Unit 3 Utility Service of Banking Notes| Class 9th Banking & Insurance Revision Notes

Unit 3 Utility Service of Banking Notes| Class 9th Banking & Insurance Video

Detailed Explanation of Unit 3: Utility Services of Banking

1. Credit Cards & Debit Cards

Modern banking provides two essential payment instruments: credit cards and debit cards, each catering to different financial needs.

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A. Credit Cards

A credit card allows the user to borrow funds up to a pre-approved limit to pay for goods and services.

• Features:
  1. Buy now, pay later: Allows deferred payment.
  2. Interest-free period: Typically 30–50 days if the bill is cleared on time.
  3. Reward programs: Cashback, discounts, or reward points on purchases.

Real-Life Example:

An individual uses a credit card to book flight tickets online, earning reward points redeemable for discounts on future purchases.

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B. Debit Cards

A debit card deducts money directly from the user’s bank account for transactions.

• Features:
  1. Direct payment from savings/current account.
  2. No interest or borrowing involved.
  3. Suitable for people managing expenses within their account balance.

Real-Life Example:

A customer pays for groceries using their debit card, with the amount deducted immediately from their savings account.

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C. Differences Between Credit and Debit Cards

Feature	Credit Card	Debit Card
Payment Mode	Borrowed funds	Own account balance
Interest	Charged on overdue payments	No interest
Eligibility	Requires a good credit score	Available to most account holders
Use in Emergencies	Suitable for large purchases	Limited by account balance

Solution Example:

Q1. Differentiate between credit and debit cards with examples.
Ans:

• A credit card allows borrowing funds, while a debit card deducts money from the user’s account.
• Example: Booking tickets with a credit card involves borrowed money, while paying bills with a debit card uses personal funds.

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2. Automated Teller Machines (ATMs)

ATMs are self-service banking terminals enabling customers to perform various financial transactions.

A. Functions & Uses of ATMs

1. Cash withdrawal: Convenient access to funds anytime.
2. Balance inquiry: View account balances instantly.
3. Fund transfer: Transfer money between accounts.
4. Bill payments: Pay utility bills directly via ATMs.

Real-Life Example:

A traveler withdraws cash from an ATM during a holiday in a remote town.

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B. Customer Complaints Management for ATM Transactions

1. Common Issues:
   • Cash not dispensed but debited.
   • Card stuck or malfunctioning.
2. Resolution Process:
   • Register complaints via helpline, online portals, or branch visits.
   • Resolution typically occurs within 7 working days.

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C. Evolution of ATMs

1. First ATM: Introduced in the late 1960s.
2. Technological Advancements: From simple cash dispensing to complex transactions like deposits and fund transfers.

D. Structure of ATMs

1. Input Devices: Keypad and card reader.
2. Output Devices: Display screen, receipt printer, and cash dispenser.
3. Software: Ensures secure and seamless transactions.

Solution Example:

Q2. What are the functions of ATMs, and how do they resolve customer complaints?
Ans:
Functions: Cash withdrawal, balance inquiry, fund transfer, and bill payments.
Complaint Resolution: Customers can report issues through helplines or branches, with most problems resolved within 7 days.

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3. Core Banking

Core banking refers to centralized systems enabling customers to access their accounts and services from any branch or digital platform.

Features of Core Banking:

1. Anywhere Banking: Access accounts from any branch or ATM.
2. Real-Time Processing: Instant transaction updates.
3. Digital Services: Internet and mobile banking integration.

Real-Life Example:

A customer deposits a cheque at a branch in Mumbai, and the amount is accessible in their Delhi branch account instantly.

Solution Example:

Q3. What are the features of core banking?
Ans:
Core banking allows real-time processing, anywhere banking, and digital services integration, ensuring customer convenience.

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4. Standing Instructions

Standing instructions are predefined orders given by customers to banks to execute recurring payments like utility bills or loan EMIs.

a. Specimen of Standing Order:

Date: [DD/MM/YYYY]
To: [Bank Name]
Subject: Standing Instruction for Monthly Payment
Instruction: Debit ₹5,000 monthly from my account for electricity bill payment.

Solution Example:

Q4. Define standing instructions with an example.
Ans:
Standing instructions automate recurring payments. Example: Setting up an order to pay monthly rent via account debit.

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Summary

Utility services such as credit/debit cards, ATMs, core banking, and standing instructions have transformed banking, enhancing convenience and efficiency for customers. These tools cater to diverse financial needs and simplify banking experiences.

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10 Most Important Questions with Detailed Solutions

1. Differentiate between credit and debit cards.
   Ans: Credit cards use borrowed funds, while debit cards deduct from the user’s account balance.
2. List the uses of ATMs.
   Ans: Cash withdrawal, balance inquiry, fund transfer, and bill payments.
3. Explain the role of core banking in modern banking services.
   Ans: Core banking enables anywhere banking, real-time processing, and digital service integration.
4. What are standing instructions? Provide an example.
   Ans: Standing instructions automate recurring payments. Example: Loan EMI payments.
5. State the features of credit cards.
   Ans: Deferred payment, interest-free periods, and reward programs.
6. What is the process for resolving ATM complaints?
   Ans: Complaints can be filed via helplines, online portals, or bank branches, resolved within 7 days.
7. What is the evolution of ATMs?
   Ans: Initially introduced for cash dispensing, ATMs now support deposits, fund transfers, and more.
8. What are the advantages of core banking for customers?
   Ans: Ensures flexibility, instant transaction updates, and digital convenience.
9. Describe the structure of ATMs.
   Ans: Includes input devices (keypad, card reader), output devices (screen, printer, dispenser), and secure software.
10. Explain how ATMs support real-life scenarios.
    Ans: ATMs provide 24/7 access to cash and services, ensuring convenience during emergencies.