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Tuesday, December 12, 2017

Revolving Credit

Revolving credit is a type of credit that does not have a fixed number of payments, in contrast to installment credit. Credit cards are an example of revolving credit used by consumers. Corporate revolving credit facilities are typically used to provide liquidity for a company's day-to-day operations. They were first introduced by the Strawbridge and Clothier Department Store.
It is an arrangement which allows for the loan amount to be withdrawn, repaid, and redrawn again in any manner and any number of times, until the arrangement expires. Credit card loans and overdrafts are revolving loans, also called evergreen loan.
In this case-
  • The borrower may use or withdraw funds up to a pre-approved credit limit.
  • The amount of available credit decreases and increases as funds are borrowed and then repaid.
  • The credit may be used repeatedly.
  • The borrower makes payments based only on the amount he or she has actually used or withdrawn, plus interest.
  • The borrower may repay over time (subject to any minimum payment requirement), or in full at any time.
  • In some cases, the borrower is required to pay a fee to the lender for any money that is undrawn; this is especially true of corporate bank revolving-credit loans.
A revolving loan provides a borrower with a maximum aggregate amount of capital, available over a specified period of time. Unlike a term loan, the revolving loan allows the borrower to draw down, repay and re-draw loans on the available funds during the term of the note. Each loan is borrowed for a set period of time, usually one, three or six months, after which time it is technically repayable. Repayment of a revolving loan is achieved either by scheduled reductions in the total amount of the loan over time, or by all outstanding loans being repaid on the date of termination. A revolving loan made to refinance another revolving loan which matures on the same date as the drawing of the second revolving loan is known as a "rollover loan", if made in the same currency and drawn by the same borrower as the first revolving loan. The conditions to be satisfied for drawing a rollover loan are typically less onerous than those for other loans.
A revolving loan is a particularly flexible financing tool as it may be drawn by a borrower by way of straightforward loans, but it is also possible to incorporate different types of financial accommodation within it - for example, it is possible to incorporate a letter of credit, a swingline (that is, a short-term borrowing that is funded on one day's notice), or an overdraft within the terms of a revolving credit loan. This is often achieved by creating a sublimit within the overall loan, allowing a certain amount of the lenders' commitment to be drawn in the form of these different facilities.
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Dormant Account

A checking or money market account is considered Dormant/Inactive if the account has had no deposit or withdrawal activity (other than posting interest) for a period of one year.
 A Certificate of Deposit account is considered Dormant/Inactive if there is no account activity for a period of one year after the first date of renewal.
In other words, An account is declared dormant after a bank or building society has failed in attempts to contact the holder; if letters or statements are returned marked "not known at this address", and if it is unused for an extended period (accounts still being used regularly will generally remain open even if mail is returned).
It varies from bank to bank. Generally, current accounts are often marked "dormant" after a year, but savings accounts can go untouched for between three and five years.
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Merchant Banking

Merchant banking consisted initially of merchants who assisted in financing the transactions of other merchants in addition to their own trade. In France, during seventeenth and eighteenth centuries a merchant banker was not merely a trader but an entrepreneur par excellence. He invested his accumulated profits in all kinds of promising activities. He added banking business to his merchant activities and became a merchant banker.

The origin of merchant banking is to be traced to Italy in late medieval times and France during the seventeenth and eighteenth centuries. 

The Italian merchant bankers introduced into England not only the bill of exchange but also all the institutions and techniques connected with an organised money market.
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Holder in due course

The holder in due course (HDC) theory is a rule in commercial law that protects a purchaser of debt, where the purchaser is assigned the right to receive the debt payments. The theory insulates the purchaser of debt, or other obligation to pay, against charges that either party to the original transaction might have had against the other.
A holder in due course must
1. Be a holder of a negotiable instrument
2. Take it for value
3. Take it in good faith
4. Take it without notice that it is overdue or dishonored, or that the instrument contains an un-authorized signature or an alteration, or that any person has any defense against or claim to it;
5. Take it without reason to question its authenticity due to apparent evidence of forgery, alteration, incompleteness, or other irregularity.
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Banker’s right of set- off

