Saturday, August 22, 2009

HOW TO OPEN A BANK ACCOUNT, SMART ZOMBI'S.




STEPS TO OPEN ACCOUNT:


The procedure of opening an account with the bank is quite simple and easy as discussed below.


SELECTION OF BANK &; TYPE OF ACCOUNT:

Having made up mind to open a bank account the prospective account holder will select a bank and its branch on the type of account to open. He will choose one from among saving, current or
fixed deposit accounts. Savings account serves the purpose of saving, current account is used for selling business transaction, and fixed deposit is meant for earning regular income.


APPLICATION BLANK:

The bank manager will provide the client an application form to fill in the blanks for getting such information as:

Name, father's name, address, profession, amount to be deposited, introducer's data, date, and signature. After receiving the filled-up form, the bank will scrutinize it and allocate an account number.


REFERENCE CARD:

Along with the application blank, the bank also gives a blank reference card which requires two signatures of the account holder as a specimen to be kept at the bank. When a cheque is presented at the bank, it matches the signature on the cheque with the one on the reference card. This practice offers safety to the bank and the account holder as well. The card also provides a space for account holder's special instruction.

REFERENCE:

At the time of opening an account the bank requires one or two reference who are already account holder of the same bank. The reference will sign the name and write his account in the columns provided in the application blank. This reference ensures the bank's confidence in the new account holder.

ALLOTMENT OF ACCOUNT NUMBER:

After thorough security of the application form, the bank will allot an account number through which all deposits and withdrawals will be carried out.


PROVISION OF PAY-IN-SLIP:

At this stage account has been opened. Now the bank will supply a pay-in-slip to the account holder who will use it to deposit the money.


MAKING DEPOSIT:

After having the bank account number allotted and received the pay-in-slip the account holder will fill in the blanks of the slip and deposit the money at the cash


SUPPLY OF A CHEQUE BOOK:

After the first deposit is made, the bank supplies a cheque book that contains up to 25 leaves for savings account, and 25 or more for current account. Fixed deposit account doesn't carry cheque books because it is non checking account.

EXCISE DUTY:

Cheque book is supplied after account holder has paid excise duty imposed by the GOVT on cheques. This duty is paid either in cash or is deducted from the balance of the account.


ENCLOSURES:

Along with the application blank a photocopy of the identity card of the account holder should be attached. For identification purpose the bank ma ask to enclose a photograph also.


HOME SAVINGS ACCOUNT, SMART ZOMBI'S.


HOME SAVINGS ACCOUNT:

This type of account offers the facility to the account holder to save money right at home and put it in the locker provided by bank. The key of the locker remains with the bank which sends its officer every week to collect the amount from the locker. Now this type is no longer in practice

FIXED DEPOSIT ACCOUNT, SMART ZOMBI'S.



FIXED DEPOSIT ACCOUNT:

This account is opened for a definite period of time without the expiry of which the amount cannot be withdrawn. the rate of interest is higher than that of savings account. The greater the period for which money is deposited the higher the interest rate is offered. The period ranges from three months to ten years. It is usually operated by widows, pensioners, salaried persons, etc. to get regular income. In Pakistan, this account is subject to ZAKAT deduction.

CURRENT ACCOUNT, SMART ZOMBI'S.


CURRENT ACCOUNT:

Current account is operated by businessmen. Earlier it could be opened with a minimum amount but now a little bit more amount is needed. Even some banks require more to open it. It can be operated any number of times a day. Unlike savings account there is no upper limit to withdrawal. This account serves the businessmen as if his cashier is sitting at the bank and dealing in his cheques. A nominal interest may be offered on the balance of account. the account is not subject to ZAKAT in Pakistan. Here too, if the balance falls below a certain sum, the bank fines the account holder a specified rate.

SAVING ACCOUNT, SMART ZOMBI'S.



SAVING ACCOUNT:

Saving account is offered to the public to encourage their small savings. Those who open it include students, salaried persons, and small traders. These small savings by individuals constitute a huge amount at the bank. The account is subject to ZAKAT in Pakistan.

It can be opened with minimum amount of money. But in practice banks demand at least maximum amount of money to open it. The account holder can withdraw cash only twice a week. Bank offers interest on this account. If the balance falls below the required minimum level, the bank imposes a certain charge on account holder.

TYPES OF BANK ACCOUNT, SMART ZOMBI'S.


Commercial banks offer its client a variety of accounts to be opened with them. This variety facilitates the person to open that account which suits his needs.

The following accounts are the type:

1: Saving account.
2: Current account.
3: Fixed deposit account.
4: Home savings account.

Friday, August 21, 2009

BANKS ACCOUNTS, SMART ZOMBI.



