SlideShare uma empresa Scribd logo
1 de 11
Baixar para ler offline
TABLE OF CONTENTS

Sr.No.                  Particulars                                 Page #
  1    Financial System:
  2    Financial Markets:

  3      Financial Institutions:

  4      Financial Intermediaries:

  5      The Stock Market:

  6      Securities:

  7      Types of Finance Companies:

  8      Insurance Companies:


Financial System:

Some economic units generate more income than they spend and have funds left
over. These are called Surplus Economic Units. Other economies units generate
less income than they spend and need to acquire additional funds in order to
sustain their operations. These are called Deficit Economic Units. The purpose of
financial system is to bring the two groups, surplus economic units and deficit
economic units, together for their mutual benefits.

Financial Markets:

   •   Physical Asset markets
   •   Spot markets
   •   Money markets
   •   Mortgage markets
   •   The primary market
   •   The secondary market
   •   Private markets
   •   The money market
   •   The capital market
   •   Security exchanges

Financial Institutions:
•   Commercial Banks
   •   Savings & Loan Associations
   •   Central Bank
   •   Credit Unions
   •   Insurance Companies
   •   Mutual Funds
   •   Pension Funds

Financial Intermediaries:

   •   Investment Bankers
   •   Brokers
   •   Dealers

The Stock Market:

   •   Physical Location Stock Exchange
   •   The Over-the-Counter Market
   •   The NASDAQ stock market

Securities:

    Securities in Money Market:
   • T-Bill
   • Negotiable Certificates of Deposits
   • Commercial Papers
   • Eurodollars
   • Banker’s Acceptance

    Securities in Capital markets:
   • Bonds
   • Treasury Notes
   • Municipal Bonds
   • Corporate Bonds

Types of Finance Companies:

   •   Consumer Finance Companies
   •   Commercial Finance Companies
   •   Sales Finance Companies

Insurance Companies:
•   Life Insurance Companies
   •   Property and Casualty Insurance Companies
   •   Pension Funds
   •   Annuities
Financial Markets:

Financial Asset Markets:

Financial asset markets, on the other hand deal with stocks, bonds, notes,
mortgages and other financial instruments.
Spot Markets:

Spot markets and future markets the terms that refer to whether the assets are
being bought or sold on the spot delivery or for delivery at some future date.
Such as six months or a year in future.

Money Markets:

Are the markets for short term, highly liquid debt securities. The New York and
London money markets have long been the world’s largest markets.

Mortgage Markets:

Deals with loan and residential, commercial and industrial real estate and on
farmland.

The Primary Market:

When a security is created and sold for the first time in the financial marketplace,
the transaction takes place in the primary market. It is also known as Initial Public
Offering (IPO)

The Secondary Market:

Once a security has been issued, it may be traded from one investor to another.

The Money Market:

Short term securities are traded in money market. Network of dealers operate in
this market.

The Capital Market:
Long term securities traded in the capital market.

Security Exchanges:

Security exchanges facilitate trading of stock or bond among investors.
Financial Institutions:


Commercial Banks:

Commercial banks are financial institutions that exit primarily to lend money to
business. Banks also lend to individuals, government and other entities, but the
bulk of their profit typically come from business loans. Commercial banks make
money by charging a higher interest rate on the money they lend than the rate
they pay on money lent to them in the form of deposits. The difference between
the rate charged to borrowers and the rate paid to depositors is known as the
interest rate spread.

Banking is different from many other types of business in that it must have a
charter before it can open its doors. A bank charter is much more different to
obtain Ethan a city license need to open another business. It is an authorization
from the government granting permission to operate.

Commercial Bank Operations:

Commercial banks operate with more government oversight than most
businesses but they are managed just like other companies.

Value maximization of Stockholders.

 Commercial banks have stockholders,employees,mnagers,equipment, facilities
and the primary financial goal of such banks is to maximize value for their
stockholders.

Receiving and Lending of Funds:

The banks do most of their business by receiving funds from depositors and
lending the funds to those who need them.

Issuance of Bonds:

Commercial banks occasionally issue long term bonds to raise funds, borrow
from the federal reserve, or borrow deposits kept by other financial institutions in
the federal reserve banks in what is known as the federal fund market.
Commercial Banks Reserves:

Commercial banks are not allowed to lend all the funds they get from depositors.
Central bank requires all commercial banks to keep a minimum amount of
reserves on hand.
The required level of reserves a bank must hold is determined by applying a
certain percentage to the average weekly deposits held by the bank. The exact
percentage of deposits a bank must hold in reserve, called the require reserve
ratio.


