An establishment authorized by a government to accept deposits, pay interest, clear checks, make loans,

act as an intermediary in financial transactions, and provide other financial services to its customers.

Banking is defined as the business activity of accepting and safeguarding money owned
by other individuals and entities, and then lending out this money in order to conduct
economic activities such as making profit or simply covering operating expenses. 

A bank is a financial institution licensed to receive deposits and make loans. Two of the
most common types of banks are commercial/retail and investment banks.  Depending on
type, a bank may also provide various financial services ranging from providing safe deposit
boxes and currency exchange to retirement and wealth management.
In the United States of America banks are regulated by the U.S. Federal Reserve Bank which
is one of the world's major central banks.  Above all, central banks are responsible for
currency stability.  They control inflation, dictate monetary policies, and oversee money
demand and supply in the market.  Commercial or retail banks offer various services
including, but not limited to, managing money deposits and withdrawals, providing basic
checking and saving accounts, certificates of deposit, issuing debit and credit cards to
qualified customers, supplying short-and long-term loans such as car loans, home mortgages
or equity line of credits.  Investment banks gear their services toward corporate clients. 
They provide services such as merger and acquisition activity and underwriting among other
investment services.

Evolution of Banking:
It has not so far been decided as to how the word ‘Bank’ originated. • Some authors are of the
opinion that this word is derived from the words ‘Bancus’ or ‘Banque’ which means a bench. •
This origin is contributed to the fact that the Jews transacted the business of money exchange on
benches in the market place.
Other authorities hold the opinion that the word bank is derived from the German word
‘Bauk’ which means ‘joint stock fund’. • Later on, when the Germans occupied major part of Italy,
the word ‘Bauk’ was Italianized into ‘Bank’
Early growth in banking • Banking is as old as human society. • Around 3400 BC they were
Sumerians who carried on some activities which are considered as banking activities. • Later
Babylonians further enlarged these activities. They contributed in the areas of credit, specifically
in agriculture credit. • They used temples as banks. • In the following era Greeks also carried
banking activities.
Greeks also used temples for banking activities where people not only deposited their
money and valuables for safety and security, but also borrowed money from there. • Business of
exchanging money and making remittances between various cities were also carried out under
the Greek system
Then Romans regulated the conduct of private banks. • Utmost confidence of the people was
created in them because the banking business was mostly done by individuals. • Fall of Roman
empire had adverse effects on banking and financial activities. • Then European countries took
over and they established cities of Venice, Florence and Genoa as center of trades and
commerce.
Modern banking • Banking in its modern form and structure started in Britain. • Lombardy
merchants came to England in the fourteenth century and settled in the parts of the city of
London now called Lombard street. • They dealt with not only keeping the money in safe custody
from general public but also changed money for travellers or merchants.
They also developed important banking facility of documentary credits. • Then this business
was taken over by Goldsmiths. • Since these goldsmiths required strong safes for the purpose of
their own business, they introduced necessary facilities of safe keeping of valuables and cash of
their customers.
These goldsmiths issued receipts or notes to their depositors in respect of the cash or
articles left with them. • These were called Goldsmiths notes and carried an undertaking to return
the money and articles to the depositors or bearers on demand. • Over a period of time these
goldsmiths discovered that large sums of money were left in their custody for longer periods:
therefore they started the use of this cash to advance loans to other persons for a fixed period
and at high interest rates.
10. They also encouraged cash deposits by their customers by offering them a
part of their profits earned on the money.
11. History of Banking industry in Pakistan • At the time of independence there
were 487 offices of scheduled banks in the territories now comprising Pakistan. •
In accordance with the Indian Independence Act of 1947, an expert committee
recommended that the Reserve Bank of India should continue to function in
Pakistan until 30th September 1948.
12. History of Banking industry in Pakistan • It was also decided that Indian notes
would continue to be legal tender in Pakistan till 30th September, 1948. • After the
announcement of independence plan in June 1947, the hindus residing in the
territories now comprising Pakistan started transferring their assets to India. • The
Banks having there registered offices in Pakistan transferred them to India.