DEFINITION:

Banks thrive on three accounts based on commodity and business needs.
1:) Safety needs. 2:) Borrowing needs. 3:) Debt clearing needs.


Banks accounts satisfy all these three needs of an individual or a businessman.

The bank account can be defined as a facility provided to the account holder to deposit his money with the bank and withdraw it whenever he needs it. He may use the account to borrow and or settle his debts through cheques.

Thursday, August 20, 2009

WHAT IS FOREX? SMART ZOMBI'S.


ZOMBI tells,

"What Forex is?
"For-ex" stands for foreign exchange; it's also known as FX. In a for-ex trade, you buy one currency while simultaneously selling another.
It is the system under which commercial nations pay off their debts.
It can be defined as th system of foreign bills of exchange under which foreign payments are made.
" The term foreign exchange refers to funds available for use in international transaction and may include foreign currency, deposits in foreign banks, and other liquid, short term financial claims payable in foreign currencies."

DISADVANTAGES OF EXPORT, SMART ZOMBI'S.


DISADVANTAGES OF EXPORTS:


Exports are heavily on the upside in mostly all respects and in societies. Its downside is very little and limited to only undeveloped countries. The main problem that arises out of exports is the scarcity of locally available essential goods. Undeveloped countries, in the rat race to earn foreign exchange at any cost, are bent upon exporting even essential goods like fruits, vegetables, meats, eggs, and other poultry and diary goods which fall short for local consumption. The result: on one hand a common man is deprived of these essential items adversely affecting his health, and on the other, these GOVT only earn a little fraction of foreign exchange forming a very little percentage of overall foreign exchange earnings. In Pakistan, eating fruit is luxury for a common man. Although it is an agriculture country it is unable to produce fruits, vegetables, and other products in such quantities, as not only to cater to its peoples needs but also export in maximum amount.

ANDVANTAGES OF EXPORT, SMART ZOMBI'S.


ADVANTAGES OF EXPORT:

FOREIGN EXCHANGE EARNINGS:

For a country foreign exchange is extremely important element in its economic system. To maximize its earnings of foreign exchange the country formulates effective foreign policies, establishes good relations with bordering and other countries, enters economic blocs. Export is one of the most important sources of foreign exchange earnings. If a country falls short of it, it seeks help from IMF ( International Monetary Fund).
The foreign exchange earned is used in the economic development, raising people's standard of living, and paying off of foreign debts.

ECONOMIC DEVELOPMENT:

Export business brings economic development. Increase in export takes production to a high levels which in turn creates employment which is a significant indicator of good economic growth and development.

IDENTITY OF THE COUNTRY:

If a country produces high quality products at reasonable price it make sa prominent place in foreign importing countries. People buy the goods by the name of that country with great confidence. Japan, Germany, U.K., France, U.S.A., and many other developed European countries have attained this respectable status. Customers across the world and readily buy products made in Japan, U.S.A., U.K., because these countries have gained consumers' confidence by providing quality products.



DISADVANTAGES OF IMPORTS, SMART ZOMBI'S.



DISADVANTAGES OF IMPORTS:


SETBACK TO LOCAL INDUSTRIES:

Although import creates healthy competition and becomes instrumental to the improvement of quality but this state of affair is not acceptable to the industrialists and producers because they have their own individual interests which are badly hit; only a few of them strive successfully to meet the challenge and survive but most of them disappear from the competitive market proving the survival of the fittest.
CONSUMPTION OF FOREIGN EXCHANGE:

Every country attaches extreme importance to the foreign exchange and strive hard to maximize its earning, and try to spend it very carefully. Its use on the import of essential items as raw materials, machinery, and other industrial goods is rather desirable. But, on the other hand, if it is developing or underdeveloped countries it will be harmful for the economy.

PUBLIC TASTE & CULTURE:

People tend to prefer imported goods to locally manufactured ones owing to their prices and quality, and consequently foreign products capture the local market. These products are so strong that they manage to change the taste and culture of the society. The main vitim and sufferer, hence, is the local industry which begins to contract - creating unemployment in the country.

ADVANTAGES OF IMPORT, SMART ZOMBI'S.



ADVANTAGES OF IMPORT:

AVAILABILITY OF GOODS:

International trade bridges the gap between demand and supply, shortage and surplus, and production and consumption. Since no country around the globe is self-sufficient and hence faces the shortage or lack of certain goods or services - which are replenished by import from the manufacturing countries.

REDUCTION IN PRICES:

Shortage of goods causes the rise in prices crating difficulties for the customer. It increases the cost of living making the life miserable of a common man. When the nations have no way out to overcome the shortage they resort to import, and consequently prices come down giving relief to the masses. As an economic phenomenon when supply is less than demand the price go up and vice versa. So to bring down prices import is one of the measures.