Central Bank:

THE STATE BANK OF PAKISTAN

Primary Functions

Sole Authority to Issue Notes:

One of the primary responsibilities of the State Bank is the regulation of currency
in accordance with the requirements of business and the general public. For this
purpose the Bank has been granted the sole right of issuing notes in the country
under Section 24 of the State Bank of Pakistan Act, 1956. The overall affairs with
respect to the issuing of notes are conducted through two notionally separate
departments of SBP.

T-Bill Auctions

SBP 3-day repots rate influences the yield of T-bills sold through auctions the cut
off yield is determined by the Auction Committee, keeping in view monetary
targets, Current economic and financial conditions and expected market
response. The Six month T-bill is considered the most important benchmark by
the money market.

Open Market Operation

SBP is conducting regular Open Market Operations
(OMOs) since January 1995.

Regulation and Supervision of the Financial System:

Another principal task of the Bank is to safeguard the soundness of the financial
system. To perform this crucial role effectively and efficiently, State Bank of
Pakistan has been given vast powers under the State Bank of Pakistan Act,
1956,
Bankers' Bank:

The Bank also functions as the bankers’ bank. Banks are classified as scheduled
and non-scheduled. The Bank maintains an updated list of all scheduled banks at
its various offices. These banks are entitled to certain facilities from the State
Bank and in return they have some obligations to it.

Lender of the Last Resort:

One of the important characteristics of a central bank is its being the lender of the
last resort. The State Bank provides loan and re-discount facilities to scheduled
banks in times of dire need when they find no other source of funds.

Banker to Government:

The State Bank conducts the banking business of Federal and Provincial
Government and some government agencies.

2 Secondary Functions:

2.1 Public Debt Management
The Bank is responsible for the management of government debt under
subsection
13(e) of section 17, and section 21 of the SBP Act, 1956.

Management of Foreign Exchange

Being responsible for maintaining the external value of the currency, the State
Bank of Pakistan assumed the charge of management and administration of the
exchange system of the country in line with the Foreign Exchange Regulation
Act,

Reports on the State of the Economy

The Bank submits its review of the economy to the Parliament through its annual
and quarterly reports.

Relationships with International Financial Institutions

Pakistan is the member of International Monetary Fund. The State Bank of
Pakistan deals with the IMF on behalf of the Government of Pakistan
3 Non-traditional Functions:

Micro Finance:
In order to expand the banking services at grass root level and to enable the
financial sector to play its role in poverty alleviation, the State Bank of Pakistan is
also promoting micro banking in the country.

Training Facilities to Bankers:

Keeping in view an acute shortage of trained bankers at the time of the
independence, the State Bank introduced "Bank Officers Training Scheme"
within
one month of its establishment. On July 2 1948, the Central Board of Directors of
the Bank approved a comprehensive scheme for university graduates especially
with mathematics, economics and commerce backgrounds.

Savings and Loan Associations:

Like commercial banks, savings and loan associations are in business to take in
deposits and lend money, primarily in the form of mortgage loans. Mortgage
loans are loans that are secured by real property such as real estate. If borrower
defaults on a mortgage loan, the lender can take legal possession on the
property. The property can then be sold and the lender keeps the proceeds from
the sale up to the amount owed.
S&Ls make a profit by charging a higher interest rate on the money they lend
than the rate paid on deposits they take in.


Credit Unions:

Credit unions are cooperative associations whose members are supposed to
have a common bond, such as being employees of the same firm. Member’s
savings are loans and home mortgage, credit unions are often the cheapest
source of funds available to the individual borrowers.

Mutual Funds:

Are corporations that accept money from savers and then use these stocks,
bonds, long term bonds, or short term debt instruments issued by businesses or
government units. These organizations pool funds and thus reduce risk by
diversification. They also achieve economy of scale in analyzing securities,
managing portfolios, and buying and selling securities.

Pension Funds:

Pension funds are retirement plans funded by corporations or government
agencies for their workers and administered generally by the trust departments of
commercial banks or by life insurance companies. Pension funds invest primarily
in bonds, stocks, mortgages and real estate.


Financial Intermediaries:
Investment Bankers

Institutions called investment banking firms exist to help business and state and
local governments sell their securities to the public.

Underwriting:

Investment bankers arrange securities sale on either an underwriting basis or
best effort basis. The term under wring refers to the process by which an
investment banker purchase all the new securities from the issuing company and
then resell them to the public.
Investment bankers who underwrite securities face some risk because
occasionally an issue is overpriced and can’t be sold to the public for the price
anticipated by the investment banker.

