A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is positioned to the left in an accounting entry. A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account.

1. CREDIT AND DEBIT CARD
Dr. Vinosh Peter K.V.

2. Contents
Merchant Banking in India
Setting up and management of merchant banks in India
Categories of Merchant Banks
Credit Card and Debit Card
Types of Credit Card
Differences between Credit card and Debit card

3. Merchant Banking in India
Prior to the enactment of Indian Companies Act,1956,
managing agents acted as merchant bankers. They acted
as issue houses for securities, evaluated project reports,
provided venture capital for new firms etc. Few share
broking firms also functioned as merchant bankers.
With the rapid growth in the number and size of the
issues made in the primary market, the need for
specialized merchant banking service was felt. Grindlays
Bank (foreign bank) opened its merchant banking
division in 1967, followed by Citibank in 1970. SBI
started its merchant banking division in 1972 and it
followed up by setting up a fully owned subsidiary in
1980, namely SBI Capital Markets Ltd.

4. The other nationalized banks and financial institutions, like
IDBI, IFCI, ICICI, Securities and Finance Company Ltd.,
Canara Bank (Can Bank Financial Services Ltd.), Bank of
India (BOI Finance Ltd.) and private sector financial
companies, like JM Financial and Investment Consultancy
Services Ltd., DSP Financial consultancy Ltd. have also set
up their merchant banking divisions.
With over 1,100 merchant bankers operating in the country,
the primary market activity is picking up. Merchant banking
services have assumed greater importance in the present
capital market scenario. With the investor becoming
more cautious and discerning, the role of merchant banker has
gained more prominence.

5.  In India, apart from the overall control by the RBI, merchant
bankers operations are closely supervised by the SEBI for their
proper functioning and investor protection.
Setting up and management of merchant banks in India
 In India a common organizational set up of merchant bankers
to operate is in the form of divisions of Indian and Foreign
banks and financial institutions, subsidiary companies
established by bankers like SBI, Canara Bank, Punjab National
Bank, Bank of India, etc. some firms are also organized by
financial and technical consultants and professionals.
Securities and exchanges Board of India (SEBI) has divided
the merchant bankers into four categories based on their
capital adequacy.

6. Each category is authorized to perform certain
functions. From the point of Organizational set
up Indias merchant banking organizations can be
categorized into 4 groups on the basis of their
linkage with parent activity. They are:
Institutional Base:-
Merchant banks function as an independent wing
or as subsidiary of various Private/ Central
Governments/ State Governments Financial
institutions. Most of the financial institutions in
India are in public sector and therefore such set
up plays a role on the lines of governmental
priorities and policies.
.

7.  Banker Base:-
These merchant bankers function as division/ subsidiary of banking
organization. The parent banks are either nationalized commercial
banks or the foreign banks operating in India. These organizations
have brought professionalism in merchant banking sector and they
help their parent organization to make a presence in capital market.
 Broker Base:- In the recent past there has been an inflow of
Qualified and professionally skilled brokers in various Stock
Exchanges of India. These brokers undertake merchant banking
related operating also like providing investment and portfolio
management services.
 Private Base:- These merchant banking firms are originated in
private sectors. These organizations are the outcome of opportunities
and scope in merchant banking business and they are providing skill
oriented specialized services to their clients.

8. Categories of Merchant Banks
Merchant bankers are classified into four categories
according to the SEBI (Merchant Banking) Regulations
1992. These are as follows:
(a) Category I: To carry on any activity relating to issue
management and act as adviser,
consultant manager, underwriter and portfolio manager for
capital issues.
(b) Category II: To act as adviser, consultant, co-manager,
underwriter and portfolio manager
for capital issues.
(c) CategoryIII:To act as underwriter, adviser, and
consultant to an issue.
(d) CategoryIV:To act only as adviser or consultant to an
issue.

9. Credit Card and Debit Card
A credit card is a small plastic card issued to users as
a system of payment. It allows its holder to buy
goods and services based on the holders promise to
pay for these goods and services.
Credit card is a suitable alternative for cash payment
or credit payment or deferred (instalment) payment.
It is used to execute those transactions which are
compiled through electronic devices like a card
swapping machine, computer with internet facility,
etc.

10. Features of credit card
Alternative to cash
 Credit card is a better alternative to cash. It removes the
worry of carrying various currency denominations to pay
at the trade counters.
Credit Limit
The credit cardholder enjoys the facility of a credit
limit set on his card. This limit of credit is determined
by the credit card issuing entity (bank or NBFC) only
after analyzing the credit worthiness of the cardholder.
The credit limit is of two types,
1. Normal credit limit, and
2. Revolving credit limit.

