Central Bank

 A central bank, reserve bank, or monetary

authority is the entity responsible for the
monetary policy of a country or of a group of
member states. It is a bank that can lend
money to other banks in times of need.
 Its primary responsibility is to maintain the
stability of the national currency and money
supply, but more active duties include
controlling subsidized-loan interest rates, and
acting as a lender of last resort to the banking
sector during times of financial crisis.
Functions of a central bank
 implementing monetary policy
 controlling the nation's entire money supply
 the Government's banker and the bankers' bank
("lender of last resort")
 managing the country's foreign exchange and gold
reserves and the Government's stock register
 regulating and supervising the banking industry
 setting the official interest rate – used to manage
both inflation and the country's exchange rate – and
ensuring that this rate takes effect via a variety of
policy mechanisms
Naming of central banks
 Many countries use the "Bank of Country" form
(e.g., Bank of England, Bank of Canada, Bank of
Russia).
 Some are styled "national" banks, such as the
National Bank of Ukraine;
 Central banks may incorporate the word "Central"
(e.g. European Central Bank, Central Bank of
Ireland).
 The word "Reserve" is also often included, such as
the Reserve Bank of Australia, Reserve Bank of India,
Reserve Bank of New Zealand, the South African
Reserve Bank, and U.S Federal Reserve System.
Commercial Bank
 A commercial bank is a type of financial intermediary
and a type of bank.
 Commercial banking is also known as business
banking.
 It is a bank that provides checking accounts, savings
accounts, and money market accounts and that
accepts time deposits
 Commercial bank is the term used for a normal
bank to distinguish it from an investment bank.
 It raises funds by collecting deposits from
businesses and consumers via checkable deposits,
savings deposits, and time (or term) deposits. It
makes loans to businesses and consumers. It also
buys corporate bonds and government bonds. Its
primary liabilities are deposits and primary assets
are loans and bonds.
The role of commercial banks
 processing of payments by TT, EFTPOS, internet banking
 issuing bank drafts and bank cheques
 accepting money on term deposit lending money by overdraft,
installment loan, or other means
 providing documentary and standby letter of credit, guarantees,
performance bonds, securities underwriting commitments and
other forms of off balance sheet exposures
 safekeeping of documents and other items in safe deposit boxes
 currency exchange, sale, distribution or brokerage, with or
without advice, of insurance, unit trusts and similar financial
products as a “financial supermarket”
Investment Bank
 An Investment Bank is a financial institution that
deals with raising capital, trading in securities and
managing corporate mergers and acquisitions.
 Investment banks profit from companies and
governments by raising money through issuing
and selling securities in the capital markets (both
equity, bond) and insuring bonds (selling credit
default swaps), as well as providing advice on
transactions such as mergers and acquisitions.
 A majority of investment banks offer strategic advisory
services for mergers, acquisitions or other financial
services for clients, such as the trading of derivatives,
fixed income, foreign exchange, commodity, and
equity securities.
Merchant bank
 In banking, a merchant bank is a financial institution
primarily engaged in offering financial services and
advice to corporations and wealthy individuals on how
to use their money.
 The term can also be used to describe the private
equity activities of banking.
Universal Bank
 A universal bank participates in many kinds of
banking activities and is both a Commercial
bank and an Investment bank.
 Historically there was a distinction drawn
between pure investment banks and
commercial banks.
 In the US, the regulatory barrier to the
combination of investment banks and
commercial banks has largely been removed,
and a number of universal banks have emerged
in both jurisdictions.
Building society
 A building society is a financial institution, owned by
its members, that offers banking and other financial
services, especially mortgage lending.
Supranational bank
 A supranational entity is formed by two or more
central governments to promote economic
development for the member countries. Supranational
Institutions finance their activities by issuing bond
debt and are usually considered part of the sub-
sovereign debt market. Some well-known examples of
supranational institutions are the World Bank,
European Bank for Reconstruction and Development;
European Investment Bank; Asian Development Bank,
Inter-American Development Bank.
Finance house
 The Finance House provides you with the ability to
source Mortgages, Insurance and much more.
 This facility can help you find the right deal for you
and in many cases you can apply online for the product
of your choice.
Transaction account- Current account
 A transactional account (NA: checking account
or chequing account, UK : current account or
cheque account) is a deposit account held at a
bank or other financial institution, for the
purpose of securely and quickly providing
frequent access to funds on demand, through a
variety of different channels. Because money is
available on demand these accounts are also
referred to as demand accounts or demand
deposit accounts.
Features
 cash money (coins and banknotes)
 cheque and money order
 giro (funds transfer, direct deposit)
 direct debit (pre-authorized debit)
 standing order (automatic funds transfer)
 ATM card or debit card
 SWIFT: International account to account transfer.
Deposit account or time or notice
account