13. History of Banking industry in Pakistan • By 30th June 1948 the number of
scheduled banks in Pakistan declined from 487 to only 195. • 19 non indian foreign
banks with a status of small branch offices and engaged only in export of
agricultural crops. • Only 2 Pakistani institutions i-e Habib Bank and the
Australasia Bank.
14. History of Banking industry in Pakistan • Decided to advance the date from
30th September 1948 to 30th June 1948 upto which the Reserve Bank of India
could serve as the monetary authority in Pakistan. • Quaid-i-Azam Muhammad Ali
Jinnah inaugurated the State Bank of Pakistan on 1stJuly 1948. • First pakistani
notes were issued in October 1948 in the denomination of Rs 5, 10 and 100.
15. History of Banking industry in Pakistan • State Bank provided every help and
encouragement to Habib Bank to expand its network of branches. •
Recommended government to establish a new bank which could serve as an
agent of the State Bank. • As a result National Bank came into being in 1949. •
Industrial development finance corporation was set up. • Agricultural development
bank was set up. • Muslim Commercial Bank was registered in 1956. • Pakistan
industrial credit and investment corporation. • Commerce Bank Limited and
Standard Bank Limited. • By June 1965, the number of scheduled banks stood at
36.
16. Nationalization of Banks • Nationalization act 1974. • Mergers were there. •
Habib(overseas)Bank and Standard Bank merged with HBL. • Bank of
Bahawalpur, Eastern Merchantile Bank & Eastern Bank Corporation merged with
NBP • The commerce and Union Bank were merged with UBL • Premiere Bank
merged with MCB. • Australasia Bank was given new name of ABL.
17. Problems of Nationalization • Bureaucratic attitude • Government owned banks •
Cant be done • Come tomorrow • Bring the following documents • Slow way doing
things • Unnecessary intervention of trade unions. • Rewards not linked with
performance • Lending on political basis • Enlarged role of governments.
18. Financial sector reforms • Reforms process begin in 1990 • 1997 reform process
got momentum. • Amendments in Banks Nationalization act 1974. empowered the
federal govt. to sell all or part of share capital of NCB’S. • New banking companies
 in private sector. • Ten new banks were permitted to commence their business. •
Golden shake hand scheme was introduced by the banks • Prudential regulations
came into existence. • CIB and computerization of all record. • Onsite and offsite
inspection by SBP.
19. Present scenario of Banking industry • Healthy competition • Improved
management and control • Excellent provision of services to general pubic •
Increased profitability of Banks. • Decrease in non performing loans •
Implementation of latest technology. • Rewards linked with performance.

 Origin, history and types of banking system

1. 1. ORIGIN, HISTORYAND TYPES OF BANKING SYSTEM
2. 2. SUBMITTED BY: Talha Ali Tehseen Javaid Muhammad Ali Saif Ali
3. 3. Introduction  Banks have been around since the first currency was formed  In the early days
of ancient empires, temples were considered to be the safest place to keep valuable commodities.
4. 4. Origin  The word ‘bank’ is used in the sense of a commercial bank.  . It is of Germanic
origin though some persons trace its origin to the French word ‘Banqui’ and the Italian word
‘Banca’ (Long Bench)
5. 5. The First Bank  The Romans, great builders and administrators of that time, took banking out
of the temples.  The first bank called the ‘Bank of Venice’ was established in Venice, Italy in
1157 to finance the monarch in his wars.
6. 6. Evolution of Bank
7. 7. The Goldsmith  He had to take special precautions against theft of gold and jewellery.  The
goldsmith started charging something for taking care of the money and valuables.  The
goldsmith receipt became like cheques as a medium of exchange and a means of payment.
8. 8. The Moneylenders  Goldsmith started advancing the coins on loan by charging interest.  He
became a banker who started performing the two functions of modern banking, that of accepting
deposits and advancing loans.
9. 9. The Establishment of Banking System
10. 10.  The modern banking system started in Venice in 1587, and in the same year the “Banco di
Rialto” was established.  People could deposit even their gold and silver items in this bank for
which the bank issued receipts. These receipts were used as currency notes.
