ATM: an automated teller machine also known as automated banking machine, cash machine, cash point. It is an electrical communication device that unable the customers of a financial institution to perform financial transactions like cash with drawer without a human cashier. On most modern ATM, and is

 the customer is identified by inserting a plastic ATM card with a magnetic stripe or a plastic smart card with a chip that contains a unique card number and some security information such as an expiration date or CVVC (CVV). Authentication is provided by the customer entering a personal identification number (PIN).

MONEY LAUNDERING ACT:

The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.
First anti-money laundering legislation of the country is Money Laundering Prevention Act, 2002, which was effective from 7th April,2002 to 14th April,2008. It was replaced by the Money Laundering Prevention Ordinance on 15th April,2008; subsequently, the ordinance was passed by the national parliament and Money Laundering Prevention Act,2009 was enacted giving effectiveness from 15th April, 2009 (Gazette Notification:24th Feb,2009).

The multinational bank’s Dhaka officials have been asked to come to the Bangladesh Bank (BB) on Thursday.

“Recent media reports claim that a lot of people siphoned money out of the country through HSBC Bank to evade tax that's why they were summoned by Bangladesh bank.

                                                  Clearing House (Banking)

Clearing is the process of collection of proceeds of instruments of different banks by a collecting bank through some systematic procedures with the involvement of Central Bank.

Types of clearing instruments:

• Cheques (CD, SB, Loan)
• Demand Draft
• Payment Order
• Others                     

Bangladesh automated clearing house is clearing house of BD affiliated  with Bangladesh bank.

MOBILE BANKING

Mobile banking is a term used to refer to systems that allow customers of a financial institution to conduct a number of financial transactions through a mobile device such as a mobile phone or tablet.

Mobile banking differs from mobile payments, which involve the use of a mobile device to pay for goods or services 

he earliest mobile banking services were offered over SMS, a service known as SMS banking. With the introduction ofsmart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers.

Now more the 20 million of people of Bangladesh are the user of Mobile Banking service since its beginning at early 2008.

                                                             Agent Banking

1. Agent banking is the provision of financial services to customers by a third party (agent) on behalf of a licensed deposit taking financial institution and/or mobile money operator (principal)..

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Merchant Bank

1. A merchant bank is a financial institution that provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms in which they invest. In the United Kingdom, the term "merchant bank" refers to an investment bank.
2. AB bank, Dutch Bangla Bank are the example of investment bank of bangladesh.
3.                                                 Online Banking 
4. Online banking (OLB) is an electronic payment system that enables customers of a financial institution to conduct financial transactions on a website operated by the institution, such as a retail bank, virtual bank, credit union or building society. Online banking is also referred as Internet banking, e-banking, virtual bankingand by other terms.
5. 
    

IMF

The International Monetary Fund (IMF)  is an international organization headquartered in Washington, D.C., in the United States, of 188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

Credit Monitoring

A system that monitors a consumer’s credit reports for signs of possible fraud. Credit monitoring services notify consumers when new information, such as a new account or credit inquiry, shows up on one or more of their credit reports. The consumer can then follow up and make sure the new information is legitimate. Consumers can also use a credit monitoring service to keep track of their credit scores, a feature that can be useful for someone who plans to apply for a mortgage or other credit-based loan in the next few months to a year.
It can either done manually or by SMART CREDIT software.

 Notary public

1. A notary public (sometimes called a notary or a public notary) is an individual authorized by state or local government to officially witness signatures on legal documents, collect sworn statements and administer oaths. He or she uses an embossing tool to verify his or her presence at the time the documents were signed. 

   An attorney or other public figure can be granted notary public status, but no legal training is required to apply for the position. 

   

What is the difference between CRR and SLR?

• Both CRR and SLR are instruments in the hands of RBI to regulate money supply in the hands of banks that they can pump in economy

• CRR is cash reserve ratio that stipulates the percentage of money or cash that banks are required to keep with RBI

• SLR is statutory liquidity ratio and specifies the percentage of money a bank has to maintain in the form of cash, gold, and other approved securities

• CRR controls liquidity in economy while SLR regulates credit growth in the country

• While banks themselves maintain SLR in liquid form, CRR is with RBI maintained as cash.

1. Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.
2. Statutory liquidity ratio (SLR) is the Bangladeshi government term for reserve requirement that the commercial banks in India require to maintain in the form of gold, government approved securities before providing credit to the customers.
3. The CELS ratings or Camels rating is a supervisory rating system originally developed in the U.S. to classify a bank's overall condition. It's applied to every bank and credit union in the U.S. (approximately 8,000 institutions) and is also implemented outside the U.S. by various banking supervisory regulators.
4. The components of a bank's condition that are assessed:

   • (C)apital adequacy
   • (A)ssets
   • (M)anagement Capability
   • (E)arnings
   • (L)iquidity (also called asset liability management)
   • (S)ensitivity (sensitivity to market risk, especially interest rate risk)
5. Basel II is an international business standard that requires financial institutions to maintain enough cash reserves to cover risks incurred by operations. The Basel accords are a series of recommendations on banking laws and regulations issued by the Basel Committee on Banking Supervision (BSBS).
6. A general lien will attach to any and all real estate. It must be paid (cleared) before one can buy or sell property, or borrow money using real estate as collateral. Many lenders will not grant any kind of loan if there is a general lien showing on a credit report. 
   
   A specific lien is attached to a specific piece of collateral, such as a car or boat.

                                  Chapter 6:Lending policy 

Sound Lending Policy :

Sound lending policy or sound credit policy is a written document which set up  a Banks basic principles and provides a formal sets of procedure to carry it out properly and effectively .

Elements of Sound Lending Policy:

Elements or the principles of sound lending policy are stated below:

1. Safety
2. Liquidity
3. Purpose
4. Profitability
5. Security
6. Spread/ Diversity
7. National interest     

Safety: Advances should be expected to come back in the normal course .The repayment of the loan depends upon the borrower capacity to pay and willingness to pay .These are depended by the borrowers assets and tangible assets and characteristics .

Liquidity:Liquidity is the availability of the bank funds needed on short notice .The borrower must be repay the loan within a reasonable amount of  time given by the bank authority.
Profitability :Its not the factor of liquidity of asset but the possibility to earn profit by it.Largest part of bank income earned  by interest received in advance for given loans and interest paid on deposit other than that foreign exchange business also a great source of earnings.
 Purpose:Banker should lend money to borrowers considering the factor of borrowers productivity to ensure safety and definite source of repayment.
Security:Security works as curatin aginest unexpected risk .Risk is always there for every advance.So any kinds of property works as collateral against the borrowers loan.
Spread/Diversity:The advnces sould be as  much broad based as possible and must be in keeping with the deposit structure .The advances must not be one directive or to one particular industry or one area.
National Interest:Banker should  lend if the the purpose of the advance is for overall national development .

Security:

A financial intrument that represent an ownership position in a publicly traded corporation(stock) a creditor relationship with govt body or a corporation (bond) or rights to ownership as represent by an option.

Bank Security:

A security is an interest or a right in property given to the  creditors to convert it into cash in case of the debtor  fails to meet the principals and interest on loan.

Features of good Security against Bank loan:

There are some certain qualities that a good tangible securities must have .These are given below:

MARKETABILITY:The security must have a ready market .The Bank has not taken the asset to keep it in possessions for an indefinite period but rather to sell it in the market and realize the loan amount .Hence ,no matter how valuable the asset may be it is of no user if it does not have a broad market.

LIQUIDITY:Liquidity refers to how quickly an asset can be converted into cash ideally a security should be liquid which will enable the banker sell the property at a known price as soon as the default occurs .

OWNERSHIP:Before accepting a security the banker  must ensure the ownership of the property .An asset which is not  owned by the lender may create difficulty in getting loan repaid.If title is defective the lender may face problem.

ADEQUACY:The value of security must be adequate to cover the full amount of the loan < Moreover a reasonable margin over the loan  has to be maintained .The margin is the difference between the market value of the security offered and loan granted.

