Modern Banking, Primitive Approach

Banking nowadays is the most dominant segment of the financial system in every country
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Representational ImageFile/ GK

For any plan of economic development, availability of capital is of core importance. No economic development of considerable magnitude is possible sans adequate degree of capital. Banks play an important role in capital formation.

Bank is an institution and banking its activity. The idea of banks is said to be dating back to 1800 BC in Babylon when moneylenders gave loans to people.

In Greece and Rome banks advanced loans, accepted deposits and also changed money. It is also said that the oldest bank of the world is Banca Monte Dei Paschi di Siena operating continuously since 1472 AD in Siena Italy.

In India the oldest and the largest bank is the State Bank of India that originated & started functioning at Calcutta (now Kolkata) in Bengal during 6/1806. Their dating in Julian or the Gregorian calendar speaks of their longevity and necessity.

There are different kinds and the types of banks that have evolved with growth in world economy. Retail banks, investment banks and commercial or corporate banks are kinds of banks whereas types include Public sector banks, private sector banks, cooperative banks, central bank, regional rural banks, small finance banks, specialised banks etc.

It is a financial institution licensed to receive deposits and advance loans. They take money from whom that deposit and lend it to those who need and demand.

They mobilise the small savings from the individuals through the network of their branches scattered over wide areas and make these available for the prospective borrowers for productive purposes.

They attract mobilisation by offering lucrative rates of interest/returns which converts weak & passive money into strong & active capital availability.

Banks act as trustful intermediaries between depositors and the borrowers besides providing employment. Banking nowadays is the most dominant segment of the financial system in every country/economy. Reserve Bank of India established during 4/1935 controls the monetary and other banking policies in India. In Jammu & Kashmir the J&K Bank Ltd. founded in 10/1938 is the oldest bank.

The commercial banks provide the requisite financial support and infrastructure for both internal and the external trade. They ensure safety of savings deposited besides serving as a strong repository of liquidity.

The life-line of all banks whether public sector banks (where majority of shares/stakes are owned by the government/central bank of the country) or the private sector banks (where majority of stakes are owned by a private individual, group of persons or organisation) is borrowing money/receiving deposits at low rates of interest and utilising the same through loans and advances at higher rates of interest to individuals and the institutions.

They charge for their services such as saving bank account, home loan, car loan, insurance-life and general, foreign exchange services, money transfer, banks drafts, bank over drafts and other tailor made solutions for finance requirement from their point of view besides introducing new security and speedy measures.

They have named their services as banking products. Saving bank account is the oldest of the services which reflects the record of debit/credit entries of an account holder. The earlier pass books were without any photograph of the account holders.

However, noticing the obscene practice of drawal of money incessantly by some unscrupulous persons forging the signatures of the actual accountholders, the bank authorities made it mandatory to affix a passport size photograph of the account holder to satisfy its genuineness and stop fraudulent practice for withdrawal of money.

To keep pace with the modern technology which has swarmed every sphere of human activity computers were installed that replaced most of the manually maintained file and ledger records. Customers’ photographs and signatures were captured in digital devices to give them ease and permanency for identification and satisfaction of the bank.

Continuing the march of improvement and advancement in modern banking a sophisticated debit/credit card with dip or insert option used at what is called ATM for drawal and deposit of money by the customer outside the bank premises and beyond its working hours was also put in vogue.

So far so good. Simultaneously some new things are also noticed at some branches of some banks which prima facie look strange to a customer concerned.

Exampli gratia a customer who visits a bank branch for drawal of money from saving bank account his/her request for withdrawal through ‘saving bank withdrawal slip’ is at first refused or at least discouraged although the customer signs or puts thumb impression in case of an illiterate, properly on the obverse and the reverse of the form in token of having actually filled or owned the form and received the cash as a proper payee.

Instead the customer is asked to go to an ATM. Sometimes a customer is asked to draw a self cheque when he/she is present in person at the counter. Cheques have their own utility & usage. These may be ante dated, post dated or current dated unlike ATM.

They are suited to draw on creditors who encash or get these credited to their accounts. Similarly the ATM card mentioned ad supra is transaction, cash and time limited as it expires beyond a certain period of time, transactions made over a prescribed limit are charged extra money besides annual card maintenance charges and the amount of drawal is also caped.

Every instrument is designed to meet a specific circumstance and none can replace the other. It will be unintelligible and sometime useless also for cash limit to give creditor an ATM card instead of a cheque best suited for liquidation of small or large amount of debt.

Likewise a customer is asked to produce pass book for identification notwithstanding the fact that his/her data, image and signatures are already secured in the computer to avoid impersonation.

Moreover, a pass book may not be up to date as against computer which makes a real time record of debit/credit entries automatically and no transaction skips the system.

Hence particulars stored in the electronic device can suffice as proof for veracity. Since cheques and ATM cards too are a non-gratuitous facility a customer may or may not like to avail of it. Pressing for their use, therefore, becomes incomprehensible.

Besides when a bank charges for all its services/documents it is but natural that financial prudence will not allow a sane customer to be extravagant or a loser in time and money where it can save rightfully and legally.

This approach appears to be primitive and not in consonance with spirit of modern banking which believes in triangular benefit by way of genuine profit to bank, ease & benefit to an account holder and help & assistance in economic development.

If what the bank officials say and try to implement at the counter are rules & regulations of banking these need to be amended. In case these are personal choices the officials may be directed to desist from such practice which is obviously painful to customers who too are indispensable for the banks for progressive co-existence.

The author is a former Sr. Audit Officer and Consultant in the A.G’s Office Srinagar.

Disclaimer: The views and opinions expressed in this article are the personal opinions of the author.

The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.

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