11. 11. Cont.  The first bank in the U.S.A. was set up in Philadelphia in the year 1782.  In England,
the first bank was started in the year 1825.  Nowadays, Banks serve many other purposes such as
giving credit cards and foreign currency to people going abroad.  Banks also provide us the
facility of lockers to keep our valuable jewellery.
12. 12. Modern Banking System
13. 13.  When a bank makes loan, it does not take other people’s deposits and lend them out. 
When a bank makes a ‘loan’ it simply types in to its account that the borrower owes it a sum of
money – this is the bank’s asset.  On the process of depositing money in the bank, lending it,
getting interest on the deposited money, the whole banking system works.
14. 14. Channels of Banking System
15. 15. INTERNET BANKING  It is also called as Net Banking, E-banking, Online Banking,
Virtual Banking  . It offers fastest and cheapest mode of banking where customer uses internet
facility
16. 16. CORE BANKING  Commonly known as fully computerized banking.  All the branches of
a bank are linked to a core computer so that the data is accessible anywhere anytime  Computers
are linked to a core computer, called Server.
17. 17. MOBILE PHONE BANKING  As per recent RBI guidelines, there is no financial limit for
transactions in a day.  It refers to doing actual banking transactions through mobile phone
18. 18. IMMEDIATE PAYMENTS SERVICES – IMPS  Developed by National Payment
Corporation of India (NPCI)  It offers an instant, 24×7 services to facilitate use of cell phones as
a channel  For accessing bank accounts and execute interbank fund transfers
19. 19. TELE BANKING  It refers to telephone based banking.  In contrast to mobile banking, no
transactions are allowed in Tele-banking.  it is call centre based banking.
20. 20. Automated Teller Machine (ATM)  ATMs facilitate cash withdrawal from one’s account –
any time – anywhere.  Such as fee-deposit, online payment of bills, mobile recharge, and fund
transfers.  Confidential PIN (Personal Identification Number) to activate the ATM.
21. 21. DEBIT / CREDIT CARDS  Also referred to as Plastic Money.  A debit card is linked to a
specific bank account and can be used to operate only that account.  The credit card holder gets a
monthly bill for the transactions .
22. 22. VISA / MASTER CARD  These are two international card service providers (Global
Payment Gateways).  All transactions put through various debit / credit cards are coordinated
and serviced by these two companies.
23. 23. Types of Banks
24. 24. Saving banks  A savings bank is a financial institution whose primary purpose is accepting
saving deposits and paying interest on those deposits.  These banks were often designed to
encourage low income people to save money and have access to banking services.
25. 25. History  Savings bank said to have been established in 1765 in the town of Brumath.  But
the savings bank idea was suggested in England as early as 1697.  There was a savings bank in
Hamburg, Germany, in 1778.
26. 26. Direct banks:  is a bank without any branch network that offers its services remotely via
online banking and telephone banking.  Direct bank also provide access via ATMs, mail and
mobile.
27. 27. History  One of the world's first fully functional direct banks was First Direct, which
launched telephone banking in the United Kingdom on 1 October 1989.  The commercialization
of the Internet in the early 1990s was the biggest driver in the creation of full direct banking
models.
28. 28. Private banks  Private banks became known as ‘Private’ to stand out from the retail banking
& savings banks aimed at the new middle class.  They often advised and performed all financial
& banking services for families.
29. 29. History  The first banks in Venice were focused on managing personal finance for wealthy
families.  Private banks have a long tradition in the UK where C. Hoare & Co. has been in
business since 1672.
30. 30. Commercial Banks:  A commercial bank is a type of financial institution that provides
services such as accepting deposits, making business loans, and offering basic investment
products.  Commercial banks are established with an objective to help businessmen.
31. 31. History  The Commercial Bank was founded in 1924 by local businessmen in Oglethorpe
country with the mission of serving the financial needs of the citizens and businesses of the area.
32. 32. Community bank:  A community bank is a depository institution that is typically locally
owned and operated.  Community banks tend to focus on the needs of the businesses and
families where the bank holds branches and offices.
33. 33. History  August 18, 1945, Huntington Park Bank opened its doors.  In 1950, Huntington
Park Bank changed its name to Community, and to underscore the Bank’s commitment to the
communities it served.