Brokers:

Brokers often account representative for an investment banking firm, handle
orders to buy or sell securities. Brokers are agents who work on behalf of an
investor. When investor call with an order. Brokers work on their behalf to find
someone to take the other side of the proposed trade. If investor want to buy,
brokers find sellers. If investors want to sell, broker find buyers.

Dealers:

Dealers make their living buying securities and reselling them to others. Dealers
make money by buying securities for one price, called bid price and selling them
for a higher price, called the ask (offer) price. The difference or spread between
the bid price and the ask price represents the dealer’s fee.

The Stock Market:

Physical Location Stock Exchange:

         Exist physically such as Karachi Stock Exchange. Trade of securities
   between buyer and seller.

The Over-the-Counter Market:
No fix location. Network of dealers around the world who maintain
                 inventories of securities for sale.

The NASDAQ stock market:

                 Computerized exchange of securities all over the world.



Securities:
Document that represent the right to receive funds in the future.

Securities in Money Market:
   •   T-Bill:

       Treasury bills are considered the benchmark of safety because the have
       essentially no risk

   •   Negotiable Certificates of Deposits:

   They are simply pieces of paper that certify that you have deposited a certain
   amount of money in the bank, to be paid back on a certain amount of money
   in the bank.

   •   Commercial Papers:

   A type of short term promissory note issued by large corporations with strong
   credit rating.

   •   Eurodollars:

   Euro dollar are deposited and borrowed by large institutions with good credit
   rating.

   •   Banker’s Acceptance:

   A banker’s acceptance is a short term debt instrument that is guaranteed for
   payment by a commercial bank.

Securities in Capital markets:
   •   Bonds:
Bond is the promise to pay their owner a certain amount of money on some
  specified date in the future.

  •   Treasury Notes:

  When the federal government wants to borrow the money for period of more
  than one year, it issues treasury notes.

  •   Municipal Bonds:

  The bonds issued by state and local governments are known as municipal
  bonds.

  •   Corporate Bonds:

  Corporate bonds are similar as treasury notes but issued by the corporations.

Types of Finance Companies:

  Consumer Finance Companies

  These are some times known a small loan companies, make small loans to
  consumers for car purchases, medical expenses, vacations, and the
  like.interst rate charged on these types of loans a little bit higher.

  Commercial Finance Companies

  These firms concentrate on providing credit to other business firms.

  Sales Finance Companies

  These companies help to sale of some corporation.



Insurance Companies:

  Life Insurance Companies:

  Life insurance companies sell policies that pay the beneficiary of the insured
  hen the insured person dies.

  Property and Casualty Insurance Companies:
Property and casualty insurance companies insure against a wide range
hazards associated person and property. These include theft, weather
damage for hurricanes and earthquake.

Pension Funds:

Pension funds are set up by companies, government and unions to pay
retirement benefit to their employees. Employees generally contribute money
to the funds now in order to draw it later, on retirement.

Annuities:

Sometime the sponsor of pension funds will use the funds accumulated
during the retire person’s working year to purchase an annuity from an
insurance company.insurane companies also sell annuities to investors.

Mais conteúdo relacionado

Mais procurados

financial system
financial systemfinancial system
financial systemVipul Mehta
 
International Finan
International FinanInternational Finan
International FinanAjeesh Mk
 
Introduction To Financial Institution Sa
Introduction To Financial Institution SaIntroduction To Financial Institution Sa
Introduction To Financial Institution Saguest3e1da1
 
Chapter 2 players in the market
Chapter 2 players in the marketChapter 2 players in the market
Chapter 2 players in the marketHannah Rain
 
Financial institution
Financial institutionFinancial institution
Financial institutionCh Irfan
 
Indian financial system, short report
Indian financial system, short reportIndian financial system, short report
Indian financial system, short reportsaurabh surve
 
Indian financial system_vth_trim
Indian financial system_vth_trimIndian financial system_vth_trim
Indian financial system_vth_trimSumit Panwar
 
Indian financial system
Indian financial systemIndian financial system
Indian financial systemsaurabh surve
 
Financial institutions and markets notes as per BPUT syllabus for MBA 2nd sem...
Financial institutions and markets notes as per BPUT syllabus for MBA 2nd sem...Financial institutions and markets notes as per BPUT syllabus for MBA 2nd sem...
Financial institutions and markets notes as per BPUT syllabus for MBA 2nd sem...Venkat Kothakota
 
Financial institutions
Financial institutionsFinancial institutions
Financial institutionsVisakhapatnam
 
Indian financial system and role of financial institutions
Indian financial system and role of financial institutionsIndian financial system and role of financial institutions
Indian financial system and role of financial institutionsSiddharth Gupta
 
