Presentation

       Title:                    Money and Banking

       Submitted to:      Dr.Hafsa  Rasheed
       Submitted by:     Group 1
Iqra Nazeer
Nida Naqi
Nimra Arif
Anila shaheen Sabir
Mehmooda Khanum
Namra Muneer
    
     Department:     Management sciences
     Section:             BBA 7 (B)

INTRODUCTION Of BANKING:

The concept of banking may have begun in the times of ancient Assyria and Babylonia with
merchants offering loans of grain as collateral within a barter system. Lenders in ancient Greece
and during the Roman Empire added two important innovations: they accepted deposits and
changed money.

Origin of Banking :

It is seen that banking transactions have been taking place since last number of years. Even it is
evidenced that the banking system was prevailing at the time of Babilon culture. The banks were
in existence in Rome also. It was said that in the year 1171, the authorities of Venice had taken
loan from the people for meeting the expenses of war and the arrangements for repayment were
also made by them. Such loan was called as ‘Mot’ in Italian language. The meaning of mot in
German language is ‘bank’. In those days, there was German rule in many parts of Italy.
Banking is an industry that handles cash, credit, and other financial transactions. Banks provide a
Safe place to Store extra cash and credit. They offer savings accounts, Certificates of Deposit,
and checking accounts. Banks use these deposits to make loans. These loans include home
mortgages, business loans, and car loans. 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

Definition:

Banking is defined as “Accepting of deposits of money from public for the

purpose of Lending or Investment, repayable on demand or otherwise and
with draw able by cheque, draft, or otherwise”

Banking can be 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 earn a profit. However,
with the passage of time, the activities covered by banking business have widened and now
various other services are also offered by banks. The banking services these days include
issuance of debit and credit cards, providing safe custody of valuable items, lockers, ATM
services and online transfer of funds across the country / world.

Objective of Banks:

1) Business objectives
2) Social objectives

 Business objectives

• Making profits
• Providing services
• Currency issue.
 • Creation of transaction media.
• Receiving deposit.
• Making loan.
• Ensuring safety.
• Investment.

 Social objectives:

• Creating savings
• Capital formation
• Industrialization.
• Employment.
• Developing living standard
• Economic development.

Types of banks:
 Retail banks
 Commercial banks
 Investment banks
 Credit banks
 Private banks
 Online banks
 Neobanks
 Challenger banks

 Retail banks:
Retail banking, also know as consumer banking or personal banking , is the provision of services by a
bank to the general public, rather than to companies , corporation or other banks which are often
described as wholesale banking. Retail banking is a way for individual consumer to manage their
money , have access to credit, and deposited their money in a secure manner.

 Commercial banks:
A bank that offers services to general public and to companies. It is a financial institution whose
purpose is to accept deposits from people and provide loans and other facilities. It carries all
operations related to deposit and withdrawal of money for general public.

 Investment banks:
Investment banks pertains to certain activities of a financial services company or a corporate division
that consist in advisory -based financial transactions on behalf of individuals , corporations and
 governments. They act as a intermediaries between security issuers and investors and help new firms
to go public.

 Credit banks:
Credit banks used in the names of banks that lend money, federal intermediaries credit banks provide
short term loans to agricultural sectors. Credit banks means as to any particular series of bonds , the
person providing a letter of credit , a line of credit or other credit or liquidity facility, as designated
Resolution providing for the issuance of such bonds.

 Private banks:
Private banking is banking , investment and other financial services provided by banks and financial
institutions primarily serving high – net- worth individuals – defined as thoes with very high levels of
income or sizeable assets. Private banks are not incorporated. In any such case, creditors can look to
both the “ entirety of the bank’s assets” as well as the entirety of sole -propritor’s / general’s partner
assets.

 Online banks:
Online banking, also known as internet banking , web banking or home banking , is an electronic
payment system that enables customers of a bank or other financial institutions to conduct a range of
financial transactions through the financial institutions websites. The online banking system will
typically connect to or be part of the core banking system operated by a bank to provide customer
access to banking services in addition to or in place of traditional branch banking. It provide personal
and corporate banking services such as viewing account balances, obtaining statements, checking
recent transactions, transferring money between accounts and making payments.