11.  Normal credit limit is usual credit given by the bank or
NBFC at the time of issuing a credit card. Revolving
credit limit varies with the financial exposure of the credit
cardholder.
 Aids payment in domestic and foreign currency
 Credit card aids its cardholder to make payments in any
currency of choice. In other words, it gives its holder a
unique facility to make payments either in domestic
(native) currency or if necessary, also in foreign (non-
native) currency, that too as and when required.
 Record Keeping of all Transactions
 Credit card issuing entities like banks or NBFCs keeps a
complete record of all transactions made by their credit
cardholders. Such a record helps these entities to raise
appropriate billing amounts payable by their cardholders,
either on a monthly or some periodic basis.

12. Regular Charges
Regular charges are basic routine charges charged by
the credit card issuing entity on the usage of
credit card by its cardholder. These charges are
nominal in nature. The regular charges are
primarily classified into two types, viz.,
 1. Annual charges, and
 2. Additional charges.
Service Tax
Service tax is included in the total amount charged to
the credit cardholder. This mandatory service tax
imposed by the government also increases the final
end cost bared by a credit cardholder.

13. Elements of Credit Card
 The front side of a credit card shows following
details:
 Logo of issuing entity.
 Logo of payment processor.
 Hologram.
 Expiration date.
 Cardholders name.
 Card number.
 Individual account identifier nu
 Issuer identifier number (IIN).
 Embedded microchip.
 Major industry identifier (MII).
 Issue date
 Bank identification number (BIN).

14. The back side of a credit card shows following details:
 Security code (card verification number).
 Magnetic stripe.
 Signature panel.
 Additional information.
Types of Credit Card
Standard Credit Card: This is the most commonly used.
One is allowed to use money up to a certain limit
Premium Credit Card: This has a much higher bank
account and fees. Incentives are offered in this over
and above that in a standard card. Credit card holders
are offered travel incentives, reward points, cask back
and other rewards on the use of this card

15. Secured Credit Card: People without credit history or
with tarnished credit can avail this card. A security
deposit is required amounting to the same as the credit
limit
Limited Purpose Credit Card: There is limitation to
its use and is to be used only for particular applications.
Charge Credit Card: This requires the card holder to
make full payment of the balance every month and
therefore there is no limit to credit.
Specialty Credit Card: is used for business purposes
enabling businessmen to keep their businesses
transactions separately in a convenient way

16. Prepaid Credit Card: Here, money is loaded by the
card holder on to the card. It is like a debit card except
that it is not tied up with a bank account.
Advantages of credit card
They allow you to make purchases on credit without
carrying around a lot of cash.
They allow accurate record-keeping by
consolidating purchases into a single statement.
They allow convenient remote purchasing
ordering/shopping online or by phone..
They are cheaper for short-term borrowing interest
is only paid on the remaining debt,
not the full loan amount.

17. Many cards offer additional benefits such as
additional insurance cover on purchases, cash back,
air miles and discounts on holidays.
Disadvantages of credit card
You may become an impulsive buyer and tend to
overspend because of the ease of using credit cards.
Lost or stolen cards may result in some unwanted
expense and inconvenience.
The use of a large number of credit cards can get you
even further into debt.
Using a credit card, especially remotely, introduces
an element of risk as the card details may fall into the
wrong hands resulting in fraudulent purchases on the
card.

18.  Debit card
A debit card (also known as a bank card or check card)
is a plastic card that provides the cardholder electronic
access to his or her bank account/s at a financial
institution. The card can be used as an alternative
payment method to cash.
Debit card and ATM cards
Obviously there is a difference between an ATM card and a
debit card. An ATM card only allows you to draw cash from
your account through an ATM (Automated Teller Machine). A
debit card allows you to make financial transactions
(purchases mostly) without paying cash. The payment is made
by swiping your debit card in a machine at a shop where you
made the purchase. The value of your purchase is
automatically deducted from your balance in your bank
account. Nowadays, banks provide ATM debit cards, which
can be used for both the purposes mentioned above. Similarly,
ATM credit cards are also available.

19. Differences between Credit card and Debit card
Credit card Debit card
It is a pay later product It is pay now product
The card holder can avail of
credit for 30- 45 days
Customers account is debited
immediately
No sophisticated communication
system is required for credit card
system
sophisticated communication
system is required for credit
card system
Opening bank account and
maintaining required minimum
amount are not essential
Opening bank account and
maintaining
required amount are essential
possibility of risk of fraud is
high
Risk is minimized through
using PIN

20. THANK YOU