The Power Point Presentation on (Banking)

2. C O N T E N T S
 INTRODUCTION TO BANK
 EVOLUTION OF BANK
 KINDS OF BANK
 COMMERCIAL BANK
 FUNCTION OF COMMERCIAL BANK
 IMPORTANCE OF COMMERCIAL BANK
 BANK ACCOUNTS
 CREDIT CREATION
 STATE BANK OF PAKISTAN
 LIST OF PRIVATE AND PUBLIC BANKS

3. INTRODUCTION TO BANK
Definition:
 General Speaking a bank is a institution which deals with money basically and
may be even property on the contrary. The bank draws the surplus the money
from people i.e. excess of income over consumption, which is a form of loan to
the bank and in return pays interest on it for the loan of those who have saved
or deposited their money.
 A bank is a Financial institution that accepts deposits from the public and
creates credit. Lending activities can be performed either directly or indirectly
through Capital Market

4. EVOLUTION OF BANKS:
The form of business bank runs today is very much like that of olden days except that
these institutions were not Known as a bank but were dived into three classes i.e.
I. Merchants
II. Money lenders
III. Goldsmiths
I. Merchants: Merchants are those peoples who borrowed from the people in the form of deposit
and later returned them with some profit known today as interest
II. Money Lenders: Money-Lenders are those people who would lend their own capital to the
people and obtain profit i.e. interest from return of loans.
III. Goldsmiths: Goldsmiths perform both these functions. Deposit received from the people were
returned

5. We shall now discuss Various Kinds of Banks although
generally I must be clear that there are only two kinds of
banks
Saving Bank and Commercial Banks .
The other banks are just the subject of commercial banks
in the sense that they Specialize in Particular Field as we
shall now see.

6.  KINDS OF BANKS
 SAVING BANKS : The kind of a bank only Received the saving of the people and no loans are given out.
Interest is given on the saving of the people. National Saving Center is the Example of this kind of bank
 COMMERCIAL BANKS :The kind of bank received that deposit of the people i.e. excess
income over consumption and gives out interest on the saving of the people. The money is given
out to those who need it and charges interest on the loan and the difference between these two
interest in the banks earning. Commercial banks also perform other Miscellaneous functions e.g.
Save lockers, transference of money etc.
AGRICULTURAL BANKS: A Bank in which loan are only given out specially for
development in the agriculture Sector.
INDUSTRIAL BANKS: In this loan are only given out specially for development in
Industrial Sector
MORTAGE BANKS: The kind of banks does not receive any deposit from the people.
It has its own capital to function as an organization i.e. by selling there shares. This
bank specially deals with money lending. Profit or return from sale of shares are used to
lend out money to the people who receive it by mortgaging their property. When loan
are paid back with interest to the bank the property is than returned.

7. EXCHANGE BANK: This bank deals with exclusively with
foreign exchange. It does not receive deposit or give out loans.
This Bank earn profit through the difference buying and selling
rates.
COOPERATIVE BANKS: Generally this a govt/public bank.
Loans are given specially for cooperative societies and for the
poor agriculturists in order to improve their economic condition
and to enhance production level.
CENTRAL BANK: There is only one central bank in every
country. It does not deals with the people in general. Its function
is to deal with government and commercial banks. The central
bank is the sole authority of issuing currency

8.  FUNCTIONS OF COMMERCIAL BANKS
Commercial banks have to perform a variety of
functions which are common to both developed
and developing countries. These are known as
‘General Banking’ functions of the commercial
banks. The modern banks perform a variety of
functions.

