OTHER SERVICES RENDERED BY BANKS

Banks have evolved into institutions that offer a host of services other than just accepting deposits and lending money.

CLEARING AND COLLECTION OF CHEQUES:

The Clearing facility helps you to encash local cheques, i.e., cheques that have been drawn in your favour, on other banks in the same town or city. The amount will be usually credited into the account in one or two days. This facility is presently offered free of charge. When the cheques are drawn on some other town or city, the bank arranges to send the cheque to that place, collect the funds and credit the amount to your account. The bank charges a commission for this facility. If the bank does not have a branch in the place where the cheque has been drawn, it sends it to another bank that has a branch there and collects the funds. Generally in such cases, these two banks share the collection charges. The time taken to credit the funds is usually the time taken for the two-way postal transit and the clearing time at that place.

REMITTANCES:

Very often, we need to send money, sometimes urgently, to someone living elsewhere. While the post office has the money orders facility, when we are sending (remitting) large amounts, the charges, i.e., the money order commission is very heavy. Since all big banks have a network of branches all over the country, it is easier to ask you bank to transfer money to the place of your choice.

There are three basic ways of remitting money - by Demand Draft (DD), by Mail Transfer (MT) and by Telegraphic Transfer (TT).

Demand draft:

This is a safe way to send money from one place to another. The DD is like a cheque that a branch of the bank (issuing branch) draws on another of its branches (payee branch) instructing it to pay a specified amount to the person named in it (the payee). The DD can either be a 'crossed' one or an 'open' one. A 'crossed' DD can be encashed only through a bank account. Cash will not be paid across the counter. This is to ensure that unauthorised people will not be able to encash the DD. When sending a DD by post or courier, it is always safer to make sure that the DD is crossed. An 'open' DD is one that is not crossed, and, therefore, the person in whose favour the DD has been drawn, can approach that branch of the bank, show identification that he is the person entitled to the money and draw the cash.

Mr. Shankar from Chennai wants to send Rs. 5,000/- to Mr. Shyam at Kolkata. Mr. Shankar goes to his bank and pays this amount along with the DD commission requesting them to issue a DD on their Kolkata branch payable to Mr. Shyam. Mr. Shankar sends this DD to Mr. Shyam in Kolkata who can either deposit the DD in his account with his bank and the amount will be credited into his account through the Clearing facility, or go to that bank in Kolkata, show proof that he is, indeed, Mr. Shyam and collect the money, if the DD has not been crossed.

Banker's cheques are just like DDs, the only feature is that the issuing branch and the payee branch are the same in banker's cheques.

Mail Transfer:

This facility is convenient if both Mr. Shankar and Mr. Shyam have accounts with the same bank. Mr. Shankar instructs his bank to send a Mail Transfer to the Kolkata branch asking them to credit Rs. 5,000/- to the account of Mr. Shyam with them. Naturally, Mr. Shyam's account number must be mentioned to ensure that the money is not credited to some other account with the same name. The benefit for Mr. Shankar in using this facility is that he does not need to incur postal or courier charges (which he would have when sending a DD) and there is no chance whatsoever of the DD falling into wrong hands at all. But, as seen earlier, this facility can be used only if both the remitter and the payee have their accounts with the same bank. The amount will be credited into the payee's account as soon as the payee branch receives the MT, which is usually sent by post or by courier. The bank usually charges the DD commission for this facility.

Telegraphic Transfer:

We have seen that an MT is sent by courier or by post. In case, the money is required urgently, when both the remitter and the payee have their accounts with the same bank, the money can be sent telegraphically. Banks use a secret code to ensure the authenticity of the telegram which instructs the payee branch to credit the amount to the payee's account. In this manner, the money can reach the payee the very next day. The cost of the telegram is added to the bank commission for using this facility. Of late, fax transfers are also being resorted to, but the charges will include the fax charges apart from the bank's commission. The advantage will be that the money can reach the payee on the very same day.

SAFE DEPOSIT LOCKERS:

In these highly unsafe times, it is very risky to keep valuables like jewellery, property documents, etc., at home. More so, when we go away on vacation or business. Banks have these lockers in different sizes in top-security, fireproof vaults, the access to which is restricted only to the bank officials and the renters of the lockers. You can enter into an agreement with the bank to lease out a locker, usually on an annual basis. Some banks offer a discount if the locker rent is paid for three years in advance. In these days of escalating charges, paying in advance protects you from any increase in the locker rent in-between. You are given a locker key and the bank has a master key. The locker will open only if both the keys are used. The bank official opens the locker for you and exits. Once you have finished with the locker operation, you can lock up with your key. Always try opening the locker again with your key alone. It will not open. The locker number and the key number will not be the same to ensure that unauthorised people cannot try accessing your locker even if they somehow get your key. When you approach the bank official to operate your locker, you will be required to sign in a locker register quoting you locker number and your signature will be verified with the bank's records for that locker number and only then you will be permitted to enter the vault. At the time of leasing out a locker for you, you will be required to mention a secret password which can be asked for by the bank official each time you operate the locker if he is not satisfied with your credentials.

A common question asked about lockers is whether the contents of the locker are covered by insurance. Since you will be operating the locker in total privacy, the bank cannot know about the contents of the locker. Therefore there is no question of Insurance coverage for the contents of the locker. But, please remember, the lockers are not accessible to unauthorised persons.

SAFE CUSTODY:

This facility is ideal for you if you want to entrust the bank with the safekeeping of documents. Many customers who spend most of their time in travel all over the country, or are going abroad for a long period prefer keeping their Fixed Deposit Receipts and share certificates and property documents in safe custody instead of keeping these in a locker. Under safe custody, if you want a Fixed Deposit Receipt to be renewed all you need to do will be to give written instructions to the bank and the job will be done. If the same Deposit Receipt was in a locker, whoever is allowed to operate the locker will have to go to the bank to take it out, renew it and then put the renewed Deposit Receipt back in the locker for safety. Under safe custody, the bank will renew the Deposit and send a fresh safe custody receipt to you. Regarding share certificates under safe custody, you can give written instructions to the bank asking the bank to hand over the certificates to the person who is being authorised by you. A fresh statement of the remaining you to safeguard a single statement in place of a bunch of Deposit Receipts and Share Certificates!