When a customer keeps two or more accounts at the bank, some of which are over drawn and some in credit, the bank has the right to combine such accounts and pay the resultant balance. When certain securities e.g. shares, debentures etc. are in the hands of a banker, he has a right of lien and not set-off.
A banker can exercise right of set-off provided the following conditions are satisfied:
The amount of the debt must be certain
The debt must be due and payable
The accounts must be between the same parties and in the same right
The debt due must be immediate and not a future debt
Liability should not be contingent
There should be no agreement to the contrary
The banker may exercise this right at his discretion
The banker has right to exercise this right before a garnishee order is made effective
The right to set-off all accounts arises immediately in the following instances:
On the death, mental incapacity or insolvency of a customer
On the insolvency of a firm, or on the liquidation of the company
On receiving a garnishee order
On receiving notice if assignment of a customer’s credit balance
On receiving notice of a second mortgage over security charged to the bank
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Sunday, December 3, 2017

Short Notes on- Commercial Announcements

Commercial Announcements is dedicated to manufacturers and developers of sample libraries, virtual instruments, and other music gear announcing their development, upgrades, updates, upcoming releases, projects, contests, and promotions and deals them themselves put together. 

The invention relates to a method for broadcasting customized commercial announcements, that includes the following steps: determining at least one broadcasting criterion; making a pre-selection of a group of commercial announcements corresponding to the broadcasting criterion or criteria; from said pre-selection, making a selection of announcements having an intrinsic correlation between them based on at least one predetermined correlation criterion; concatenating the selected announcements in order to form at least one eligible commercial sequence; electing a sequence from the selected announcements; and broadcasting the elected sequence.
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Tuesday, November 28, 2017

Discuss the General Credit Control, the instruments often employed by BB.

There are two types of instruments of credit control. These are:

General or Quantitative   
Selective or Qualitative     

Under the General Credit Control, the instruments often employed by BB are discussed below:
Bank Rate Policy
The Bank rate has been defined in Act as " the standard rate at which it (BB) is prepared to buy or rediscount bills of exchange or other commercial paper eligible to purchase under this Act. By varying the rate, the BB can to a certain extent regulate the commercial bank credit and the general credit situation of the country. The impact of this tool has not been very great because of the fact that BB does not have a mechanism to control the unorganized sector.
Reserve Requirements
The Reserve Bank of Bangladesh is vested with the powers to vary the CRR and SLR as explained above. By varying reserve requirements, the BB restricts/frees the flow of funds by way of credit to different sectors of the economy. When SLR or CRR is increased by BB, It reduces commercial banks' capacity to create credit and thus helps to check inflationary pressures
Open Market Operations
Open market operations are a flexible instrument of credit control by means of which the Reserve Bank on its own initiative alters the liquidity position of the bank by dealing directly in the market instead of using its influence indirectly by varying the cost of credit. Open market operations can be carried out by purchases and sales, by Central Bank, of a variety of assets such as government securities (G-sec), commercial bills of exchange, Foreign exchange, gold and even company shares. In practice, however, BB confines to the purchase and sale purchase of government securities including treasury bills. When the BB purchases government securities from the banks, the latest deposits with it tend to increase adding to the cash reserves of banks and hence their capacity to expand credit increase. Conversely, when the BB sells securities to the banks, their deposits with BB would get reduced, contracting the credit base. The net result would be a contraction of credit and a reduction in money supply.
Repo Rate and Reverse Repo Rate:
          Repos: The BB introduced repurchase auctions (Repos) since December,1992 with regards to dated Central Government securities. When banking systems experiences liquidity shortages and the rate of interest is increasing, the BB will purchase Government securities from Banks, payment is made to banks and it improves liquidity and expands credit.
          Reverse Repos : Since November, 1996 BB introduced Reverse Repos to sell Govt. securities through auction at fixed cut-off rates of interest. It provides short term avenues to banks to park their surplus funds, where there is considerable liquidity and call rate has a tendency to decline. These two rates are, now-a- days, commonly applied for reducing money supply or increasing it.
Moral Suasion
Moral Suasion indicates the advice and exhortations given by the Reserve Bank to the banks and other players in the financial system, with a view to regulate and control the flow of credit, generally, or to any one particular segment of the economy. This may be attempted through periodical discussions/communications. With a substantial share of banking business being in the public sector, this tool has proved effective.
Direct Action
This technique indicates the denial of the Reserve Bank to extend facilities to the banks which do not follow sound banking principles or where the Reserve Bank feels the capital structure of the bank is very weak. This is not attempted frequently but is used in rare cases involving continual and wilful violations of policies of the Reserve Bank/Govt. of Bangladesh.
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Describe the situation/cause of termination of a Banker-customer relationship.

