Banking

Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer)

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In this article we will discuss about Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer) and how KYC helps banks to identify their customers. 


Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer)

Concept of BANK

Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer)

Banks are the financial institutions which accepts deposits from the general public and lending. it also provides loan facilities to household, firms, etc.Bank are those institutions which operate in money and also create credit.Bank provides safety, liquidity and profitability to its customers.

Primary functions of banks are:                                      Secondary functions of banks :

  1. Accepting deposits                                                       1. Clearance of cheque
  2. Lending                                                                         2. sale and purchase of shares / bonds
  3. Credit creation                                                              3. Transfer of money
  4. Mutual Funds
  5. Insurance

In todays times for the opening of bank account ,there must be need of KYC.

KYC [ Know Your Customer ]

Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer)

KYC is a process in banking regulation to identifying their customer and their financial dealings. It is necessary but simple for opening and maintaining your bank account. KYC is issued by the RBI.                                                                    For opening of new bank account their is a need of PAI , which means Photo, Address, and Identity proof.

  1. One identity proof and address proof and with a recent photograph of the customer are enough to open bank account.
  2. Adhar card, Driving licence, Voter card, Passport, PAN Card.

Also Read : Credit Rating : Meaning, Need, Importance,Benefits and its Process

Know Your Customer involves :

  1. Individual
  2. H.U.F ( Hindu Undivided Family )
  3. PartnershipConcept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer)
  4. Proprietorship firm
  5. L.L.P ( Limited Liability Partnership )
  6. Private Ltd./ Public Ltd.
  7. Society / Trust

⇒ Individual :                                                                                                                                                    * Individual required Identification proof like PAN card, Adhar card , Driving licence, Voter card , Passport                  *Recent photograph of the customer .                                                                                                                              * Latest address of the customer.

H.U.F [ Hindu Undivided Family ]

  • HUF – PAN card
  • Karta-  PAI , In Hindus family karta is the head of the family , bank required photograph, Address and Identity proof of the karta
  • co-parcenors – Family members.

Partnership :

⇒ Proprietorship Firm :

  • PAI of the owner of the firm.
  • 2 Registration proof with govt.                                                                                                                                           (1). CST/ VAT                                                                      (2) Custom & Excise                                                                                                                                      (3) Service Tax                                                                                                                                                (4) IEC [ Importer , Exporter Code]

⇒ L.L.P [ Limited Liability partnership ]

  • PAN card
  • LLP Deed
  • Registration under companies act
  • LLP declaration
  • LLP deed is the most important document it contain right, liability and powers.

Company [ Private / public Ltd. ]

  • PAN card
  • M.O.A [ Memorandum of Association ]
  • Article of Association
  • Certificate of incorporation
  • Board resolution
  • List of Directors / Promoters
  • Certificate of commencement of Business
  • MOA and AOA is the most important document, it contain right and gudielines of the company

⇒ Society / Trust / NGO :

  • PAN card
  • Registration certificate under society / Trust Act.
  • By Laws
  • List of signatory
  • Resolution
  • Trust Deed / By Laws are the most important document it contain rights and liabilities.

So we have studied Concept of Bank, their functions, CREDIT MANAGEMENT and KYC (Know Your Customer) and if you have any query please let us know in the comments section below.

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