COMPETITION & QUALITY:

Sometimes as an economic policy imports are allowed only to create healthy competition which brings prices at the reasonable level, forces the manufacturer to improve quality and innovate goods. The improvement and innovation goes up to the extent that they are demanded abroad.


POLITICAL REASONS:

Friendship among countries, treaties, and economic blocs allow to open borders for exchange of goods among them. Sometimes, the foreign trade relations bring the exporting country under the pressure of importing country which would edicit certain political or otherwise gain from the former.


INFUSION OF NEW IDEAS & TECHNOLOGY:

Closure of borders for importers brings only short-term benefits. But in the long-run it creates suffocation, brings quality down owing to lack of competition, increases the wealth of sellers at the cost buyers. Since quality becomes substandard foreign markets are lost. The ban on imports not only gives way to smuggling inflicting losses to the exchequer and if the GOVT manages to curb it, the country is deprived of the new ideas, technology, innovation, and now techniques that are taking place in the developed countries creating further digital divide between poor and rich countries.


Tuesday, August 18, 2009

TRANSFER OF MONEY, SMART ZOMBI'S.


" Commercial banks play a significant role in transferring money from one person, company, city, or country to another. This service is reliable, quick, safe, and inexpensive. On the other hand, if this service is performed by post office, it would be costly, time consuming, and risky. Now, in the business world, money is transferred mostly by banks using cheques, pay orders, drafts.

Thanks.

Tuesday, August 11, 2009

IMPORT, SMART ZOMBI'S.


IMPORT:

DEFINITION:
The import refers to buy from foreign countries. It iplies tariff, foreign exchange, and shipping. It denotes that the importing country is facing the lack or shortage of goods which is being met by buying from abroad. Imports are financed by foreign exchange.

DOCUMENTS USED IN IMPORTING THE GOODS:


1: Importing license.
2: Performa invoice.
3: Insurance cover note.
4: Letter of credit.
5: Bill of exchange.
6: Certificate of origin.
7: Certificate of measurement and weight.
8: Bill of lading.
9: Mate receipt.
10: Packing list.
11: VBF from 6 - A or 6 - B.
12: Registration certificate as importe.
13: Certificate from the chambers of commerce.
14: Income tax certificate showing GIR.

EXPORT, SMART ZOMBI'S.


EXPORT:

DEFINITION:


Export refer to selling locally available goods on foreign market. It denotes that the country has a surplus of goods and needs foreign exchange


DOCUMENTS USED IN EXPORTING THE GOODS:

1
: Indent.
2: Letter of credit (L/C).
3: Bill of exchange (B/E).
4: Bill of lading (B/L).
5: Shipping order.
6: Performa invoice.
7: Insurance receipt.
8: Dock receipt.
9: Mate receipt.
10: Export invoice.
11: Consular invoice.
12: Certificate of origin.
13: Shipping bill.

FOREIGN TRADE, SMART ZOMBI'S.


INTRODUCTION:

No country in this world is self sufficient. A country may have a surplus of one thing but short of the other. Every country, no matter rich or poor, big or small, developed or undeveloped is dependent on the other. Japan is short of raw materials, Arab Countries lack of human resources, and Pakistan suffers the shortage of oil, technology, and industrial and consumer goods. Either shortage or surplus both result in "FOREIGN TRADE".


Foreign trade has two parts:

Import: It means buying from abroad.
Export: It refers to selling abroad.

EXCHANGE CONTROL, SMART ZOMBI'S.


DEFINITION:
"Regulating all foreign exchange activities and matters by and bringing them under the jurisdiction of a centralized authority is referred to as exchange control.


To import goods the importer pays to the commercial bank amount in the local currency. The bank, in turn, surrenders the local currency to the central bank for foreign exchange in order to pay it to the exporter. Conversely, in exporting goods, the central bank receives foreign exchange which it retains with itself and deposits with the commercial bank the equivalent amount in the local currency which is finally paid to the exporter.

In short all receipts and payments of foreign exchange are made through a central bank.

MECHANISM TO DETERMINE EXCHANGE RATE, SMART ZOMBI'S.

MECHANISM TO DETERMINE EXCHANGE RATE:
The mechanism of determination of exchange rate varies with the currency systems which may be as followed"

1: When both countries adopt gold standard.

2: When one country is on gold standard, and the other is on non convertible paper currency.

3: Both countries have non-convertible paper currencies.

These are defined as followed.


1: WHEN BOTH COUNTRIES ADOPT GOLD STANDARD:

When two trading nations are on gold standadr or their paper currencies are convertible into gold and silver, the exchange rate between their currencies would depend on the weight of gold contained in the coin. If a Pakistani coin contains two grams of gold and other country coin one gram, the exchange rate would be:

1 Pakistani coin = 2 coins of other country.

Or 1 coin of other country = 0.50 Pakistani coin.

