BANKING LAW AND

PRACTICE
 Introduction

 Commercial banks are one of the primary

agents which help circulating funds in the
market. Commercial banks provide loans and
corporate bonds to the households, new start
ups and small medium enterprises to run their
businesses. It also obtains money from the
households and invests that money to other
profitable investments
 . Commercial banks play an important and active
role in the economic development of a country. If
the banking system in a country is effective,
efficient and disciplined it brings about a rapid
growth in the various sectors of the economy.
1. Banks promote capital formation
2. Investment in new enterprises
3. Promotion of trade and industry
4. Development of agriculture
5. Balanced development of different regions
6. Influencing economy activity
7. Implementation of Monetary policy
8. Monetization of the economy
9. Export promotion cells
 Role Of Banks In A Developing Economy

 Banks play a very useful and dynamic role in

the economic life of every modern state. 
The economic importance of commercial banks
to the developing countries may be viewed
thus:
1. Promoting capital formation
2. Encouraging innovation
3. Monetsation
4. Influence economic activity
5. Facilitator of monetary policy
 Promoting Capital
Formation
 A developing economy needs a high rate of
capital formation to accelerate the tempo of
economic development, but the rate of capital
formation depends upon the rate of saving
 Banks afford facilities for saving and, thus
encourage the habits of thrift and industry in
the community
 They mobilize the ideal and dormant capital of
the country and make it available for
productive purposes
 Encouraging Innovation
 Innovation is another factor responsible for
economic development. The entrepreneur in
innovation is largely dependent on the manner
in which bank credit is allocated and utilized in
the process of economic growth. Bank credit
enables entrepreneurs to innovate and invest,
and thus uplift economic activity and progress
 Monetsation
 Banks are the manufactures of money and they
allow many to play its role freely in the
economy. Banks monetize debts and also assist
the backward subsistence sector of the rural
economy by extending their branches in to the
rural areas. 
They must be replaced by the modern
commercial bank’s branches
 Influence Economic
Activity
 Banks are in a position to influence economic
activity in a country by their
influence on the rate interest. They can
influence the rate of interest in the money
market through its supply of funds.  Banks
may follow a cheap money policy with low
interest rates which will tend to stimulate
economic activity
 Facilitator Of Monetary
Policy
 Thus monetary policy of a country should be
conductive to economic
development. But a well-developed banking
system is on essential pre-condition to the
effective implementation of monetary policy.
Under-developed countries cannot afford to
ignore this fact
 Allied Bank Limited was the first bank to
be established in Pakistan. It started out in
Lahore by the name Australasia Bank before
independence in 1942; was renamed Allied
Bank of Pakistan Limited in 1974 and then
Allied Bank Limited in 2005
In August 2004, because of capital
reconstruction, the Bank’s ownership was
transferred to a consortium comprising
Ibrahim Leasing Limited and Ibrahim Group
 Visa Credit Cards Visa Debit Card
 SWOT Analysis Of Allied Bank

STRENGTH:

 high motivation of employees

 Salaries are very reasonable
 They have wide area network in all over the
Pakistan
 Bank has very strict rules and regulations
WEAKNESSES:

 Advertisement of ABL is not such goods as of

other banks
 Out look of the ABL branches is not attractive
to the people
OPPORTUNITIES:

 The policies of the new government to uplift

the economy and pursue financial sector
reforms are expected to yield positive results in
the banking industry of the country. The ABL
is very well praised to avail promising
opportunities.
THREATS:

 Political influence
 Continuous downfall of the country economy
 New Privates Bank coped with emerging new
Technology of IT
 Role Of Allied Bank In Developing The
Economy Of Pakistan

Mobilizes savings:
Allied bank help to mobilize savings of the
people for productive purposes. They collect scattered
and idle savings of people, pool them together and
make fund available for productive purposes
Promotes foreign trade:
Allied bank promote foreign trade, by financing the
foreign trade of a country by granting loans, opening
letter of credit, discounting foreign bills of exchange
and issuing bank drafts.
Encourages savings:
With the existence of Allied bank and with
attractive incentives such as high interest rates
etc, the people are encouraged to save more

Encourages investments:
Allied bank provide short-term and
medium-term loans for industries, trade and
commerce at reasonable rates of interest. Easy
loans attract the investors to invest in new
enterprises.
Development of agricultural sector:
Allied bank provide easy loans to farmers
for the purpose of buying tractors, threshers,
installation of tube-wells, purchase of fertilizers,
seeds, etc
Development of industrial sector:
Allied bank provide short-term and medium-
term loans to industry. Commercial banks not only
provide finance for the development of industry
but also help the industry in many other ways
 Conclusion

 Banks in fact play their developmental role in

an economy by the functions they perform for
the clients i.e: accepting deposits, advancing
loans, financing foreign trade, agency services
etc. and commercial banks in Pakistan are
doing their job most efficiently
 Recommendation

 Commercial Banks in the Economic

Development of a Country play an important
and active role . If the banking system in a
country is effective, efficient and disciplined it
brings about a rapid growth in the various
sectors of the economy. So state bank of
pakistan should bring some reforms to make
banking system more effective and efficient