 Neobanks:
Neobanks is a type of direct bank that operates exclusively online without traditional physical branch
networks . Neobanks is a Fintech company that offers banking services like checking or deposit
accounts to it’s clients through online or mobile platform. The offering of Neobanks are usually
limited compared to traditional banks. The slimmed -down model often allows Neobanks customers
to enjoy fewer fees and higher then average interest rate.

 Challenger banks:
A relatively small retail banks set up with the intension of competing for business with large, long
established national banks. Challenger banks are small , recently created retail banks that compete
directly with the longer established banks in the UK, sometimes by specialising in areas underserved
by the “big four” banks.

SCOPE OF BANKING:
The banking sector is considered to as the backbone of the economy and offers various career
opportunities to students from all fields: science, commerce humanities. You need to good in
analyzing numbers with strong mathematics so that you can interpret and analyze numerical data.
It is one of the lucrative careers especially for the people who are looking job in government
sector. 
The sector is in the huge need for manpower as Government is taking banking to remote areas
also by opening new branches. It is also considered one of the socially respectable and secure
job. There are multiple examinations for bank jobs conducted by IBPS, State Bank and Reserve
Bank (twice in a year). To clear these bank  examinations you need to be proficient in
Reasoning, Aptitude, General knowledge, General English and Arithmetic topics.
Communication and interaction with customers is most important in this field and hence gives
you an exposure to different types of people with varied needs and lifestyles and enhances your
confidence level as well in the long run. Some prospective careers in banking are : Bank
Probationary Officer (PO) Financial Analyst. Account Manager. Specialist IT Officer.
Some prospective careers in banking are :
 Bank Probationary Officer (PO):
Profitability officers a measure of an organization's profit relative to its expenses. These
officers are more efficient and realize more profit as a percentage of its expenses than a
less-efficient organization, which must spend more to generate the same profit.
 Financial Analyst:
Financial analysts work in banks, pension funds, insurance companies, and other businesses.
Financial analysts guide businesses and individuals in decisions about expending money to
attain profit. They assess the performance of stocks, bonds, and other types of investments.
 Account Manager:
An account manager is an entry- to mid-level employee who is responsible for the day-
to-day management of a particular customer's account within a business. An account
manager is often more interested in the client satisfaction aspect of a business
relationship instead of explicitly trying to generating sales.
 Specialist IT Officer:
As an IT technical support officer, you'll install and configure computer systems,
diagnose hardware and software faults and solve technical and application problems,
either over the phone or in person. You'll cover one or more areas of expertise, depending
on the size of the organisation you work for.
 Marketing Officer (SO):
A marketing officer is an overseer of an organization's marketing campaigns and plays an
important role in developing and executing communication concepts and marketing
strategies for the company.
 Law Officer (SO):
Should be able to draft and vet agreements and contracts executed by the Bank and its
subsidiaries. Should be well versed with the inquiry process conducted against workers and
 officers under the applicable laws. Will represent the department on various internal and
external forums.
 Agricultural Field Officer:
An agricultural field officer is usually in charge of promoting financial products like loans
to farmers. Their duties often comprise travelling to remote villages and checking the
prospects of the farmers applying for loans.

Commercial Bank details:

Commercial Bank:

A commercial bank is a financial institution that provides services like loans, certificates of
deposits, savings bank accounts bank overdrafts, etc. To its customers. These institutions make
money by lending loans to individuals and earning interest on loans. Various types of loans given
by a commercial bank are business loans, car loans, house loans, personal loans, and education
loans.

They give out these loans from the money deposited by their customers in different types of
accounts. They use the deposits as capital for providing loans. Commercial banks are essential
for the economy of a country because they help in creating capital, credit as well as liquidity in
the market. These banks are generally physically located in cities but these days there are online
banks are growing in numbers.

According to the commercial bank definition, it is a financial institution whose purpose is to

accept deposits from customers and lend out loans.

Examples:

ICICI Bank, State Bank of India, Axis Bank, and HDFC Bank.

Functions of Commercial Banks:

Types of commercial Banks:

Commercial Banks can be further classified into public sector banks, private sector banks,
foreign banks and Regional Rural Banks (RRB). On the other hand, cooperative banks are
classified into urban and rural.

 Public sector banks:

Majority of the stake is held by the government. Public banks are lending and depository
institutions owned and managed by a government in the public interest.
 Private sector banks:
Private sector banks are those whose stock is primarily owned by private companies or
individuals.