QUALITY:If a commodity is consider as security it should be good quality.

A commodity which is perishable and may deteriorate in phases of time then it should not be accepted as good security.

YIELD GENERATING SECURITY:An asset which generates earnings during the period  in which the loan is outstanding is a  better security than those which don't and are preferred by the bankers .

Easy Store ability and low maintenance cost :A security should not create a headache or be a burden  for the banker .It must be easy to store with low maintenance cost.

OTHERS:

i.Validity of the title of the borrower.

ii.Stability of Price.

iii.Documentation.

iv.Free from disabilities etc.

IT is mandatory to take security against a bank loan:

It is imperative to take security against a bank loan.The reasons are as follows

i.Stabilize income so that revenue level out over the business cycle when loan revenues fail income from investment securities may rise.

ii.Offset credit risk exposure in loan portfolio .High quality securities often come from different regions than the source of loans helping  diversify a financial firms sources of income.

iii.Provide a backup sources of liquidity because securities can be sold to raise needed cash or used as the borrower of additional funds.

iv.Reduce tax exposure especially in off setting taxable loan revenues.

v.Serve as collateral to secure govt deposits held by a depository institution.
vi.Help hedge against losses due to changing interest rates.

*Definition of Good loan:

The loan which cant easily repayable on time from borrower are called good loan.
This loan is the mostly traditional loan and follow able.
Loan identification area made through proper  credit analysis and adequate security offered by reliable clients .

Definition of bad loan or problem loan:
 The bad loan or the problem loan where repayment are not being made as orginally agreed between lender bank and borrower client which may never be repaid.

Characteristics of good loan:

Fixed interest rate:Fixed interest rate is beneficial to the consumer .Mortgage loans are a good example.Fixed rate loans are protected from the spikes of ever changing market.
Low interest rate:The lower the interest rate the easier it is to make payments .Whether its mortgage ,auto loans ,credit card account.

Auto pay features:Auto pay feature is a great factor for consumer to stay current and and avoid additional finance fees.

Installment options:Consumers can benefits from taking out smaller loans that are paid back to the lender in monthly installments over fixed period of time.

The causes of bad loan and steps to handle them:

There are mainly two types of reasons behind problem loan  or bad loan

THE QUANTITATIVE CAUSES:
i.Excessive loan expansion for getting high rate of profit
ii.Lending large size of loans to overpower the competitive banks.
iii.Providing loans which is beyond the repayment capacity of the borrowers.
iv.Sanctioning loans without adequate securities.
v.Accepting overvalued securities in excess of market price.
vi.Loans given on the basis of transaction rather than net worth.
vii.Over attention on bank profit and growth.

THE QUANTITATIVE CAUSES:
i Repayment plan not clearly given or not stated properly.
ii.Inadequate professionally capable persons to handle loan cases.
iii.Giving loan based on favoritism and nepotism
iv.Loan to new business with inexperienced owner or manager.
v.Inadequate loan review.
vi.Inadequate loan supervision.

PROBLEM LOANS CAN BE HANDLE IN DIFFERENT WAYS:
a.Taking legal actions through court.
  1.General recovery suit.
2.Recovery suit by liquidation. 
b.Steps by bank itself.
1.Preventive steps.
2.Curative steps.

                                    Chapter 7 :Payment Instrument

Cheque:

 According to negotiable  instrument act 1881 section 6 “A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise then on demand.

 Basic Feature of Cheque:

1.   Instrument in writing

2.   An unconditional order

3.   On a specified Banker

4.   Payee to be certain

5.   A certain sum of money

6.   Payable on demand

7.   To be signed by the drawer

Material Parts of a cheque :

1.    A date

2.    Amount

3.    Payee

4.    Place

5.    Crossing/open cheque

Sample of cheque

Types of Cheque:

1.Open cheque

    a.Bearer Cheque

    b. Order Cheque

2. Crossed cheque

    1.Special Cross

    2.General Cross

Sample of cross cheque.

