Question

Describe some of the basic services that banks can provide to businesses. How do banks identify business services? How do banks tend to sell these service offerings to any given business?

Answer 1

Some of the basic services that banks provide to businesses. they are-

1. Advancing of Loans - The main and basic services of banks that provides loans to business for running their bussiness are in effective manner.Banks are profit oriented business organizations. So they have to advance loan to the public and generate interest from them as profit.After keeping certain cash reserves, banks provide short-term, medium-term and long-term loans to needy borrowers.

2.Cheque Payment - Banks provide cheque pads to the account holders. Account holders can draw cheque upon the bank to pay money. Banks pay for cheques of customers after formal verification and official procedures.

3. Bank Gaurantee - Customers are provided the facility of bank guarantee by modern commercial banks. When customers have to deposit certain fund in governmental offices or courts for a specific purpose, a bank can present itself as the guarantee for the customer, instead of depositing fund by customers.

4.Credit card - A credit card is cards that allow their holders to make purchases of goods and services in exchange for the credit card’s provider immediately paying for the goods or service, and the card holder promising to pay back the amount of the purchase to the card provider over a period of time, and with interest.

5.Online Banking - Online banking is a service offered by banks that allows account holders to access their account data via the internet. Online banking is also known as “Internet banking” or “Web banking.”Online banking through traditional banks enable customers to perform all routine transactions, such as account transfers, balance inquiries, bill payments, and stop-payment requests, and some even offer online loan and credit card applications. Account information can be accessed anytime, day or night, and can be done from anywhere.

6.Discounting of Bills of exchange - This is another popular type of lending by the modern banks. Through this method, a holder of a bill of exchange can get it discounted by the bank, in bill of exchange, the debtor accepts the bill drawn upon him by the creditor (i.e., holder of the bill) and agrees to pay the amount mentioned on maturity.After making some marginal deductions, the bank pays the value of the bill to the holder. When the bill of exchange matures, the bank gets its payment from the party, which had accepted the bill.

Business banking is a company's financial dealings with an institution that provides business loans, credit, savings and checking accounts specifically for companies and not for individuals. Business banking is also known as commercial banking and occurs when a bank, or division of a bank, only deals with businesses. A bank that deals mainly with individuals is generally called a retail bank, while a bank that deals with capital markets is known as an investment bank.

Banks tend to sell these service offerings to any given business that banks charge some commission on the basis of bank Gurantee and take charge of everything which are issued by the bank like charges of Debit card, cheque book, solvency certificate, processing charge at the time of advancing the loans and many other charges like a penalty on advancing a loan like as commitment charge etc. these are the source of incomes for the banks which the bank charge to sell these services offerings to any given business.