Ancillary Services: An Overview

Ancillary Services: Jaiib Paper 1 (Module B) Unit- 7

Dear bankers,

As we all know that  is Ancillary Services for JAIIB Exam. JAIIB exam conducted twice in a year. So, here we are providing the Ancillary Services (Unit-7), FUNCTIONS OF BANKS (Module B), Principle & Practice of Banking JAIIB Paper-1.


  • Remittance means transfer of funds on branch of a bank to another of the same bank or a different bank. Customer can make remittance within city through banker’s cheques and for remitting funds from one centre to another through Demand Draft (DD), Mail Transfer (MT), Telegraphic Transfer (TT), National electronic funds transfer (NEFT), and Real Time Gross Settlement (RTGS) at specified service charges.

♦Demand Drafts (DD) and Banker’s Cheque (BC)

Meaning Banker’s Cheque or Payment Order is a cheque issued for making the payments within the same city. Demand draft is a negotiable instrument used to transfer money from one person at one city to another person in another city.
Special feature All banker’s cheque are pre-printed with “NOT NEGOTIABLE”. Demand draft of Rs. 20000 or more should be issued with “A/c payee” crossing.
Clearance It can be cleared in any branch of the same city. It can be cleared at any branch of the same bank.
Validity 3 months 3 months
Scale Bankers cheque can be cleared in any branch of the bank provided it comes under the local jurisdiction Demand Draft can be cleared at any branch of the same bank irrespective of the city.


♦Mail Transfer (MT)

  • A mail transfer is a way of remitting money from one place to another through a bank. In case payee is a customer, his account is credited. It is used for both internal and international remittances. Bank charges commission for this service.

♦Telegraphic Transfer (TT)

  • Telegraphic transfer, also known as Wire transfer is an electronic method of transferring funds. In this method, money is transferred from one bank to another via cable services or telegraphs. Earlier, overseas payments via telegraphic transfer was a popular method. Though, telegraph is not used for transfers today, name still remains the same for the transfer of funds electronically or for any wire transfer transactions. Telegraphic transfers are safe and convenient way to transfer funds to people staying overseas. Telegraphic transfer or wire transfer is the most common means of transferring funds overseas.

What is the Information Required for Telegraphic Transfer?

Here are the important points to be provided for telegraphic transfer:

  • Name of the remitter
  • Bank account details of remitter
  • Payment currency
  • Amount to be remitted
  • Name of the beneficiary
  • Account number of beneficiary or IBAN (International Bank Account Number) for payments to UAE and Europe
  • Name and address of beneficiary bank
  • Beneficiary bank’s SWIFT (Society for Worldwide Interbank Financial Telecommunication) code and BIC Code (Bank Identifier Code)
  • Details of intermediary bank
  • Reason or purpose of transfer

♦National Electronic Funds Transfer System (NEFT)/ Real Time Gross Settlement System (RTGS)

Comparison Category NEFT RTGS IMPS
Settlement Type Half hourly batches Real time Real time
Minimum Transfer Limit Re.1 Rs.2 lakh Re.1
Maximum Transfer Limit No Limit


However, maximum amount per transaction is limited to Rs.50,000/- for cash-based remittances within India and to Nepal under the Indo-Nepal Remittance Facility Scheme.

No limit Rs.2 lakh
Service Timings  8:00 AM – 7:00 PM all working days except 2nd and 4th Saturday of the month

Unavailable on Sunday and Bank Holidays

Operates in 23 half-hourly settlement batches

 8:00 AM – 6:00 PM all working days

Unavailable on Sunday and Bank Holidays


 Available 365 days 24/7
Transaction Charges No charges for inward transactions (at destination bank branches for credit to beneficiary accounts) No charges for inward transactions

Charges applicable for outward transactions for amount:

Rs.2 lakh – Rs.5 lakh: not exceeding Rs.25

Above Rs.5 lakh: not exceeding Rs.50

GST is also applicable

Charges for remittance through IMPS are decided by the individual member banks and PPIs. The taxes are included.
Payment Options Online and Offline Online and Offline Online


♦Mobile Banking In India

  • Mobile banking started in India in 2002, and back then, transactions were carried out through SMS. Today, almost all banking transactions can be performed using a computer, laptop or a smartphone. Everything from checking account statements to paying credit card bills, utility bills and transferring funds can be done online.
  • Mobile banking began as an offshoot of internet banking to further aid convenience and ease of access. In 2018, almost all banks have mobile phone applications for financial transactions. These apps remove the requirement of having a computer or laptop to transfer funds, and with continued advancements, have made visits to the bank a rarity.
  • Note: In 2008, ICICI Bank was the first bank to launch mobile banking in India.

