WELCOME

Presenter;

 Tshewang Tshomo

Group Eight
 Tshering Lhamo
 Tshering Nima
 Tshering Tashi
 Kinzang Dorji
Outline

 Concept of banking services and commercial banking system

 Evolution of commercial bank

 Function of commercial bank

 Important product of commercial bank

 Concept of saving & current account, and credit & debit card
What is bank?
• It is financial institution, business organization

• Sells financial services to earn money

• Usually earns profit for their smooth functioning and their survival
 Banking Services
What is banking?

Banking can be defined as ‘the business activity of accepting and safeguarding money
owned by other entities, and then lending out this money in order to earn a profit’.

Provides a safe place to save excess cash, known as deposits.

Supplies liquidity to the economy by loaning this money out to help businesses grow
and to allow consumers to purchase consumer products, homes, cars etc.
 Concept of commercial banking system

• What is commercial bank?

It is a kind of formal institution that carries all the operations related to deposits and
withdrawn of money for the general public, providing loans for investment, and other
activities.

The banks are profit making institutions and undertaking business operations for profit
only.

 Borrowing
 Lending primarily characterized
Types of banks in Bhutan
Central Bank:

RMA, The Royal Monetary Authority of Bhutan is the central Bank - autonomous body

Public Sector Banks:

BNB, BOB

Private Sector Banks:

Tashi Bank

Development Banks/Financial Institutions:

BDBL, RICB, BIL, Pension and Provident Fund, NCSIDBL

Foreign Direct Investment:

DPNBL
Evolution of commercial bank over time
 Commerce in Bhutan was traditionally carried out through barter system

 Then Bhutan first began to produce coins in silver towards the end of 18 century and
continued into the 20 centuries until 1968 when the economy gradually started to become
widely monetized.

 28 May 1968-BOB

 1982-RMA

 31 January 1988-BDBL

 6 January 1997-Bhutan National Bank

 10 March 2010- T Bank

Products of Commercial Bank
Concept on Saving and Current Account
 FEATURES OF SAVING ACCOUNT
 Withdraw of money on Demand, on presentation of cheque or through withdrawal
form
 Restriction on numbers of withdrawal per month and the amount withdrawn per
day.
 Minimum balance has to be maintained
 Interest bearing account
 Pass book or statement of account is provided by the bank
 FEATURES OF CURRENT ACCOUNT

 Non interest bearing account

 Overdraft Facilities
 Statement of account
 Ledger Folio charges
 Cheque or bill collection facilities
Saving Account VS Current Account
A product offered by the banks to A product offered by bank, that can
their customers for saving money MEANING be operated upon any numbers of
for future use. time.

To encourage the habit of saving in AIM The accounts aim at supporting

the people. frequent transactions.

Interest bearing account INTEREST Non interest bearing account

Limited WITHDRAWAL Unlimited

Saving Account VS Current Account
Less Minimum Balance Comparatively High

Passbook or Statement of Accounts Account Details Statement of Account

Not provided Overdraft Provided

Comparatively High
Less Opening balance

Individuals Suitable For Businessman and Company

Concept on Credit and Debit Card

Credit Card
A credit card is a type of credit facility, provided by banks that allow customer customers to
borrow funds within a pre-approved credit limit.

Using a credit card is similar to taking an instant loan.

Evolution of credit card system

The Diner Club card: First modern credit card invented in 1950.

American Express: Invented in 1958

BankAmerica: Invented in 1958 as a first consumer credit card

MasterCard: Invented in 1966

• Most credit cards have 16 digits number
• Credit cards is based on a credit limit
• Unsecured debt
• Credit card issue also depends on your credit history
 For example, Ap Dorji uses his credit card to shopping or for any other purposes. Each
month he will receive credit statement from the bank, that will tell him the total amount
due, the minimum payment due and when his payment is due.

Interest and repayment period

 He can pay the full amount due on or before the due date (no interest charged)
 He can pay the minimum amount due on or before the due date (interest on the
remaining amount)
 Every time he pays the minimum amount due, he will be charged interest on the
remaining balance
 At the end of month you are asked to pay minimum amount of the total amount to the
bank through an email.
 Every left over balance is going to add over to the next month’s balance and it goes on
and on
Debit Card
A debit card is a payment card that allows you to make purchases or withdraw cash from
your bank account. Unlike a credit card, which involves borrowing money, a debit card
allows you to spend only the money you have in your bank account.

 Debit card doesn’t give instant loan as credit card

 When you use debit card, money is deducted from

your checking account

 You swipe a debit card, your balance will be

immediately deducted from your linked account,
or in some case gives you some form of overdraft
but have to pay interest for that amount.
 Differences between Debit card, Credit card, and ATM
Debit card
 Source of Funds: Debit cards are linked to your bank account, and purchases are deducted
directly from your available balance.
 Credit Line: Debit cards do not provide a credit line; they use your own money.
 Interest: No interest is charged on purchases made with a debit card.
 Repayment: No monthly bills; you're spending your own money.
 Overdraft: Overdrafts may result in fees if you spend more than your available balance.

Credit Card
Source of Funds: Credit cards provide a line of credit from the card issuer. Purchases are
essentially a loan.
Credit Line: Credit cards have a credit limit, which determines your maximum spending
capacity.
Interest: Interest is charged on the outstanding balance if not paid in full by the due date.
Repayment: Requires monthly payments to the card issuer.
Credit History: Responsible use can help build a positive credit history.

ATM

Function: ATM cards are primarily used for withdrawing cash from automated teller machines
(ATMs).

Source of Funds: Linked to your bank account, like a debit card.

Purchases: Typically, you can't make purchases directly with an ATM card; it's for ATM
transactions.

Credit Line: No credit line is associated with ATM cards.

Overdraft: Overdrafts may result in fees if you withdraw more than your available balance.
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T h an