9.  FUNCTIONS
 Acceptance of deposits:
 Current account
 Fixed deposit account
 Saving account
 Advancing loans:
 BY OPENING A LOAN ACCOUNT
 BY MEANS OF OVERDRAFT
 BY DISCOUNTING BILLS OF EXCHANGE
 BY MEANS OF PURCHANSING BONDS AND SECURITIES
 Transference Of Money
 CREATION OF SAFEST MEDIUM OF EXCHANGE

10.  FINANCING OF FOREIGN TRADE:
 GENERAL UTILITY SERVICES:
Such Utility services which a bank may perform areas follows:
 Foreign Exchange Business :
 Locker services :
 Role of Referee :
 Inheritance Problem :

11. BANK ACCONTS
Banks thrive on three accounts based on commodity and business
needs.
 Safety needs
 Borrowing needs
 Debt clearing needs
TYPES OF ACCOUNTS:
The following accounts are the types:
 Saving Account
 Current Account
 Fixed Deposit Account

12. Account in which you can deposit and withdraw at any
time. This account specially maintain for traders and
businessman.
FEATURES:
 Cash or Debit Card
 Direct Debits
 Checkbook
 Online or Telephone Banking
 Overdraft Facility
 Interest
 Post Office Branches

13. For peoples who save money from their monthly income.
It can be open with minimum Rest. 100/-
FEATURES:
 Interest Rates
 Minimum Monthly Balances
 Unlimited Transactions
 ATM Access
 Cheese Book Options
 Online Banking Services
 Opening Deposits and Balances
SAVING ACCOUNT:

14. FIXED DEPOSITE ACCOUNT:
This account is maintain for those people who have surplus
but no need it in near future.
FEATURES:
PROFIT:
TERM OF DEPOSITE:
PERIOD:
INTEREST:
WITHDRAWAL FROM FIXED DEPOSITE ACCOUNT
FIXED DEPOSIT RECEIPT

15.  Importance Of Commercial Banks
Commercial banks are important because they lend
money to people, accept deposits, process checks and
payments, and offer secure havens for treasured items,
according to Investopedia. Commercial banks also
attract large amounts of capital from investors.

16. On behalf Of Customer it is called a loan but looking at it
from bank angle it is credit money which greatly influences
total money supply in the country. However ,narrowly
speaking the bank borrow to lend and through this process it
creates credit money. The question arises…
How does it get money to make money?
Generally the central bank determines the reserve ratio (ready
cash) for all commercial bank upon which the rest of money in
bank is loaned out. Thus, credit money is created money times
the actual amount available in all commercial banks.
 Credit Creation

17.  Limitation on Credit Creation
Amount of Cash: The power to create credit depends on the cash
received by banks. If banks receive more cash, they can create more credit.
Cash Reserve Ratio: All deposits cannot be used for credit creation.
Banks must keep certain percentage of deposits in cash as reserve.
The Banking Habits of the People: The loan advanced to a customer
should again come back into banks as primary deposit.
Nature of Business Conditions in the Economy: Credit creation will be
large during a period of prosperity, while it will be smaller during a
depression.

18. Leakages in Credit-Creation: The funds may not flow smoothly from one bank to
another. Some people may keep a portion of their amount as idle cash.
Sound Securities: A bank creates credit in the process of acquiring sound and
profitable assets, like bills, and government securities.
Liquidity Preference: If people desire to hold more cash, the power of banks to create
credit is reduced.
Monetary Policy of the Central Bank: The extent of credit creation will largely
depend upon the monetary policy of the Central Bank of the country. The Central
Bank has the power to influence the volume of money in circulation and through
this it can influence the volume of credit created by the banks.
 Limitation on Credit Creation

19.  STATE BANK OF PAKISTAN:
State Bank of Pakistan is the central bank of our country. It came into
existence on 1st July, 1948. It performs the same function like those a
central bank in any other country. Besides this, it is also performs the
developmental role in our economy.
The paid up capital of state bank of Pakistan is 30million which is dived in
3 Lac shares of Rest. 100 each. Before nationlization,Its 51% shares were
held by Federal Govt. and the remaining 49% is held by the people. On
nationalization on 1st jan,1974 its 100% shares were transferred to the
Federal Govt. and now it is completely a govt. organization