Exchange rate thus determined is called as "mint par of exchange".
Gold standard allows free flow of coins among countries with it.


2:WHEN ON COUNTRY IS ON GOLD STANDARD, AND THE OTHER ON NON-CONVERTIBLE PAPER CURRENCY:

In such a case currencies of two trading countries cannot freely flow. They will settle their foreign debts through the bills of exchange. the rate will be determined on the demand and supply of their bills, whose demand depends on that of goods and services. High demand will put the rate of currency at a high level and vice versa.


3: WHEN BOTH COUNTRIES ARE ON NON-CONVERTIBLE PAPER CURRENCIES:

Here also the above method involving bill of exchange is used. In this modern world all countries run non-convertible paper currency systems. Under it payment in foreign trade is made through bill of exchange. If the goods and services have a good demand abroad, the demand for bill of exchange will consequently be high. High demand for the bill will fetch a high exchange rate for the currency. Because of poor demand for Pakistani goods, consequently the currency, and high demand for dollar, the exchange value of a dollar to the rupee in mid 1999 was Rs.50 and in 30 July 2001 the dollar value shot up Rs. 67.. Drop in the exchange rate is the indication of sustained negative balance of payment and other negative factors.

Monday, August 10, 2009

DETERMINATION OF RATE OF EXCHANGE, SMART ZOMBI'S.

DETERMINATION OF RATE OF EXCHANGE.
The rate of exchange is the ratio at which one country's currency can be exchanged for another.

If one American dollar can buy Pakistan's fifty rupees, the rate of exchange for a dollar and a rupee would be



1 US $ = Pak Rs. 70
1 PAK Re. = $ 0.014 (i.e. less than 1.5cents).

PROBLEMS IN FOREIGN TRADE, SMART ZOMBI'S.

PROBLEMS IN FOREIGN TRADE.
The most crucial problem in foreign trade is to make payments to the exporting country in its currency. In those days when trading nations were on gold standard, there was no problem in discharging each other's debts. The transactions were settled through paying or receiving gold coins or currencies convertible into gold and silver.

But now gold standard no longer exists. Every country possesses its own paper currency which is not convertible into gold or silver, and is quite different from other country's in value, size, shape, design, and mechanism. the trading countries are not willing to accept each other's currencies. The difference in currency systems creates the need for the development of foreign exchange that refers to a system by which trading nations can discharge one another's debts. However, these countries are inclined to accept those currencies which enjoy a great demand, readily convertible into any currency, and enjoys the confidence of businessman, common men, and Governments around the world. On this standard come dollars, pounds, marks, yens, etc. All trading nations are ready to accept these currencies in imports and exports which enjoys the status of foreign exchange.

DEVELOPMENT OF FOREIGN EXCHANGE CONCEPT, SMART ZOMBI'S.


DEVELOPMENT OF FOREIGN EXCHANGE CONCEPT.

No country in the world is self-sufficient. Poor countries produce raw materials but lack in manufactured goods for want of technology. Rich and developed countries posses abundance of manufactured goods but are deprived of raw materials. Thus both poor and rich countries trade with each other. Trade between two countries is referred to as foreign trade.

FACTORS OF FOREIGN EXCHANGE, SMART ZOMBI'S.

FACTORS OF FOREIGN EXCHANGE

Foreign exchange always involves two elements:

1: Mechanism of foreign payments.
2: Determination of exchange rate.

MECHANISM OF FOREIGN PAYMENTS:.
A third party always exits in the settlement of transaction between importer and exporter. This third party is either a bank or a discounting house. These two institution play an important role in the foreign trade as under.

1: The local bank appoints its representatives posted in banks in foreign countries through whom foreign payments are cleared.

2: The local bank maintains in foreign countries its own branches which are used in settling transactions relating to foreign exchange.

3: Some banks establish independent banks in foreign countries. These banks offer services to importers, exporters, and governments and help them in foreign payments. These foreign banks purchase foreign exchange in the local market in order to supply the exchange to the importers.


DETERMINATION OF EXCHANGE RATE:.

1: RATE FIXED BY GOVT.

The govt fixes its currency rate in terms of foreign currency. the rate remains fixed and stable over a long period of time. In the determination, the state keeps in view market forces, demand for local and foreign goods, and dictates of the WORLD BANK AND IMF.

2: FREE FLOAT:

In this method GOVT leaves its currency in the open market where it (currency) finds its genuine place. Market forces, like demand and supply, push the currency at a certain level which becomes its rate. The rate of exchange will be high if the currency has a good demand abroad and will be at low level if the demand is poor.

3: DIRTY FLOAT:.

It is the mixture of the above two methods. The GOVT uses its discretion up to a certain a level and the rest is left to open market forces in the determination of exchange rate.