Lecture 1 financial institutions #
Lecture 1 financial institutions #Lecture 1 financial institutions #
Lecture 1 financial institutions #Latifa Ben Hamouda
 
205 Financial Markets and Banking Operations Unit 2
205 Financial Markets and Banking Operations Unit 2 205 Financial Markets and Banking Operations Unit 2
205 Financial Markets and Banking Operations Unit 2 ASM's IBMR- Chinchwad
 
Financial markets and institutions notes as per BPUT syllabus for MBA 4th
Financial markets and institutions notes as per BPUT syllabus for MBA 4th Financial markets and institutions notes as per BPUT syllabus for MBA 4th
Financial markets and institutions notes as per BPUT syllabus for MBA 4th Venkat Kothakota
 
The role of financial market and institution in the economic development of b...
The role of financial market and institution in the economic development of b...The role of financial market and institution in the economic development of b...
The role of financial market and institution in the economic development of b...badhon11-2104
 
Indian Financial System: a complete guide to indian financial system Bba ifs
Indian Financial System: a complete guide to indian financial system Bba ifsIndian Financial System: a complete guide to indian financial system Bba ifs
Indian Financial System: a complete guide to indian financial system Bba ifsSahil Narang
 
The Financial Environment
The Financial EnvironmentThe Financial Environment
The Financial EnvironmentSayed Janan
 

Mais procurados (20)

financial system
financial systemfinancial system
financial system
 
International Finan
International FinanInternational Finan
International Finan
 
Introduction To Financial Institution Sa
Introduction To Financial Institution SaIntroduction To Financial Institution Sa
Introduction To Financial Institution Sa
 
Chapter 2 players in the market
Chapter 2 players in the marketChapter 2 players in the market
Chapter 2 players in the market
 
Financial institution
Financial institutionFinancial institution
Financial institution
 
205 fmbo unit4e
205 fmbo unit4e205 fmbo unit4e
205 fmbo unit4e
 
Indian financial system, short report
Indian financial system, short reportIndian financial system, short report
Indian financial system, short report
 
Indian financial system_vth_trim
Indian financial system_vth_trimIndian financial system_vth_trim
Indian financial system_vth_trim
 
Indian financial system
Indian financial systemIndian financial system
Indian financial system
 
Financial institutions and markets notes as per BPUT syllabus for MBA 2nd sem...
Financial institutions and markets notes as per BPUT syllabus for MBA 2nd sem...Financial institutions and markets notes as per BPUT syllabus for MBA 2nd sem...
Financial institutions and markets notes as per BPUT syllabus for MBA 2nd sem...
 
Financial institutions
Financial institutionsFinancial institutions
Financial institutions
 
Indian financial system and role of financial institutions
Indian financial system and role of financial institutionsIndian financial system and role of financial institutions
Indian financial system and role of financial institutions
 
Lecture 1 financial institutions #
Lecture 1 financial institutions #Lecture 1 financial institutions #
Lecture 1 financial institutions #
 
205 Financial Markets and Banking Operations Unit 2
205 Financial Markets and Banking Operations Unit 2 205 Financial Markets and Banking Operations Unit 2
205 Financial Markets and Banking Operations Unit 2
 
Financial markets and institutions notes as per BPUT syllabus for MBA 4th
Financial markets and institutions notes as per BPUT syllabus for MBA 4th Financial markets and institutions notes as per BPUT syllabus for MBA 4th
Financial markets and institutions notes as per BPUT syllabus for MBA 4th
 
Indian Financial System
Indian Financial SystemIndian Financial System
Indian Financial System
 
The role of financial market and institution in the economic development of b...
The role of financial market and institution in the economic development of b...The role of financial market and institution in the economic development of b...
The role of financial market and institution in the economic development of b...
 
Indian Financial System: a complete guide to indian financial system Bba ifs
Indian Financial System: a complete guide to indian financial system Bba ifsIndian Financial System: a complete guide to indian financial system Bba ifs
Indian Financial System: a complete guide to indian financial system Bba ifs
 
The Financial Environment
The Financial EnvironmentThe Financial Environment
The Financial Environment
 
Indian Financial System
Indian Financial SystemIndian Financial System
Indian Financial System
 

Destaque

Griffin chap01 business_notes (ITB ECO)
Griffin chap01 business_notes (ITB ECO)Griffin chap01 business_notes (ITB ECO)
Griffin chap01 business_notes (ITB ECO)Amaan Hussain
 
Mid term sample papet ( SMS )
Mid term sample papet ( SMS )Mid term sample papet ( SMS )
Mid term sample papet ( SMS )Amaan Hussain
 
