Types of the banks

B. Use the flow chart and topical vocabulary to speak about banking.

Reading 2: The Banking Services

A. Study the topical vocabulary and say which bank services you employ.

Opening an account

to have an account with /in the bank	иметь счёт в банке
interest on an account	процент по счёту
to pay an interest of 2%	платить два процента
a specimen of signature	образец подписи
genuine signature	подлинная подпись
initial sum	первоначальная сумма
account in roubles (dollars)	счёт в рублях (долларах)
current account (UK)/ checking account (USA)	текущий счёт
deposit account (UK)/ savings account (UK,USA)	срочный (депозитный) счёт
salary account	счёт, на который перечисляется зарплата
loan account	счёт ссуд
personal loan	ссуда частному лицу (обычно без обеспечения)
standing order/ direct debit mandate	приказ о регулярных платежах

Paying into an account

to pay in /into an account	положить /зачислить деньги на счёт
to put some money into an account
to deposit /to put in smb's account

Withdrawing from an account

to withdraw	снимать (деньги) со счёта
to take out from an account
to draw out
to make withdrawals

to overdraw	превысить кредит в банке
overdraft	овердрафт (сумма, получаемая по чеку сверх остатка на текущем счет)
balance of	остаток

Making a transfer

to transfer money from an account	перевести деньги со счёта
to make the transfer to the bank	перевести банку
in somebody's name	на имя
bank charges commission (UK)	комиссионные
service charges (USA)
to charge a commission	брать комиссионные
extra charge	дополнительные сборы
to make payment(s)	платить, выплачивать
to confirm the transfer	подтвердить перевод
to collect the transfer	получить деньги по переводу

Buying and changing foreign currency

to buy (self) foreign currency	покупать (продавать) иностранную валюту
to change roubles for dollars	менять рубли на доллары
to change into	обменять на
rate of exchange/exchange rate (for the dollar)	обменный курс (доллара)

Cheques /checks (USA)

to cash a cheque	оплатить чек, получить деньги по чеку
a cheque in pounds sterling	чек в фунтах стерлингов
a cheque in favour of	чек на имя
to make out	выписать чек
to issue a cheque
to endorse/to sign a cheque	подписать (заверить) чек
to accept the cheque	принять чек для оплаты
traveller's cheques	дорожные чеки
to draw a cheque on a certain account	выписать чек на определённый счёт
a cheque for ($200)	чек на (200 долларов)

B. Read the text.

Commercial banks render services to the business community, as well as to the general public. The functions of banks are divided into Primary and Secondary ones. Primary functions are the main activities generating the main profit and obligatory on the part of bank to perform while secondary are not the main sources of income of the banks.

The primary functions of a commercial bank include accepting deposits granting loans and advances.

The most important activity of a commercial bank is to mobilise deposits from the public or Accepting deposits. People who have surplus income and savings find it convenient to deposit the amounts with banks. Depending upon the nature of deposits, funds deposited with bank also earn interest. If the rate of interest is higher, public are motivated to deposit more funds with the bank. There is also safety of funds deposited with the bank. Banks accepts deposits from the public and their customers in the form of Current deposit, Saving, deposit, fixed deposit, and under other deposit schemes.

Current Deposit can be withdrawn by the depositor at any time by cheques. Businessmen generally open current accounts with banks. Current accounts do not carry any interest as the amount deposited in these accounts is repayable on demand without any restriction.

Savings deposit account is meant for individuals who wish to deposit small amounts out of their current income. It helps in safe guarding their future and also earning interest on the savings. A saving account can be opened with or without cheque book facility. There are restrictions on the withdrawls from this account.

The term ‘Fixed deposit’ means deposit repayable after the expiry of a specified period. Fixed deposits are most useful for a commercial bank. Since they are repayable only after a fixed period, the bank may invest these funds more profitably by lending at higher rates of interest and for relatively longer periods. The longer the period, the higher is the rate of interest offered.

The second important function of a commercial bank is to grant loans and advances. Such loans and advances are given to members of the public and to the business community at a higher rate of interest than allowed by banks on various deposit accounts. The rate of interest charged on loans and advances varies depending upon the purpose, period and the mode of repayment. The difference between the rate of interest allowed on deposits and the rate charged on the Loans is the main source of a bank’s income.

Cash credit is an arrangement whereby the bank allows the borrower to draw amounts up to a specified limit. The amount is credited to the account of the customer. The customer can withdraw this amount as and when he requires.

Overdraft is also a credit facility granted by bank. A customer who has a current account with the bank is allowed to withdraw more than the amount of credit balance in his account. It is a temporary arrangement. Overdraft facility with a specified limit is allowed either on the security of assets, or on personal security, or both.

Besides the primary functions of accepting deposits and lending money, banks perform a number of other functions which are called Secondary functions. They are therefore could be subdivided into agency ( transfer of funds, collection of checks, portfolio management, periodic collection , i.e. collection of salary, pension, dividend etc.) and general utility functions ( issue of drafts and letters of credit, locker facility , i.e. safe custody of valuables, underwriting of shares, dealing in foreign exchange . Agency services are rendered as agent of customers, whereas general utility services are rendered to the general public.

