Banking

This means that if you take this note to the bank asking for conversion the bar. compelled to give you 100 rupees in any denomination. The value of the paper content of 100 rupee note is extremely low (almost nil) yet it commands purchasing power worth of 100 rupees. This is because of the fact that it has been declared as legal tender by the government and is generally accepted as a medium of exchange.
Bank Money:
Bank money means near money, which is not always legal tender but it is wi. accepted as a medium of exchange. (The meanings and importance of near money has been described in next question). Here what needs to be stressed is that near money is an important type of money in the modern economy and much of the business of world takes place in near money. Bank money mostly consists of cheques, drafts and bills of exchanges. These are briefly described below:-
(a) Cheque:
A cheque is a written instruction on a specified piece of paper from a client to h;s bank, instructing the later to pay a certain sum of money. The cheque would be "self i.e.. money is withdrawn by the client himself or it could be in the name of any third part> There are three kinds of cheques, these include bearer cheques, crossed cheques and order cheques (these are described in credit instrument section.)
(b) Bill of Exchange:
Bill of exchange is a convenient way to pay for commercial transaction in credit. The seller instead of taking cash from the buyer draws a bill on him which the bu>e: accepts by signing it. This bill can be a sight bill or a time bill. In case of sight bill the payment is made on demand and in case of time bill the payment is due after a particular time period.
(c) Draft:
Draft is just like a cheque. However, the difference is that it is drawn by a bank on its own branch or on any other bank's branch. So we can say that drafts are the cheque which are used by banks. A draft when drawn on a bank, directs it to pay a certain sum of money to a person named on it.
These are the four types of money. Besides these the fifth type which is rapidly gaining both the importance and the usage in the modern sophisticated world is called plastic money.
Plastic Money:
Plastic money means the credit cards and plastic cards which have silicon chips and a specially printed set of characters. These cards are used for making payments at -rdinary shops and at EFTPOS (Electronic Funds Transfer at Point of Sale).
The plastic money, smart cards and credit cards are described in the last section of this book .