A Banker-customer relationship  is a contractual relationship between two parties and it may be terminated by either party on voluntary basis or involuntarily by the process of law. These two modes of termination are described below.
1. Voluntary Termination:
The customer has a right to close his demand deposit account because of change of residence or dissatisfaction with the service of the banker or for any other reason, and the banker is bound to comply with this request. The banker also may decide to close an account, due to an unsatisfactory conduct of the account or because it finds the customer undesirable for certain reasons. However, a banker can close an account only after giving a reasonable notice to the customer. However, such cases of closure of an account at the instance of the banker are quite rare, since the cost of securing and opening a new account is much higher than the cost of closing an account. If a customer directs the banker in writing to close his account, the banker is bound to comply with such direction. The latter need not ask the reasons for the former's direction. The account must be closed with immediate effect and the customer be required to return the unused cheques.

2. If the Bank desires to close the account:
If an account remains un-operated for a very long period, the banker may request the customer to withdraw the money. Such step is taken on the presumptions that the customer no longer needs the account. If the customer could not be traced after reasonable effort, the banker usually transfers the balance to an "Unclaimed Deposit Account", and the account is closed. The balance is paid to the customers as and when he is traced.
The banker is also competent to terminate his relationship with the customer, if he finds that the latter is no more a desirable customer. The banker takes this extreme step in circumstances when the customer is guilty of conducting his account in an unsatisfactory manner, i.e. if the customer is convicted for forging cheques or bills or if he issues cheques without sufficient funds or does not fulfil his commitment to pay back the loans or overdrafts, etc. The banker should take the following steps for closing such an account.
(a) The banker should give to the customer due notice of his intention to close the account and request him to withdraw the balance standing to his credit. This notice should give sufficient time to the customer to make alternative arrangements. The banker should not, on his own, close the account without such notice or transfer the same to any other branch.
(b) If the customer does not close the account on receipt of the aforesaid notice, the banker should give another notice intimating the exact date by which the account be closed otherwise the banker himself will close the account. During this notice period the banker can safely refuse to accept further credits from the customer and can also refuse to issue fresh cheque book to him. Such steps will not make him liable to the customer and will be in consonance with the intention of the notice to close account by a specified date.

3. Termination by Law:
The relationship of a banker-customer can also be terminated by the process of law and by the occurrence of the following events:
(a)   Death of customer: On receiving notice or information of the death of a customer, the bank stops all debit transactions in the account. However, credits to the account can be permitted. The balance in the account is given to the legal representative of the deceased after obtaining the letters of administration, or succession certificate, or indemnity bond as per the prescribed procedure, and only then, the account is closed.
(b)   Bankruptcy of customer: An individual customer may be declared bankrupt, or a company may be wound up under the provisions of law. In such an event, no drawings would be permitted in the account of the individual/company. The balance is given to the Receiver or Liquidator or the Official Assignee and the account is closed thereafter.
(c)   Garnishee Order: After receiving a garnishee order from a court or attachment order from income tax authority, the account can be closed as one of the options after taking the required steps.
(d)   Insanity of the customer: A lunatic/person of unsound mind is not competent to contract under Section 11 of the Indian Contract Act, 1872. Since banker-customer relationship is contractual, the bank will not honour cheques and can close the account after receiving notice about the insanity of the customer and receiving a confirmation about it through medical reports.
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Thursday, October 12, 2017

বেকারের ডাইরী থেকে

বেকারের ডাইরী থেকে
জাকিরুল হক তালুকদার

আমি বেকার নেইতো দেখার
আমার আপন কেহ
চক্ষু বুজে চাকরী খোঁজে
রৌদ্রে পোড়াই দেহ
নাইতো আমার টাকা কড়ি
নাইতো মামা-চাচা
দোহাই লাগে চাকরী দিয়া 

কেউ আমারে বাঁচা।।

ষোল কেলাস পাশ করেছি
রেজাল্ট ছিল খুব ভালই
বেকার বলে কাছের মানুষ
আজকে দেখি হয় তালই
অহংকারে নাকটা তাদের
বড্ড ভীষন উচা
দোহাই লাগে চাকরী দিয়া
কেউ আমারে বাঁচা।।