 Foreign banks:
A Foreign Bank is a financial institution that provides financial services to international
consumers from outside of its native country.

The term “foreign bank” generally refers to any United States operation of a banking
organization headquartered outside of the U.S.

 Regional Rural Banks:

RRBs is to fulfil the credit needs of the relatively unserved sections in the rural areas, small and
marginal farmers, agricultural labourers and socio-economically weaker sections.

How commercial banks are different from other banks?

Commercial banks offer more products and service offerings. Commercial banks offer every
banking service which a small banking company would offer also CDs, investment accounts,
commercial real estate loans, even mortgage plans and the option to have a debit card, credit card
or both.
Commercial banks serve individuals and businesses, while central banks serve the country's
banking system. They provide money transfers back and fort between banks and governmental
institutions both domestically and in cases of transactions with foreign entities.
Difference between commercial bank and central bank?
Both commercial banks and central banks take in deposits of money. A difference between a
central bank and a commercial bank is that commercial banks receive their deposits, in the form
of checking, savings and certificates of deposit, from their corporate or individual customers and
deposit some of that money at their country's central bank. Central banks receive their deposit
from other banks.
Commercial banks serve individuals and businesses, while central banks serve the country's
banking system. They provide money transfers back and forth between banks and governmental
institutions both domestically and in cases of transactions with foreign entities.
Central banks offer products and services to the country's government and other commercial
banks. Commercial banks offer banking products and services to individuals and businesses.
There is only one central bank that oversees the entire banking operation.
Central bank can be called the apex bank, which is responsible for formulating the monetary
policy of an economy.
Commercial banks, on the other hand, are those banks that help in the flow of money in an
economy by providing deposit and credit facilities. Commercial banks provide financial services
to the individuals and businesses.

 Role of banks in economic development:

Banks also play a central role in the transmission of monetary policy, one of the government's
most important tools for achieving economic growth without inflation. The central bank controls
the money supply at the national level, while banks facilitate the flow of money in the markets
within which they operate

.The banking system plays an important role in the modern economic world. Banks collect the
savings of the individuals and lend them out to business- people and manufacturers.

Manufacturers borrow from banks the money needed for the purchase of raw materials and to
meet other requirements such as working capital. It is safe to keep money in banks. Interest is
also earned thereby.
Banks have always played an important position in the country’s economy. They play a decisive
role in the development of industry and trade. The main contributions made by the banks to the
economic development of the nation;

1. Capital Formation.
2. .Creation of Credit.
3. Channelizing the Funds to Productive Investment.
4. Fuller Utilization of Resources.
5. Encouraging Right Type of Industries.
6. Bank Rate Policy.
 7. Finance to Government.
8. Bankers as Employers.

1. Capital Formation
Banks play an important role in capital formation, which is essential for the economic
development of a country. They mobilize the small savings of the people scattered over a wide
area through their network of branches all over the country and make it available for productive
purposes.

2. Creation of Credit
Banks create credit to provide more funds for development projects. Credit creation leads to
increased production, employment, sales, and prices, and thereby, they cause faster economic
development.

3. Channelizing the Funds to Productive Investment

Capital formation is not the only function of commercial banks. Banks invest the savings
mobilized by them for productive purposes. Pooled savings should be distributed to various
sectors of the economy to increase the productivity of the nation.

4. Fuller Utilization of Resources

Savings pooled by banks are utilized to a greater extent for the development purposes of various
regions in the country. It ensures fuller utilization of resources.

5. Encouraging Right Type of Industries

The banks help develop the right type of industries by extending loans to the right type of
persons. In this way, they help the country’s industrialization and the country’s economic
development.

6. Bank Rate Policy

Economists believe that by changing the bank rates, changes can be made in a country’s money
supply. Federal or state banks in developing countries; the interest rate is to be paid by banks for
the deposits accepted by them and the rate of interest to be charged by them on the loans granted
by them.

7. Finance to Government
The government is acting as the promoter of industries in underdeveloped countries for which
finance is needed it. Banks provide long-term credit to the government by investing their funds
in Government securities and short-term finance by purchasing Treasury Bills.
8. Bankers as Employers
After the nationalization of big banks, the banking industry has grown to a great extent. Bank’s
branches are opened in almost all the villages, which leads to the creation of new employment
opportunities. Banks are also improving people for occupying various posts in their office