Para-banking and financial services refer to the activities undertaken by banks that are not part of their core banking operations. These services are often provided through a separate division within the bank and may include a wide range of services such as insurance, mutual funds, credit cards, and more. Here are some common para-banking and financial services undertaken by banks:
- Insurance Services: Banks offer a range of insurance products such as life insurance, health insurance, and motor insurance. These policies are often provided through partnerships with insurance companies, and the bank may earn a commission on the sale of policies.
- Mutual Fund Services: Banks offer mutual fund investment services to their customers, where they can invest in a range of mutual funds. The bank earns a commission on the sale of mutual funds.
- Credit Card Services: Banks offer credit cards to their customers, which can be used for purchases and cash withdrawals. The bank earns revenue through interest charges, fees, and commissions on the transactions.
- Investment Banking Services: Banks offer investment banking services such as underwriting, mergers and acquisitions, and advisory services. These services are typically offered to corporate clients.
- Wealth Management Services: Banks offer wealth management services to high net worth individuals, which include portfolio management, financial planning, and investment advisory services.
- Forex Services: Banks offer forex services such as currency exchange, remittances, and travel cards. These services are often provided through partnerships with forex companies, and the bank earns a commission on the transactions.
- Depository Services: Banks offer depository services such as demat accounts, where customers can hold and trade securities. The bank earns revenue through fees and commissions on the transactions.
- Online Trading Services: Banks offer online trading services, where customers can buy and sell securities through the bank’s online trading platform. The bank earns revenue through fees and commissions on the transactions.
In conclusion, banks offer a wide range of para-banking and financial services to their customers, including insurance services, mutual fund services, credit card services, investment banking services, wealth management services, forex services, depository services, and online trading services. These services are often provided through partnerships with other companies, and the bank earns revenue through commissions, fees, and interest charges.