Griffin chap01 business_notes - itb - ayesha aman - Economics
Griffin chap01 business_notes - itb - ayesha aman - EconomicsGriffin chap01 business_notes - itb - ayesha aman - Economics
Griffin chap01 business_notes - itb - ayesha aman - EconomicsAmaan Hussain
 
The most beautiful heart
The most beautiful heartThe most beautiful heart
The most beautiful heartjhimbou
 
Griffin chap02 environments_notes (ITB ECO)
Griffin chap02 environments_notes (ITB ECO)Griffin chap02 environments_notes (ITB ECO)
Griffin chap02 environments_notes (ITB ECO)Amaan Hussain
 
3. global context of business - itb - ayesha aman - Economics
3. global context of business - itb - ayesha aman - Economics3. global context of business - itb - ayesha aman - Economics
3. global context of business - itb - ayesha aman - EconomicsAmaan Hussain
 

Destaque (6)

Griffin chap01 business_notes (ITB ECO)
Griffin chap01 business_notes (ITB ECO)Griffin chap01 business_notes (ITB ECO)
Griffin chap01 business_notes (ITB ECO)
 
Mid term sample papet ( SMS )
Mid term sample papet ( SMS )Mid term sample papet ( SMS )
Mid term sample papet ( SMS )
 
Griffin chap01 business_notes - itb - ayesha aman - Economics
Griffin chap01 business_notes - itb - ayesha aman - EconomicsGriffin chap01 business_notes - itb - ayesha aman - Economics
Griffin chap01 business_notes - itb - ayesha aman - Economics
 
The most beautiful heart
The most beautiful heartThe most beautiful heart
The most beautiful heart
 
Griffin chap02 environments_notes (ITB ECO)
Griffin chap02 environments_notes (ITB ECO)Griffin chap02 environments_notes (ITB ECO)
Griffin chap02 environments_notes (ITB ECO)
 
3. global context of business - itb - ayesha aman - Economics
3. global context of business - itb - ayesha aman - Economics3. global context of business - itb - ayesha aman - Economics
3. global context of business - itb - ayesha aman - Economics
 

Semelhante a Banks in pakistan

Financial Institutions, Instruments and Markets.
Financial Institutions, Instruments and Markets.Financial Institutions, Instruments and Markets.
Financial Institutions, Instruments and Markets.Atha Ullah Akakheel
 
Role of financial markets ands institutions
Role of financial markets ands institutionsRole of financial markets ands institutions
Role of financial markets ands institutionsKnhantu
 
Critically examine the features of various common money market instruments av...
Critically examine the features of various common money market instruments av...Critically examine the features of various common money market instruments av...
Critically examine the features of various common money market instruments av...Bilal Ahmed Bhatti
 
Money Market.pptx
Money Market.pptxMoney Market.pptx
Money Market.pptxTintoTom3
 
Indian financial system
Indian financial systemIndian financial system
Indian financial systemArunMehra21
 
Money market & Capital market
Money market & Capital marketMoney market & Capital market
Money market & Capital marketNowshed Hossain
 
Indian Financial System
Indian Financial SystemIndian Financial System
Indian Financial SystemAjeesh Mk
 
Week 2 - Financial System.pdf
Week 2 - Financial System.pdfWeek 2 - Financial System.pdf
Week 2 - Financial System.pdfYosafatDimas
 
Banking fundation trg techcanvas - lms v2
Banking fundation trg   techcanvas - lms v2Banking fundation trg   techcanvas - lms v2
Banking fundation trg techcanvas - lms v2techcanvassacademy
 
Financial Management Lecture 2 NUML University
Financial Management Lecture 2 NUML UniversityFinancial Management Lecture 2 NUML University
Financial Management Lecture 2 NUML Universitypal83111
 
Banking services -review_notes
Banking services -review_notesBanking services -review_notes
Banking services -review_notesAkshay Gaikwad
 
01 an overview-of-the-financial-system
01 an overview-of-the-financial-system01 an overview-of-the-financial-system
01 an overview-of-the-financial-systemMark Christian Siwa
 
Indian-financial-system (1)
 Indian-financial-system (1) Indian-financial-system (1)
Indian-financial-system (1)Neetu Jora
 
International Finance and Payments
International Finance and PaymentsInternational Finance and Payments
International Finance and Paymentsnarman1402
 

Semelhante a Banks in pakistan (20)

Financial Institutions, Instruments and Markets.
Financial Institutions, Instruments and Markets.Financial Institutions, Instruments and Markets.
Financial Institutions, Instruments and Markets.
 
