Services provided by a bank over and above functions like account maintenance, providing loans, etc. are discussed below:
1. To issue draft (i.e. demand draft/banker’s draft):

• Demand draft is a cheque written by a bank (issuing bank) to another bank/branch asking it to pay money to the person/organization whose name is mentioned on it. Demand daft is a very secure medium for sending money to a person or an institute.
• The person who wishes to send money fills a form in the bank requesting it to issue the draft for the details mentioned in the form. Based on this the bank prepares a demand draft and mentions the receiver’s name on it and passes the order tc its breach or associate bank to make the payment to the receiver. Since ‘A/C Payee’ is mentioned on the draft, it can be deposited only in the account of the person whose name is written on it.
• Unlike cheque, a demand draft never bouncer.
• The sender of the DD needs to pay certain commission to the bank for this service.

2. Banker’s cheque (pay-order):

• A pay-order is similar to demand-draft. The cheque issued by the bank against the payment it accepts is called pay-order.
• Since the cheque is issued by the bank it is also called banker’s cheque.
• Pay-order can be enchashed only in the same city where it was issued.

3. Real-time Gross Settlement (RTGS):

• -» Real-time Gross Settlement (RTGS) is a special fund transfer system where in one can transfer money from one bank to another within India, on a ‘real-time’ basis i.e. the money will be transferred immediately without waiting period and on ‘gross-settlement’ basis.
• The bank through which RTGS is done is called an RTGS member bank. Each member bank is allotted a unique code called IFSC code for identification and transactional purposes. IFSC code is an 11 digit alpha numeric (i.e. combination of alphabets and numbers) code.
• The Institute for Development and Research on Banking Technology (IDRBT), Hyderabad provides IFSC codes to all the banks.

4. National Electronic Fund Transfer (NEFT):

• NEFT stands for National Electronic Funds Transfer. It is an Indian system of electronic transfer of money from one bank or bank branch to another.
• The banks or their branches that support NEFT have to become a part of NEFT network.
• The money is transferred from account of sender to account of receiver having an account in same bank or another bank via. internet.
• In order to transact one need to have an 11 digit alpha numeric IFSC code of the bank and branch in which the amount is to be transferred.
• The transfer of money usually takes place on the same day. However, the settlement of transactions take place in hourly batches i.e. For example, if one initiates a transaction and if the settlement time is over he needs to wait till the next settlement time to get his funds transferred. RBI has decided various slots of settlement times in a day.

5. Bank over-draft:

• Over-draft is a facility given to businessman having current account in the bank.
• The bank may allow a businessman to over-draw amount from his current account compared to the money present in his account i.e. his credit balance. This facility is called over-draft facility.
• A businessman needs to provide some self-guarantee or someone’s guarantee to assure repayment of the over-drawn amount along with bank’s interest. One needs to pay interest only on the amount withdrawn in excess to available in account. Based on the account holder’s financial credit the bank sanctions (approves) the limit the holder wui be allowed to withdraw.

6. Cash-credit:

• A cash credit is a drawing account for drawing money within a specific credit limit approved by the bank against some security.
• The businessman needs to pay interest pre-decided by the bank on the amount he takes as cash-credit.

7. Loan:

• An amount of money that a bank provides to a borrower against a fixed rate of interest usually for a long term and against some security is called a loan. The bank gives the loan amount altogether.
• Bank provides several types of loans like loans for buying a house, furniture, renovation, vehicle, expanding business, etc.
• To make sure the borrower repays the loan the bank keeps borrower’s immovable property such as house, office, etc. with it as mortgage.
• The terms and conditions of repayment are set at the time of approving the loan.