Allied Bank Of Pakistan (Ltd)
BANKS AND SCOPE OF BANKING1.1: WHAT IS BANK?
A bank is an institution for the custody, loan or exchange of money for sanctioningcredit, for transferring funds by domestic and foreign bills of exchange. It is a pipelinethrough which currency moves in to and out of circulation.As it is clear from the definition of banking, the main activity or function of banking is borrowing and lending of money with a margin of gain. However, as far as the presentday banking is concerned, there are a number of different banks, set up under specificdifferent objectives, performing various functions.
1.2:BANKING IN DEVELOPING SOCIETIES
In the developed societies, the banks do not have to make many efforts in mobilizingsavings, as it has become a second habit with the people. The commercial banks arefinancing the short and long-term capital needs of the business. The loans and discountsof commercial banks include real state mortgages and long term loans, which extend to aslong a period as ten years. These banks also administer estates, acts as insurance agentsand underwriters, provide brokerage services and implement domestic as well as foreigneconomic policies of the government.Commercial banks in developing countries have to make vigorous efforts of resourcemobilization at all levels. However, with the passage of time the commercial bankingoperations are under going remarkable qualitative change. In Pakistan for instance, banking facilities are being extended to the un-banked places. Planned efforts are beingmade to enhance the supply of bank advances to the new priority sectors in consonancewith the present day socio-economic needs.A special scheme to induct commercial banks in the field of agricultural credit wasintroduced in December 1972. The scheme provides for short and medium term loans tofarmers under a much-simplified procedure. State Bank's measures aimed at increasingthe flow of credit to the small man in business and industry as well as to housing and
Department of CommerceFaculty of Administrative Sciences Rawalakot (A.K)