 A money deposit at a banking institution that cannot

be withdrawn for a preset fixed 'term' or period of
time. When the term is over it can be withdrawn or it
can be rolled over for another term. Generally
speaking, the longer the term the better the yield on
the money.
Personal account
 A personal account is an account for use by an
individual for their own needs. It is a relative term to
differentiate the said accounts from those accounts for
corporate or business use.
 The term "personal account" may be used genericly for
financial accounts at banks and for service accounts
such as accounts with the phone company, or even for
e-mail accounts.
Standing order
 A standing order is an instruction a bank
account holder gives to their bank to pay a set
amount at regular intervals to another account.
The instruction is sometimes known as a
banker's order. They are typically used to pay
rent, mortgage or other fixed regular payments.
Because the amounts paid are fixed, a standing
order is not usually suitable for paying variable
bills such as credit card, or gas and electricity
bills.
 Standing orders are available in the banking systems of
several countries, including Germany, the United
Kingdom, Barbados, the Republic of Ireland,
Netherlands, Russia and presumably many others. In
the United States, and other countries where cheques
are more popular than bank transfers, a similar service
is available, in which the bank automatically mails a
cheque to the specified payee.
Cheque
 A cheque or check is a negotiable instrument
instructing a financial institution to pay a specific
amount of a specific currency from a specified demand
account held in the maker/depositor's name with that
institution. Both the maker and payee may be natural
persons or legal entities.
Cheques generally contain
- place of issue - Counterfoil
- cheque number - Payee
- date of issue - Drawee (Drawer’s bank)
- payee - Drawer
- amount of currency
- Account number
- signature of the drawer
- Sort cord
- routing / account
number - Date
- fractional routing - crossing
number
Canadian cheque
British cheque
Types of cheques
 An order check – A crossed cheque
 A bearer check – An open cheque
 A counter check
Credit card
 A credit card is part of a system of payments named
after the small plastic card issued to users of the
system. It is a card entitling its holder to buy goods
and services based on the holder's promise to pay for
these goods and services. The issuer of the card grants
a line of credit to the consumer (or the user) from
which the user can borrow money for payment to a
merchant or as a cash advance to the user.
Debit card
 A debit card (also known as a bank card or
check card) is a plastic card which provides an
alternative payment method to cash when
making purchases. Functionally, it can be
called an electronic check, as the funds are
withdrawn directly from either the bank
account (often referred to as a check card), or
from the remaining balance on the card. In
some cases, the cards are designed exclusively
for use on the Internet, and so there is no
physical card.
ATM card
 An ATM card (also known as a bank card, client
card, key card or cash card) is an ISO/IEC 7810
card issued by a bank, credit union or building
society. It can be used at an ATM for deposits,
withdrawals, account information, and other
types of transactions, often through interbank
networks.
 Some ATM cards can also be used at a branch,
as identification for in-person transactions at
merchants, for EFTPOS (point of sale)
purchases
Smart card
 A smart card is in any pocket-sized card with
embedded integrated circuits which can process data.
 Microprocessor cards contain volatile memory and
microprocessor components.
 Using smartcards also is a form of strong security
authentication for single sign-on within large
companies and organizations.