Role of financial markets ands institutions
Role of financial markets ands institutionsRole of financial markets ands institutions
Role of financial markets ands institutions
 
Critically examine the features of various common money market instruments av...
Critically examine the features of various common money market instruments av...Critically examine the features of various common money market instruments av...
Critically examine the features of various common money market instruments av...
 
Money Market.pptx
Money Market.pptxMoney Market.pptx
Money Market.pptx
 
Indian financial system
Indian financial systemIndian financial system
Indian financial system
 
Money market & Capital market
Money market & Capital marketMoney market & Capital market
Money market & Capital market
 
Indian Financial System
Indian Financial SystemIndian Financial System
Indian Financial System
 
Money
MoneyMoney
Money
 
Week 2 - Financial System.pdf
Week 2 - Financial System.pdfWeek 2 - Financial System.pdf
Week 2 - Financial System.pdf
 
Money market- monetary economics
Money market- monetary economicsMoney market- monetary economics
Money market- monetary economics
 
Banking fundation trg techcanvas - lms v2
Banking fundation trg   techcanvas - lms v2Banking fundation trg   techcanvas - lms v2
Banking fundation trg techcanvas - lms v2
 
Financial Management Lecture 2 NUML University
Financial Management Lecture 2 NUML UniversityFinancial Management Lecture 2 NUML University
Financial Management Lecture 2 NUML University
 
Banking services -review_notes
Banking services -review_notesBanking services -review_notes
Banking services -review_notes
 
Ppt fin1
Ppt fin1Ppt fin1
Ppt fin1
 
01 an overview-of-the-financial-system
01 an overview-of-the-financial-system01 an overview-of-the-financial-system
01 an overview-of-the-financial-system
 
structure of financial system
structure of financial systemstructure of financial system
structure of financial system
 
Indian financial system
Indian financial systemIndian financial system
Indian financial system
 
Indian-financial-system (1)
 Indian-financial-system (1) Indian-financial-system (1)
Indian-financial-system (1)
 
International Finance and Payments
International Finance and PaymentsInternational Finance and Payments
International Finance and Payments
 
commercial bank
commercial bankcommercial bank
commercial bank
 

Mais de Ali Kamran

Mais de Ali Kamran (20)

Training and development
Training and developmentTraining and development
Training and development
 
Teacher
Teacher Teacher
Teacher
 
Style textile
Style textileStyle textile
Style textile
 
Sme's
Sme'sSme's
Sme's
 
Section 1 back ground (2)
Section 1 back ground (2)Section 1 back ground (2)
Section 1 back ground (2)
 
Research
ResearchResearch
Research
 
Ptcl
PtclPtcl
Ptcl
 
Pso
PsoPso
Pso
 
Pizza hut presentation
Pizza hut presentationPizza hut presentation
Pizza hut presentation
 
Pia1
Pia1Pia1
Pia1
 
Wah nobel ltd.
Wah nobel ltd.Wah nobel ltd.
Wah nobel ltd.
 
Paktel
PaktelPaktel
Paktel
 
Paktel
PaktelPaktel
Paktel
 
Outsourceing
OutsourceingOutsourceing
Outsourceing
 
Nestle
NestleNestle
Nestle
 
Motorola
MotorolaMotorola
Motorola
 
Mobilink
MobilinkMobilink
Mobilink
 
Marriott
MarriottMarriott
Marriott
 
Marriot questioinnaire
Marriot questioinnaireMarriot questioinnaire
Marriot questioinnaire
 
Management report..furguson
Management report..furgusonManagement report..furguson
Management report..furguson
 

Último

Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024Neil Day
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI360factors
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023SkillCircle
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...mwangimwangi222
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?Stephen Perrenod
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Commonwealth
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismBrian Lin
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfMichael Silva
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklosbeduinpower135
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources PresentationAdnet Communications
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfSCBEICSCB
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingHenry Tapper
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.KumarJayaraman3
 

Último (20)

Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 
Effects & Policies Of Bank Consolidation
Effects & Policies Of Bank ConsolidationEffects & Policies Of Bank Consolidation
Effects & Policies Of Bank Consolidation
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
 
E-levy and Merchant Payment Exemption in Ghana
E-levy and Merchant Payment Exemption in GhanaE-levy and Merchant Payment Exemption in Ghana
E-levy and Merchant Payment Exemption in Ghana
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?
 
