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Commercial Banking

Commercial Banking

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Published by Umair Javed

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Published by: Umair Javed on Apr 27, 2012
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04/27/2012

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COMMERCIAL BANKING AND ITS REGULATIONS

Sir Rizwan ul Hassan

repayable on demand or otherwise and withdraw able by cheque. order or otherwise.Banking means the accepting. . for the purpose of lending or investment . draft.Introduction  According to Banking Companies Ordinance 1962. of deposits of money from the public.

Origin and Evaluation  Historically banking started by  Merchants  Gold smith  Money lenders  Primitive Banks of Venice –1157  Bank of Barcelona—1401  Bank of Amsterdam—1609  Bank of England--1694  Bank .

Commercial Banks in India Bank of Bengal—1809  Habib Bank Ltd—1941  Muslim Commercial Bank 1948  In Pakistan   Banking companies ordinance-1962  Bank nationalized-----1974  Bank denationalized---1991  Islamic banking---------1981 .

Functions of Commercial Bank  Primary Functions      Receiving Deposits Extending Loans Secondary Functions Public utility services Agency Services .

Contd…  Public Utility services  Transfer of money  Credit Creation  Underwriting of shares  Issue of letter of credit  Lockers  Agency Services  Accepting Cheques  Receiving payments for other organizations  Legal Attorney .

Sources of Funds 1.Capital  Paid-up Capital  Retained earnings 2-Deposits  Saving deposits  Current deposits  Time deposits  Euro dollars .

Use of Bank funds Non-Profitable use Fixed assets Cash reserves Operating expenses  Profitable use Lending Investment  . .

Call loans .Lending   Over draft Loans  Personal Loans  Car loans  House Financing  Education Financing   Discounting bill of exchange.

Mutual Funds .Investment      Government Securities Government Bonds Corporate Stocks or shares Corporate Bonds.

Fund Management  Principles of lending  Safety  Profitability  Diversity  Liquidity  Short Term  Principles of Investment  Safety  Profitability  Business environment .

 Qualifications of customer  Not minor  Of sound mind  No past history of bankruptcy or alien enemy.  ― any person or corporate body is a customer when opens an account or negotiations for advance or loan‖.Commercial Banks and Customers  Who is customer ? ― person who has some sort of accounts either deposits or current account or some similar relations‖. .

Contd…  Rights of Customers  To draw cheque  To receive interest  To sue  Duties of Customers  Present cheque in business hours  Should keep cheque book in lock and key  Should draw cheque very carefully .

Contd…  General relationship between bank and customer  Debtor and Creditor  Principal and agent  Bailer and bailee .

Bank Accounts  Individual Account  Specimen  CNIC  Reference  Source Signature of Income of account close  Account Ended  Application  Death  Lunacy or unsound mind  Insolvency .

Joint Accounts  Partner ship  Copies of CNIC of all partners  Attested copy of partnership Deed  Attested copy of registration certificate  Authorized letter . in original in favor of the person operating the account  Joint Stock Company  Resolution of board for opening the account & specifying the person to operate the account  Memorandum and articles of Association .

By- laws  Resolution of governing body for opening the account and operating the account  Copies of CNIC of all members of governing body . Societies and Associations  Certified copies of.Contd…  Certificate of incorporation  Certificate of commencement of business  Copies of CNIC of all directors  List of directors  Clubs . certificate of Registration.

Four categories  Risk management or ―R‖ category  Corporate governance or ―G‖ category  KYC and anti money laundering ―M‖ category  Operations or ―O‖ category .Prudential Regulations   Prudential regulations for banks and DFIs. January 01. 1992.

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