♦Safe Deposit Lockers

  • Safe Deposit locker is a facility extended to the customer to enable to the customers to enable them to keep their valuables/ documents etc, in a specially designed locker on payment of prescribed rentals. The relationship between the bank and the hirer of the lockers is that of a “Lessor and Lessee” or “Bailor and Bailee” (Licensor and Licensee).


  • Section 45 of the Banking Regulation Act deals with the nomination facilities in lockers services. Procedure pertaining to safe deposit lockers is detailed hereunder:
  • In the case of a singly operated locker, nomination can be made in favour of only one individual.
  • Where the safe deposit locker is hired hired by two or more individual jointly, nomination can be made by them in favour of one or more persons.

Important Guidelines of RBI on lockers

  • As per the guidelines banks cannot force customers to buy FD to open a bank locker. But, as a security cover banks can ask customers for a caution money deposit equivalent to three years rent and amount for a forced opening of the locker. This is done because there are instances where the locker is not used by the lock hirers and even the rent is not paid for it.
  • It is mandatory to have an agreement between the locker hirer and the bank. This agreement contains the basic terms and conditions like illegal items would not be stored in the locker, regular payment of dues and so on. The locker hirer should collect the copy of the agreement.
  • Banks have to carry out KYC checks on customers, before providing the locker facility. This has to be done for both old and new customers.
  • All the applications for the bank locker facility must contain a waitlist number.
  • Banks have to take all the necessary steps to safeguard and protect the bank lockers.
  • Locker keys must be embossed with the bank/branch identification code for identifying the owner of the keys.
  • The locker hirer can appoint a single nominee to the bank locker. If the nominee is appointed, he should be given the due rights by the bank.
  • If the bank locker is not operated for a long time, the banks can notify the locker hirer to either operate the locker or to surrender it. The banks should make a request for a written reply, which states the reasons for not operating the locker. If the bank has not received any reply and the locker is still not operated, it has all the right to open the locker forcibly after sending a formal notice to the hirer.

♦Portfolio Management

What is a Portfolio?

  • A portfolio refers to a collection of investment tools such as stocks, shares, mutual funds, bonds, cash and so on depending on the investor’s income, budget and convenient time frame.

Following are the two types of Portfolio:

  • Market Portfolio
  • Zero Investment Portfolio

What is Portfolio Management ?

  • The art of selecting the right investment policy for the individuals in terms of minimum risk and maximum return is called as portfolio management.
  • Portfolio management refers to managing an individual’s investments in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum profits within the stipulated time frame.
  • Portfolio management refers to managing money of an individual under the expert guidance of portfolio managers.
  • In a layman’s language, the art of managing an individual’s investment is called as portfolio management.

Need for Portfolio Management

  • Portfolio management presents the best investment plan to the individuals as per their income, budget, age and ability to undertake risks.
  • Portfolio management minimizes the risks involved in investing and also increases the chance of making profits.
  • Portfolio managers understand the client’s financial needs and suggest the best and unique investment policy for them with minimum risks involved.
  • Portfolio management enables the portfolio managers to provide customized investment solutions to clients as per their needs and requirements.

Portfolio Management Scheme- RBI Guidelines

  • PMS services are provided at the customer’s risk, without guaranteeing them a pre- determined return;
  • The services are provided to parties in respect of their long- term investible funds;
  • The minimum period, for which funds are placed by the clients, should be one year;
  • Funds accepted for portfolio management should not be entrusted to another bank for  management;
  • Funds are expected to deployed essentially in capital market instruments such as shares, debentures, bonds securities etc, but are not to be employed for lending in call money/ bill market and lending to/ Placement with corporate bodies;
  • The undeployed funds are the same as outside borrowings of the bank and Cash Reserve Ratio (CRR)/ SLR has to be maintained on such funds;

♦Merchant Banking

  • Role of Merchant Banking in India. basically provide services in the field of marketing, management, legal and financial matters to their clients. Its role ranges from aiding the person in starting the business, provide ways for raising funds, plays an efficient role in expanding the operations and also helps in reconstructing and reviving of sick business units.
  • The main business of merchant banking as summarized aptly by Narasimhan Committee in its reports is “Management and Underwriting of new issues, syndication of credit and provision of advisory services to corporate clients on fund raising and other financial aspects.

Following other activities are also covered under merchant banking:

  • Payment of interest/ Divident warrants/ refund orders
  • Bridge loan against issues

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