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
New Monthly Enterprises Survey. Issue 21. (01.2024) Ukrainian Business in War...
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdf
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklos
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdf
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB funding
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
 

Banks in pakistan

  • 1. TABLE OF CONTENTS Sr.No. Particulars Page # 1 Financial System: 2 Financial Markets: 3 Financial Institutions: 4 Financial Intermediaries: 5 The Stock Market: 6 Securities: 7 Types of Finance Companies: 8 Insurance Companies: Financial System: Some economic units generate more income than they spend and have funds left over. These are called Surplus Economic Units. Other economies units generate less income than they spend and need to acquire additional funds in order to sustain their operations. These are called Deficit Economic Units. The purpose of financial system is to bring the two groups, surplus economic units and deficit economic units, together for their mutual benefits. Financial Markets: • Physical Asset markets • Spot markets • Money markets • Mortgage markets • The primary market • The secondary market • Private markets • The money market • The capital market • Security exchanges Financial Institutions:
  • 2. Commercial Banks • Savings & Loan Associations • Central Bank • Credit Unions • Insurance Companies • Mutual Funds • Pension Funds Financial Intermediaries: • Investment Bankers • Brokers • Dealers The Stock Market: • Physical Location Stock Exchange • The Over-the-Counter Market • The NASDAQ stock market Securities: Securities in Money Market: • T-Bill • Negotiable Certificates of Deposits • Commercial Papers • Eurodollars • Banker’s Acceptance Securities in Capital markets: • Bonds • Treasury Notes • Municipal Bonds • Corporate Bonds Types of Finance Companies: • Consumer Finance Companies • Commercial Finance Companies • Sales Finance Companies Insurance Companies:
  • 3. Life Insurance Companies • Property and Casualty Insurance Companies • Pension Funds • Annuities Financial Markets: Financial Asset Markets: Financial asset markets, on the other hand deal with stocks, bonds, notes, mortgages and other financial instruments. Spot Markets: Spot markets and future markets the terms that refer to whether the assets are being bought or sold on the spot delivery or for delivery at some future date. Such as six months or a year in future. Money Markets: Are the markets for short term, highly liquid debt securities. The New York and London money markets have long been the world’s largest markets. Mortgage Markets: Deals with loan and residential, commercial and industrial real estate and on farmland. The Primary Market: When a security is created and sold for the first time in the financial marketplace, the transaction takes place in the primary market. It is also known as Initial Public Offering (IPO) The Secondary Market: Once a security has been issued, it may be traded from one investor to another. The Money Market: Short term securities are traded in money market. Network of dealers operate in this market. The Capital Market:
  • 4. Long term securities traded in the capital market. Security Exchanges: Security exchanges facilitate trading of stock or bond among investors. Financial Institutions: Commercial Banks: Commercial banks are financial institutions that exit primarily to lend money to business. Banks also lend to individuals, government and other entities, but the bulk of their profit typically come from business loans. Commercial banks make money by charging a higher interest rate on the money they lend than the rate they pay on money lent to them in the form of deposits. The difference between the rate charged to borrowers and the rate paid to depositors is known as the interest rate spread. Banking is different from many other types of business in that it must have a charter before it can open its doors. A bank charter is much more different to obtain Ethan a city license need to open another business. It is an authorization from the government granting permission to operate. Commercial Bank Operations: Commercial banks operate with more government oversight than most businesses but they are managed just like other companies. Value maximization of Stockholders. Commercial banks have stockholders,employees,mnagers,equipment, facilities and the primary financial goal of such banks is to maximize value for their stockholders. Receiving and Lending of Funds: The banks do most of their business by receiving funds from depositors and lending the funds to those who need them. Issuance of Bonds: Commercial banks occasionally issue long term bonds to raise funds, borrow from the federal reserve, or borrow deposits kept by other financial institutions in the federal reserve banks in what is known as the federal fund market.
  • 5. Commercial Banks Reserves: Commercial banks are not allowed to lend all the funds they get from depositors. Central bank requires all commercial banks to keep a minimum amount of reserves on hand. The required level of reserves a bank must hold is determined by applying a certain percentage to the average weekly deposits held by the bank. The exact percentage of deposits a bank must hold in reserve, called the require reserve ratio. Central Bank: THE STATE BANK OF PAKISTAN Primary Functions Sole Authority to Issue Notes: One of the primary responsibilities of the State Bank is the regulation of currency in accordance with the requirements of business and the general public. For this purpose the Bank has been granted the sole right of issuing notes in the country under Section 24 of the State Bank of Pakistan Act, 1956. The overall affairs with respect to the issuing of notes are conducted through two notionally separate departments of SBP. T-Bill Auctions SBP 3-day repots rate influences the yield of T-bills sold through auctions the cut off yield is determined by the Auction Committee, keeping in view monetary targets, Current economic and financial conditions and expected market response. The Six month T-bill is considered the most important benchmark by the money market. Open Market Operation SBP is conducting regular Open Market Operations (OMOs) since January 1995. Regulation and Supervision of the Financial System: Another principal task of the Bank is to safeguard the soundness of the financial system. To perform this crucial role effectively and efficiently, State Bank of Pakistan has been given vast powers under the State Bank of Pakistan Act, 1956,