Banks have now installed their own Automated Teller Machine (ATM) throughout the country at convenient locations. By using debit & credit cards, customers can deposit or withdraw money from their own account any time.

Having saving or current account in the banks a customer is provided with Debit cards. The amount paid through the card is automatically debited (deducted) from the customers’ account.

Credit cards are issued by the bank to persons who may or may not have an account in the bank. Just like debit cards, credit cards are used to make payments for purchase, so that the individual does not have to carry cash. Banks allow certain credit period to the credit cardholder to make payment of the credit amount. Interest is charged if a cardholder is not able to pay back the credit extended to him within a stipulated period. This interest rate is generally quite high.

With the extensive use of computer and Internet, banks have now started transactions over Internet or Net- banking. The customer having an account in the bank can log into the bank’s website and access his bank account. He can make payments for bills, give instructions for money transfers, fixed deposits and collection of bill, etc.

In case of Phone banking, a customer of the bank having an account can get information of his account, make banking transactions like, fixed deposits, money transfers, demand draft, collection and payment of bills, etc. by using telephone or mobile phone.

C. Identify whether the statements are true, false or not given.

1. A country cannot make commercial and industrial progress without a well organised banking system.

2. Loans may be granted only for long period by bank.

3. Primary activity of commercial banks includes accepting deposits and lending money.

4. Difference of interest allowed to public on deposits and charged on loan is the main source of income of banks.

5. A loan cannot be repaid in lump sum by the borrower.

6. Loans are generally granted against the security of certain assets.

7. Services rendered by banks to the general public constitute the main function of banks.

8. Bank charges some amount for the services rendered.

9. Banks generally grant long-term loans to industries..

10. Banks grant loans to students for their studies at reasonable interest rate.

11. Through overdraft, a customer can withdraw more money than the amount in his/her bank account.

D. Fill in the blanks with suitable words.

1. There are four important ways of lending money by banks. They are…

2. Bank loans can be divided into two categories… and …

3. When the loan is repayable on demand or at a very short notice, the loan is known as …

4. If the loan granted by a bank is on long-term or medium-term, the loan is called …

5. … is a flexible system of lending under which the borrower has the option to withdraw the funds as and when required.

6. …is an agreement with the bank by which a current account holder is allowed to withdraw over and above the amount in his account.

E. Find the answers to the following:

1. Explain the Primary functions of banks.

2. Explain the Secondary functions of banks.

3. Describe the functions of modern commercial banks.

4. Explain the methods of granting loan by bank.

5. What do you mean by bank overdraft? Explain the procedure for granting overdraft by bank.

6. Differentiate between loans and advances.

7. Explain cash credit facility allowed by banks to customers.

8. Explain in brief the agency functions of a commercial bank.

9. Differentiate between Primary and Secondary functions rendered by bank.

10. Describe briefly the various modes of acceptance of deposits by banks.

F. Find the words with their opposites.

spend variable withdraw borrow default purchase

deposit lend save sell

G. Match the words with their definitions

balance	deficit in a bank account caused by withdrawing more money than is paid in
bank charges	written order to a bank to pay the stated sum from one's account; chequeUK
checkUS	bank a/c from which money may be drawn at any time; checking accountUS
credit card	a sum deducted from a bank account, as for a cheque - also v
current account	an instruction to a bank to make regular payments
debit	small document recording money that you pay in to a bank account
deposit account	bank a/c on which interest is paid; savings accountUS
loan	money in a bank a/c; sum added to a bank a/c; money lent by a bank – also v
overdraft	(plastic) card from a bank authorising the purchasing of goods on credit
standing order	the difference between credits and debits in an account
withdraw	to take money out of a bank account
	money paid to a bank for the bank's services etc

H. Supply prepositions where necessary.

as/about/by/during/for/from/in/into/of/on/on behalf of/out /to/ through/with

1. Commercial banks of Russia have developed ... the past few years.

2. The Central Bank acts ... the Government and works ... close cooperation with the other banks of Russia.

3. It is ... the Central Bank that the Government's monetary policy is implemented.

4. Savings banks receive money ... their customers in two forms: ... current account and deposit account.

5. ... a current account a customer can issue cheques.

6. No interest is paid ... current accounts.

7. Commercial banks receive money ... savers ... current and deposit accounts.

8. They work ... profit and earn interest... the bank.

9. The man decided to open an account... the bank and to put some monеу ... his account. He asked the bankers ... the interest he might get... his money. Then he decided to draw ... some dollars. He intended to transfer his money ... another bank because the bank's charges ... all services are rather high…

10. I’d like to buy some foreign currency and change roubles ... dollars. Here is a cheque ... roubles. It is a cheque ... 1000000 roubles ... my name.