রোগ আর শোকে বারোমাস
করছে বাবা বসবাস
পকেটখানা ভীষণ ফাঁকা
ওষুধ কেনার নাইতো টাকা
আমি বড্ড নিরুপায়
বাবার অধম বাছা
দোহাই লাগে চাকরী দিয়া
কেউ আমারে বাঁচা।।

প্রিয়তমা যায় চলে যায়
চাকরীজীবির ধইরা হাত
আমার কিন্তু ঘুম আসে না
দীর্ঘশ^াসে কাটে রাত
হইলোনারে সুখের মিলন
পেখম তুলে নাঁচা
দোহাই লাগে চাকরী দিয়া
কেউ আমারে বাঁচা।।

বাপে কান্দে মায়ে কান্দে
আমার কথা ভাবিয়া
দূর্ভাবনায় করছে জীবন
শ্রেষ্ঠ দোযখ হাবিয়া
ঘরটা এখন তাদের কাছে
একটা মরন খাঁচা
দোহাই লাগে চাকরী দিয়া
কেউ আমারে বাঁচা।।

চিলেকোঠায় করি বসত
চাকরী খুঁজতে ঢাকায়
দেখি লোকে অবাক চোখে
আমার দিকে তাঁকায়
আমি যেন এই শহরে
জীবন্ত পরগাছা
দোহাই লাগে চাকরী দিয়া
কেউ আমারে বাঁচা।।
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Tuesday, October 10, 2017

Discuss about the Debentures as a Security for the Loan/Advance

Debenture is a document issued by a company acknowledging its indebtedness to the bearer or a registered holder. A fixed rate of interest is payable at stated periods on such debentures. In the case of mortgage debentures, a charge is created on the assets of the company issuing such debentures in favour of a trustee who is responsible to take care of the interest of individual investors.
(i) Easy to sell.
(ii)    Not subject to violent price fluctuations.
(iii)   They can be transferred at minimum cost.
(iv)   Bearer debentures are fully negotiable.
(v)    They rank in priority to shares and mostly secured by a charge on the company's property.
(i)  If interest is not paid regularly on the debentures it would affect its price and marketability.
(ii)   If the charge on property of company is not registered, the subsequent charges will get a priority.
(iii)  Debentures may be issued by companies having no power to borrow money.
Precautions to be taken while taking debentures as security
(i)  The nature of the debentures must be ascertained, i.e., whether they are unsecured or secured, the later, being preferred.
(ii) The borrowing powers of the company issuing the debentures must be ascertained, and to verify that the same has not been exceeded.
(iii) Deposit of the debentures plus a memorandum of deposit is necessary.
(iv)The nature and value of the assets charged must be examined frequently.
(v) The banker must find out whether there are any un-cancelled redeemed debentures.
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Mention the Precautions while taking stocks and shares as security

Banker must take the following precautions while advancing against stocks and shares:
(i) In the case of partly paid shares (a) the banker should never register them in his name.
(b)  He must ensure that pending calls are paid.
(c) Sufficient margin should be taken to avoid any future loss or change in the value of the security.
(d)  The banker should verify share certificate and ensure that the calls, are paid properly and entered in the space provided for the same.
Other precautions
(i)  Update the list of shares which the particular bank is willing to lend against on a regular basis.
(ii) Updating the amount that can be lent against a particular share which is called the card limit at regular intervals
(iii)                Yearly review of the portfolio or more frequent review depending upon the volatility in the capital market.
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Monday, October 9, 2017