34. 34. Online banks  Online Banks operate entirely online – there are no physical branch locations
available to visit with a teller or personal banker.
35. 35. History  Online banking was first introduced in the early 1980s in New York, United States.
 Almost simultaneously with the United States, online banking arrived in the United Kingdom. 
The UK's first home online banking services known as Homelink was set up by Bank of Scotland
for customers
 36. 36. Mutual banks  A mutual savings bank is a financial institution chartered by a central or
regional government, without capital stock, that is owned by its members who subscribe to a
common fund.
37. 37. History  The Reverend Henry Duncan in 1810, in Ruthwell, Scotland. Rev. Duncan
established the small bank in order to encourage his working class.  The banks were started by
philanthropists, who took on the positions of savings bank trustees, managers, and directors.
38. 38. Central banks  Central banks manage the monetary system for a government.  For example,
the Federal Reserve Bank is the US central bank responsible for managing economic activity and
supervising banks.
39. 39. History  The first institution recognized as a central bank, the Swedish Riksbank. Established
in 1668 as a joint stock bank.  A few decades later (1694), the most famous central bank of the
era, the Bank of England, was founded also as a joint stock company to purchase government
debt.
40. 40. Ethical banks:  An ethical bank, also known as a social, alternative, civic, or sustainable
bank, is a bank concerned with the social and environmental impacts of its investments and loans.
41. 41. History  The cooperative movement and the new social movements from the 1960’s have
developed a practice of ethical banking.
42. 42. Investment banks:  Investment banks help businesses work in financial markets.  If a
business wants to go public or sell debt to investors, they’ll often use an investment bank.
43. 43. History  The term ‘investment bank’ came into common usage in the late 19th – early 20th
centuries, particularly in the United States.
44. 44. Retail Banks:  Retail banks are probably the banks you’re most familiar with: Your checking
and savings accounts are held at a retail bank, which focuses on consumers.  These banks give
you credit cards, offer loans, and they’re the ones with numerous branch locations in populated
areas.

 Historical Background of Banking in Bangladesh

1. 1. WELCOME
2. 2. Submitted To Kazi Nafiul Mazid Advocate, Supreme Court of Bangladesh Submitted By
Meherabul Islam Shovon Northern University Bangladesh
3. 3. Learning Objects  Definition of Banking.  Evolution of Banking.  Beginning of banks. 
Modern Banking.  History of Banking in Bangladesh.  Bangladesh Bank.  Types of Bank in
Bangladesh.  Commercial Bank.  CAMELS Rating System.
4. 4. Definition of Banking  The word Bank come from the Latin Word “Banco”.  The term
banking is defined as “accepting, for the purpose of lending or investment, of deposits of money
from the public, repayable on demand or otherwise and withdrawable by cheque, draft, and order
or otherwise”.  It is thus clear that the underline principle of business of banking is that the
resources mobilized through the acceptance of deposits must constitute the main stream of funds
which are to be utilized for lending and investment purposes. The banker is thus an intermediary
and deals with money belonging to the public.
5. 5. The Evolution Of Banking
6. 6. Beginning of Banks  The idea of banks began as long ago as 1,800 BC in Babylon. In those
days moneylenders made loans to people. In Greece and Rome banks made loans and accepted
deposits. They also changed money. (In the Bible Jesus famously drove the money changers out of
the temple in Jerusalem).  However with the collapse of the Roman Empire trade slumped and
banks temporarily vanished. However banking began to revive again in the 12th and 13th
centuries in the Italian towns of Florence and Genoa.
7. 7. History of Banking in Bangladesh
8. 8. Cont.  The first modern bank in Bengal was Bank of Hindostan, established in 1770 in
Calcutta.  The first modern bank headquartered in Dhaka was Dacca Bank, established in 1846.
It did a very limited business and did not issue banknotes. It was purchased by Bank of Bengal in
1862.
9. 9. Cont. • After the Liberation War and the eventual independence of Bangladesh, the Government
of Bangladesh reorganized the Dhaka branch of the State Bank of Pakistan as the central bank of
the country, naming it Bangladesh Bank. This reorganization was done pursuant to Bangladesh
Bank Order, 1972, and the Bangladesh Bank came into existence retroactively from 16 December
1971.
