answer 1

Public deposits means savings of the general public at large to a reliable entity , created in the form of bank and regulated by central banks ,for safekeeping and expects to earn some return and easy availability in times of need.

Two key issues bank management must deal with , in managing public's deposits :

1. The biggest challenge for banking industry is to serve the mass and huge market of a country.Thus, there should be easy availability of liquid funds available with the banking industry at all the times so that funds can be provided by the banking indutries to their customers either in the form of loan or for withdrawls of theri savings at any time.

In order to maintain the liquidity , banks must have proper C.R.R and other ratios maintained with themselves throughout the year.

For this purpose the Central Bank must keep a proper vigilance on all the banks to check that the ratios are properly maintained by all the private as well as public banks.

Also , banks can fix threshhold limits for advancinng loans to the public after proper verifying the background of the clients . In this manner they reduce their Non- Performing Assets.

2. Due to technoilogical advancements , intense competition and IT revolution , the banking services are all automated. Now we are not required anymore to stand in que for transfering money in other accounts, for payments of our electricity bills etc. Thus a varied range of servies like net banking , ATM services, mobile banking etc the daily work of the public at large has been solved.

But at the same time , it has given rise to security threats as the risk of 3rd party hacking has increased these days. Also, some banking online platform services are too slow taht it consumes a lot of time of their clients to transfer money or check account balances or avail any type of online services.

Therefore, there is still requirement for the banks to keep a proper mechanism for tightening the securiy norms and making the day to day activities of the client easy.