myz-vgb.ru A Business Encyclopedia

Concentration Banking

Definition: The Concentration Banking is the arrangement used by the firms, wherein the funds from all the regional banks in different locations gets concentrated or collected into the single bank account.

In other words, a firm has its operations in several parts of the country and in order to ease the complexity of handling multiple bank accounts at different locations, the firm may opt for a concentration banking service, whereby all the funds from different regional banks gets forwarded to a single bank account called as a concentration account.

Although the organizations can have many accounts in different banks, but they usually have a single account in which major transactions take place, such account is called the concentration account and the bank in which the account is held is called the concentration bank.

How does the Concentration Banking operate?

  • First of all, the places are identified where company’s major customers are placed and then the local bank accounts are opened at each location.
  • Once the accounts are opened, the local collection center (agents) or the bank branch is identified where all the cheques are collected from the customers at the respective locations.
  • The remittances from the customers can be collected either in person or through the post. Once the cheques are collected are deposited in the local banks for the clearance.
  • On the realization of cheques, the funds are transferred to the head office bank account (concentration account) through any telegraphic/electronic transfer schemes.

The concentration banking helps the organizations in reducing the mailing float. Since the remittances from the customers are either collected in person or by local post, the mailing float has substantially reduced. Also, it has reduced the cheque processing float at company’s office, as the detailed list of all the remittances received is sent to the company’s head office as a credit advice.

Through concentration banking, the banking processing float has also been reduced considerably, as the cheques are cleared locally and the funds are readily made available. Thus, the time required for the clearance of the outstation cheques have reduced manifold.

Leave a Reply

Your email address will not be published. Required fields are marked *

Shares

Related pages


cost-push inflation may be caused bydefinition of tqmunitary elastic demand curvefmcg definewhat is the difference between strata and stratumdefinition laissez-faire leadershipblack & scholes modelbureaucratic organizational structure definitionattack marketing and promotionspayback method definitiontheory of egoismexamples of unitary elastic demand goodsdescribe market segmentationemployment provident funddefinition of informal communicationrole of paralanguage in business communicationbrand resonance definitionpolycentric pricing strategymax weber management theoriesmatrix ansoffflip in pillreinforcement theory of motivation skinnerequity theory of relationshipsansoff matrix strategymarginal rate of substitution graphmarginal utility of money is constantmeaning of quotasbanking kiosksdisadvantages of long term debtcorrelational analysiscertificate of deposit investopediadefine utility maximizationpoison pills financemethod of paired comparisonsfactors determining price elasticity of demandoligopolistic competition characteristicsgrading method of performance appraisaldisinvestment strategiesmonopolistic competition price takerinformative report of demat accountwhat is oligopolistic competitioncapital budgeting and risk analysisclassical vs neoclassicaldefine denotative languageincome tax return form itr-1definition deontologymeaning of stability in hindibenchmarking in strategic managementjoinee definitionwho uses laissez faire leadershipdisinvestment strategiesmeaning of elasticity of demandforeign exchange market operationsmeaning of scorecarddefine achieversdisguised employmentdefinition of speculatorsinstrumentality theoryjob enrichment isdefinition of poachleadership laissez fairedistribution of the sample proportioncost push inflation demand pull inflationinventory turnover definitiontypes of informal communicationscalar chain fayollaissez faire leadership disadvantagesdifference between demand estimation and demand forecastingbuy out definitionclassical management theorydefinition of social loafinguntapped market meaningfree rein leadership advantages and disadvantagesexamples of oligopoly marketpoaching employeeswhat is seed financing