A Banker is a debtor as well as Trustee-Explain

Ordinarily, a banker is a debtor of his customer in respect of the deposits made by the latter, but in certain circumstances he acts as a trustee also. A trustee holds money or assets and performs certain functions for the benefit of some other person called the beneficiary. For example, if the customer deposits securities or other valuables with the banker for safe custody, the latter acts as a trustee of his customer. The customer continues to be the owner of the valuables deposited with the banker. The legal position of the banker as a trustee, therefore, differs from that of a debtor of his customer. In the former case the money or documents held by him are not treated as his own and are not available for distribution amongst his general creditors in case of liquidation.
The position of a banker as a trustee or as a debtor is determined according to the circumstances to the each case. If he does something in the ordinary course of his business, without any specific direction from the customer, he acts as a debtor (or creditor). In case of money or bills, etc., deposited with the bank for specific purpose, the bankers' position will be determined by ascertaining whether the amount was actually debited or credited to the customer's account or not. For example, in case of a cheque sent for collection from another banker, the banker acts as a trustee till the cheques is realized and credited to his customer's account and thereafter he will be the debtor for the same account. If the collecting banks fails before the payment of the cheque is actually received by it from the paying bank, the money so realized after the failure of the bank will belong to the customer and will not be available for distribution amongst the general creditors of the bank.
Thus, Lastly I can say that, A banker is a debtor as well as trustee.
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Bank & Customer is the relationship of Debtor & Creditor-Explain

On the opening of an account the banker assumes the position of a debtor. He is not a depository or trustee of the customer's money because the money over to the banker becomes a debt due from him to the customer. A banker does not accept the depositors' money on such condition. The money deposited by the customer with the banker is, in legal terms, lent by the customer to the banker, who makes use of the same according to his discretion. The creditor has the right to demand back his money from the banker, and the banker is under and obligation to repay the debt as and when he is required to do so. But it is not necessary that the repayment is made in terms of the same currency notes and coins. The payment, of course, must be made in terms of legal tender currency of the country.
A depositor remains a creditor of his banker so long as his account carries a credit balance. But he does not get any charge over the assets of his debtor/banker and remains an unsecured creditor of the banker. Since the introduction of deposit insurance in India in 1962, the element of risk to the depositor is minimized as the Deposit Insurance and Credit Guarantee Corporation undertakes to insure the deposits up to a specified amount.
Banker's relationship with the customer is reversed as soon as the customer's account is overdrawn. Banker becomes creditor of the customer who has taken a loan from the banker and continues in that capacity till the loan is repaid. As the loans and advances granted by a banker are usually secured by the tangible assets of the borrower, the banker becomes a secured creditor of his customer.
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Who is the Customer of a Bank? or, Define Customer

The term 'customer' of a bank is not defined by law. Ordinarily, a person who has an account in a bank is considered is customer. Banking experts and the legal judgments in the past, however, used to qualify this statement by laying emphasis on the period for which such account had actually been maintained with the bank.
In Sir John Paget's view "to constitute a customer there must be some recognizable course or habit of dealing in the nature of regular banking business." 
This definition of a customer of a bank lays emphasis on the duration of the dealings between the banker and the customer and is, therefore, called the 'duration theory'. According to this viewpoint a person does not become a customer of the banker on the opening of an account; he must have been accustomed to deal with the banker before he is designated as a customer. The above-mentioned emphasis on the duration of the bank account is now discarded.
According to Dr. Hart, "a customer is one who has an account with a banker or for whom a banker habitually undertakes to act as such." 
Broadly speaking, a customer is a person who has the habit of resorting to the same place or person to do business. So far as banking transactions are concerned he is a person whose money has been accepted on the footing that banker will honor up to the amount standing to his credit, irrespective of his connection being of short or long standing.
Thus, a person who has a bank account in his name and for whom the banker undertakes to provide the facilities as a banker, is considered to be a customer. It is not essential that the account must have been operated upon for some time. Even a single deposit in the account will be sufficient to designate a person as customer of the banker.
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Mention the Basic Characteristics/ Features of Banking

The following are the basic characteristics to capture the essential features of Banking:
Dealing in money:  
The banks accept deposits from the public and advance the same as loans to the needy people. The deposits may be of different types - current, fixed, savings, etc. accounts. The deposits are accepted on various terms and conditions.
Deposits must be withdraw-able:  
The deposits (other than fixed deposits) made by the public can be withdraw-able by cheques, draft or otherwise, i.e., the bank issue and pay cheques. The deposits are usually withdraw-able on demand.
Dealing with credit:  
The banks are the institutions that can create credit i.e., creation of additional money for lending. Thus, "creation of credit" is the unique feature of banking.
Commercial in nature: 
Since all the banking functions are carried on with the aim of making profit, it is regarded as a commercial institution.
Nature of agent: 
Besides the basic function of accepting deposits and lending money as loans, bank possesses the character of an agent because of its various agency services.
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