10. 10. Cont.  Nationalized Commercial Banks (NCBs) were established in Bangladesh in 1972
through amalgamation of twelve commercial banks that were operating in pre-independent
Bangladesh allowing the poor access to fund, reducing capital flight to foreign countries, and
increasing domestic investment were some of the basic objective of this nationalization.
11. 11. Bangladesh Bank Bangladesh Bank is the central bank of Bangladesh. Bangladesh Bank was
established in Dhaka as a body corporate vide the Bangladesh Bank Order, 1972 (P.O. No. 127 of
1972) with effect from 16 December 1971. At present it has ten offices located at Motijheel,
Sadarghat, Chittagong, Khulna, Bogra, Rajshahi, Sylhet, Barisal, Rangpur and Mymensingh in
Bangladesh; total manpower stood at 5807 (officials 3981, subordinate staff 1826) as of 31 March
2015. Bangladesh Bank is the first central bank in the world to introduce a dedicated hotline
(16236) for the general populace to complain any banking related problem. Moreover, the
organization is the first central bank in the world to issue a "Green Banking Policy".
12. 12. Functions of Bangladesh Bank The major functional areas include :  Formulation and
implementation of monetary and credit policies.  Regulation and supervision of banks and non-
bank financial institutions, promotion and development of domestic financial markets. 
Management of the country's international reserves.  Issuance of currency notes.  Regulation
and supervision of the payment system.  Acting as banker to the government .  Money
laundering prevention.  Collection and furnishing of credit information.  Implementation of the
Foreign Exchange Regulation Act.  Managing a deposit insurance scheme .
13. 13. Types of Bank in Bangladesh
14. 14. Commercial Bank  A commercial bank is a financial institution that provides services, such
as accepting deposits, giving business loans and auto loans, mortgage lending, and basic
investment products like savings accounts and certificates of deposit.  The traditional
commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and
ATMs.
15. 15. Types of Commercial Bank
16. 16. Functions of Commercial Bank
17. 17. Role of Commercial Banks in 21st century  The commercial banks are now not confined to
local banking.  They are fast changing into global banking i.e., understanding the global
customer, using latest information technology, competing in the open market with high technology
system, changing from domestic banking to investment banking etc.  The commercial bank are
now considered the nerve system of all economic development in the country.
18. 18. CAMELS Rating System  Meaning of CAMELS Rating System  C = Capital adequacy. 
A = Assets.  M = Management Capability.  E = Earning.  L = Liquidity.  S = Sensitivity.
19. 19. CAMELS Rating as of December 2014 Strong or ‘A-class’ Banks  Prime Bank.  Exim
Bank.  South Bangla Agriculture Bank.  Southeast Bank.  Standard Bank.
20. 20. Satisfactory or ‘B-class’ Banks  Al-Arafah Islami Bank.  Islami Bank Bangladesh. 
Dutch-Bangla Bank.  Bank Asia.  AB Bank.  Mutual Trust Bank.  Pubali Bank.  Dhaka
Bank.  Uttara Bank.  Shahjalal Islami Bank.  One Bank.  NCC Bank.  Jamuna Bank. 
The Trust Bank.  Social Islami Bank.  BRAC Bank.  Union Bank.  Midland Bank.  NRB
Global Bank.  Modhumoti Bank.  NRBC Bank.  Farmers Bank.  NRB Bank.  Meghna
Bank.  Premier Bank.  First Security Islami Bank.  Eastern Bank.
21. 21. Fair or ‘C-class’ Banks  Mercantile Bank  National Bank  IFIC Bank  The City Bank 
United Commercial Bank  Bangladesh Commerce Bank  Bangladesh Development Bank 
Bank Al-Falah  Woori Bank
22. 22. Cont. Marginal or ‘D-class’ Banks  Rupali Bank  Agrani Bank  Janata Bank  Sonali
Bank  BASIC Bank Unsatisfactory or ‘E- class’ Banks  Bangladesh Krishi Bank  Rajshahi
Krishi Unnayan Bank  ICB Islamic Bank