Characteristics of a bearer cheque:

The terms bearers cheque refers to a cheque refers to a cheque that is payable to who ever presents the cheque rather than to a designated payee.Such cheque is known as bearer draft

This is risky chque of found by any one he can collect the credit.

                   Characteristics of crossed cheque

Crossing of cheque means drawing two parallel lines on the face of the cheque with or without words like &CO,Account payee or NOT NEGOTIABLE.

It cant be credited to payee account but cant be encashed  in the cash counter.

                           Characteristics of Order Cheque

When instead of bearer ,,the word or order is written on the face of the cheque the cheque is called an order cheque.

Such cheque is payable to person specified by the payee or anyone to whom it has been transferred or endorsed .

Importance of crossed Cheque

1.If payment is made by means of a crossed cheque receipt need not be obtained

2.Account Payee crossed cheque make sure only the particular person (To whom it is drawn) can receive payment.

3.The finder of lost crossed cheque cant encash it without the help of the banker

4.Payment of cheque particularly crossed cheque enabled automatic record of the amount in the pass book.

Various types of payment instrument used by the bank:

Debit Card: A payment card which is used for withdrawing cash and buying goods and services.The amount is debited directly from the cash holders bank account .

                                                                

Credit card :A payment card that can be used for buying goods and services and possibly for cash withdrawals on the basis of an approved credit line .For payment by credit card the money is not withdrawn from the card holders account until some time after the payment ,typically once in a  month.

Direct Debit:Direct debit is a way for consumer to pay recurring bills once the consumer has registerd a bill for payment via direct debit ,the creditor always initiates the future payments of the same bill.

Bank draft:A type of cheque where the payment is guaranteed to be available by issuing bank.

In payment from:The joint in payment form can be used to pay bills at the post office ,at the bank or via online banking .The impayment form makes it possible to transfer payment directly to the creditors bank account.

Difference between cheque and bank draft:

Cheque:

1.Issued by individual.

2.Drawn by account holder.

3.The drawer and drawer are both different.

4.A cheque can be dishonor for not having suffiecent fund on the account.

Bank Darft:

1.Issue by bank.

2.Drawn by bank to another.

3.The drawer and Drawee are both bank.

4.A bank draft cant be dishonored cause the payment is certain.

Causes of Dishonor of a cheque:

1.Not having  sufficient funds in the payee account

2.If the amount written on cheque and figure is diffrent.

3.If the owner of cheque reports that the cheque and figure is different.

4.If the owner of cheque reports that the cheque is lost/stolen then bank stops payment.

5.If the person become unsound mind ,prior to notice the bank stops payment.
6.If court ordered the bank stops payment of any account.
6.If the person declared insolvent by the court.
7.If the cheque is torn,the bank refused to pay.
8.If drawer not mention the date then bank refuse its payment.
9.Notice of the death of customer if received then bank refused to pay.
10.If the cheque is mentioned before the date mention on it.
11.If the cheque is outdated the bank refused to pay.
12.If the signature of the drawer is not matched with specimen bank refuse to pay.


Pay order:
pay order is a type of negotiable instrument like draft which instruct a payer bank to pay a certain sum to a third party also called pay to order.

Material alternation of cheque :

According to cheque act 1986 section 3 (8)
"An alternation of a cheque is a material alternation if it alters in any respect a right ,duty or liability of the drawer or endorser or the drawee institution ."


Material alternation refers to 

I.Alternation of date of the instrument.
II.Change of payable sum
III.Change of the place of payments.
IV.Alternation of the crossing payee.
V.Alternation of the crossing marks.
VI.Alternation in the rate of interest.

Frank William Abagnale, Jr  is an American security consultant known for his history as a former confidence trickster, check forger(check alter er), and impostor between the ages of 15 and 21.

Forgery of the drawer signature:
Forged drawer signature as a general rule when a bank pays a check on which the drawers signature is forged the bank is liable and must credit the drawers account.
If customers negligence sub ordinates contributes to the forgery then the bank is not obliged to pay.