Category: Banking Instruments

Kisan Credit Card

A Kisan Credit Card is a credit card to provide affordable credit for farmers in India. It was started by the Government of India , Reserve Bank of India (RBI), and National Bank for Agriculture and Rural Development (NABARD) in 1998-99 to help farmers access timely and adequate credit. Kisan Credit Cards are issued to […]

Risk Management

Risk management refers to the practice of identifying potential risks in advance, analyzing them and taking precautionary steps to reduce/ curb the risk. RBI issued guidelines on Risk Management in Bank on 20th October 1999. Highlights are – 1. Banks to set up a comprehensive risk rating systems for counter parties. 2. Banks have to […]

Bank Deposits/Accounts

Traditionally banks in India have these types of deposit accounts: ● Current Accounts: A current account is always a Demand Deposit and the bank is obliged to pay the money on demand. The Current accounts bear no interest. Instead, banks charge service charges on these accounts. They provide the convenient operation facility to the individual […]

Business Correspondents

With the objective of ensuring greater financial inclusion and increasing the outreach of banking sector, the Reserve Bank of India in January 2006 permitted banks to use intermediaries as Business Facilitators (BFs) or Business Correspondents (BCs). Entities eligible to be appointed as BC are – ● NGOs/ MFIs set up under Indian Societies/ Trust Acts.(Care: […]

Demand Draft

A demand draft is a negotiable instrument similar to a bill of exchange . A bank issues a demand draft to a client (drawer), directing another bank (drawee) or one of its own branches to pay a certain sum to the specified party (payee). ● A Demand Draft is payable on demand. ● A Demand […]

Bill of Exchange

Bill of Exchange is a three-party negotiable instrument in which the first party, the drawer, presents an order for the payment of a sum certain on a second party, the drawee, for payment to a third party, the payee, on demand or at a fixed future date. Inland Bill A bill that is drawn in […]

Promissory Notes

A promissory note is a legal instrument (a financial instrument), in which one party (the maker or issuer ) promises in writing to pay a determinate sum of money to the other (the payee ), either at a fixed or determinable future time or on demand of the payee, under specific terms. If signed by […]


A cheque is a negotiable instrument instructing a financial institution to pay a specific amount of money from a specified transactional account held in the drawer’s name with that institution. Parties to a cheque are drawer (who is writing the cheque), drawee (the bank with whom the account is maintained) and payee (the person named […]

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