Commerce-Banking

What is a cheque?

• A cheque is an order to a bank to pay a stated sum to the bearer of the cheque or a named person.

What are 7 other services provided by the bank?

• Bank overdrafts and Bank loans • Credit card • Debit card • Telebanking - Banking using the telephone • Internet banking - Banking using the internet • Electronic funds transfer • Safe deposit - Keeping of documents and valuables • Executors and trustees - executor of a will and trustee of an estate

Services provided by merchant banks

• Issuing shares of companies • Assisting companies with take-overs and mergers • Taking large deposit from businesses • Making large loans to local and international businesses • Arranging international payments and financing -Managing investments for businesses

List 5 reasons why a cheque can be dishonoured.

• There may not be sufficient funds in the drawer's account to make the payment. • The cheque may be a stale cheque. That is it is presented to the bank six months after the mentioned date on the cheque. • The drawer's signature may not be the same as the specimen signature. • The amount written in words and figures may not be the same. • The cheque is mutilated or defaced.

6 characteristics of a check account

1. Useful for business who needs safe method to make and receive payments. 2. Opened with large deposit 3. Earns no interest 4. Money can be deposited and withdrawn anytime 5. Has to pay charges if the deposit falls below a certain amount 6. No limit of withdrawing money.

What are the services provided by the commercial bank?

1. accepting deposits 2. Making Payment through the Cheque System 3. Credit Transfers/Bank Giro Credits 4. Standing Order or Banker's Orders 5. Direct Debit 6. Letter of Credit 7. ATM 8. Bank Draft

What is money?

Money may be defined as any commodity which is generally accepted as both a measure of value and a medium of exchange

What are Standing Order or Banker's Orders

These are orders to a bank to pay regularly a fixed sum of money from one's account in order to settle recurring payments like mortgage repayments, rent etc.

Job of Merchant Banks

These banks mainly deal with the affairs of businesses

Automated Teller Machines (ATM)

This facility enables the customer to perform banking transactions anytime at ATMs installed outside or inside the bank and at key locations.

What is a bank draft?

This is a cheque drawn by one bank on another bank, demanding that the latter pay a specified sum to the payee named on the draft.

Who is the drawee?

This is the bank on which the cheque is drawn. This is printed on the cheque and helps when queries arise.

Who is the Payee?

This is the person getting paid. Their name is written on the top line of the cheque.

Who is the drawer?

This is the person who signs the cheque. The drawer's signature should appear below the drawer's name.

Disadvantages of Using Cheques

o Cheques can be dishonored. o Payments through cheques means limited hard cash. o Paper work increases. -Not suitable for petty purchases

Advantages of Using Cheques

o Minimum cash handling. o Convenient and Safe. o Track record of payment can be maintained. o Better business control.

What are Bank statements

A record of someone's account

What are the Important Content of a Cheque

- date - the payee -amount - the drawer -the drawee -the account number - the branch code number

Problems with the barter system of trade:

-A double coincidence of wants - both traders should have someone to exchange their surplus with -An exchange rate - the problem here was that traders sometimes found it difficult to agree on the quantities of each other's goods that were to be exchanged.

Types of Money

-Coins -Paper money/Notes -Credit Money

Functions of the Central Bank

-Maintain cash reserve of commercial banks -Maintenance of national reserves of international currencies -Lender of the Last Resort -Maintenance of the banking system

Types of Cheques

-Open Cheque -Crossed Cheque

What the commercial banks in the Bahamas?

-RBC -First Caribbean -Fidelity Bank - Scotiabank Bahamas Limited

•What is Barter?

-The exchange of one good for another without the use of money is called barter.

What are three types of accounts provided by the commercial bank?

-savings account -check in/current account -fixed deposit account

What can credit transfer be used for?

-to make single or multiple payments. -It can be useful to the businessman who has to make a large number of payments at one time to those with bank accounts. -Credit transfers can be used to pay salaries, rents, hire purchase installments

What services does a ATM provide?

-withdrawals of cash -transfer of funds between accounts -deposit of cash or cheques -bank balance inquiry -request for statements of accounts.

6 characterisiics of the fixed deposit account

1. Suitable for those who have extra money to be set aside to earn interest 2. Opened with large deposit 3. Earns high interest 4. No need to pay bank charges 5. Amount of deposit remains fixed. Cannot be withdrawn 6. Money cannot be withdrawn until a specific period expire.

What are 6 characteristics of a savings account?

1. Suitable for those who wish to save small sums of money 2. opened with minimum deposit 3. Earns low interest 4. No need to pay bank charges 5. Money can be deposited and withdrawn anytime 6. Certain limit of withdrawing money

Roles of the Central Bank

A country's central bank plays the role as banker to the government and the banking system and act as the authority responsible for implementing the government monetary policy.

What is a credit transfer?

A credit transfer is when an account holder instructs his bank to pay directly into the bank account of the payee.

What is a bank?

A financial institution that lends and borrow money through loans and deposits.

What is the difference between direct debit and standing orders?

Direct debit differs from standing orders in that it is the creditor who gives payment instructions and not the debtor.

What is Direct Debit

Same as Standing Order except that payments of varying amounts at irregular intervals can be made.

Functions of Money

•A medium of exchange - Money makes the exchange of goods and services easier and the barter system obsolete. •A measure of value - Money provides a means by which goods and services can be given a price. •A store of value - Money can be stored for future spending. However this function of money can be satisfied only if it retains its value. •A means of deferred payment - Money makes possible credit transactions. Act as part of the price mechanism - Money makes possible the working of the price mechanism (Price mechanism refers to the system where the forces of demand and supply determine the prices of commodities and the changes therein

Characteristics of Money

•It must be durable - it must be long lasting. It should not deteriorate. •It must be divisible - possible to divide it into smaller units. •It must be portable - it must be convenient to carry around. •It must be acceptable - people must agree to use it. It must be relatively scare - the quantity should be controllable.

Importance of Money

•Money makes production possible •Money makes savings possible •Money enables economic growth to occur •Money makes credit possible