  • 6. Bankers' Bank: The Bank also functions as the bankers’ bank. Banks are classified as scheduled and non-scheduled. The Bank maintains an updated list of all scheduled banks at its various offices. These banks are entitled to certain facilities from the State Bank and in return they have some obligations to it. Lender of the Last Resort: One of the important characteristics of a central bank is its being the lender of the last resort. The State Bank provides loan and re-discount facilities to scheduled banks in times of dire need when they find no other source of funds. Banker to Government: The State Bank conducts the banking business of Federal and Provincial Government and some government agencies. 2 Secondary Functions: 2.1 Public Debt Management The Bank is responsible for the management of government debt under subsection 13(e) of section 17, and section 21 of the SBP Act, 1956. Management of Foreign Exchange Being responsible for maintaining the external value of the currency, the State Bank of Pakistan assumed the charge of management and administration of the exchange system of the country in line with the Foreign Exchange Regulation Act, Reports on the State of the Economy The Bank submits its review of the economy to the Parliament through its annual and quarterly reports. Relationships with International Financial Institutions Pakistan is the member of International Monetary Fund. The State Bank of Pakistan deals with the IMF on behalf of the Government of Pakistan 3 Non-traditional Functions: Micro Finance:
  • 7. In order to expand the banking services at grass root level and to enable the financial sector to play its role in poverty alleviation, the State Bank of Pakistan is also promoting micro banking in the country. Training Facilities to Bankers: Keeping in view an acute shortage of trained bankers at the time of the independence, the State Bank introduced "Bank Officers Training Scheme" within one month of its establishment. On July 2 1948, the Central Board of Directors of the Bank approved a comprehensive scheme for university graduates especially with mathematics, economics and commerce backgrounds. Savings and Loan Associations: Like commercial banks, savings and loan associations are in business to take in deposits and lend money, primarily in the form of mortgage loans. Mortgage loans are loans that are secured by real property such as real estate. If borrower defaults on a mortgage loan, the lender can take legal possession on the property. The property can then be sold and the lender keeps the proceeds from the sale up to the amount owed. S&Ls make a profit by charging a higher interest rate on the money they lend than the rate paid on deposits they take in. Credit Unions: Credit unions are cooperative associations whose members are supposed to have a common bond, such as being employees of the same firm. Member’s savings are loans and home mortgage, credit unions are often the cheapest source of funds available to the individual borrowers. Mutual Funds: Are corporations that accept money from savers and then use these stocks, bonds, long term bonds, or short term debt instruments issued by businesses or government units. These organizations pool funds and thus reduce risk by diversification. They also achieve economy of scale in analyzing securities, managing portfolios, and buying and selling securities. Pension Funds: Pension funds are retirement plans funded by corporations or government agencies for their workers and administered generally by the trust departments of
  • 8. commercial banks or by life insurance companies. Pension funds invest primarily in bonds, stocks, mortgages and real estate. Financial Intermediaries: Investment Bankers Institutions called investment banking firms exist to help business and state and local governments sell their securities to the public. Underwriting: Investment bankers arrange securities sale on either an underwriting basis or best effort basis. The term under wring refers to the process by which an investment banker purchase all the new securities from the issuing company and then resell them to the public. Investment bankers who underwrite securities face some risk because occasionally an issue is overpriced and can’t be sold to the public for the price anticipated by the investment banker. Brokers: Brokers often account representative for an investment banking firm, handle orders to buy or sell securities. Brokers are agents who work on behalf of an investor. When investor call with an order. Brokers work on their behalf to find someone to take the other side of the proposed trade. If investor want to buy, brokers find sellers. If investors want to sell, broker find buyers. Dealers: Dealers make their living buying securities and reselling them to others. Dealers make money by buying securities for one price, called bid price and selling them for a higher price, called the ask (offer) price. The difference or spread between the bid price and the ask price represents the dealer’s fee. The Stock Market: Physical Location Stock Exchange: Exist physically such as Karachi Stock Exchange. Trade of securities between buyer and seller. The Over-the-Counter Market:
  • 9. No fix location. Network of dealers around the world who maintain inventories of securities for sale. The NASDAQ stock market: Computerized exchange of securities all over the world. Securities: Document that represent the right to receive funds in the future. Securities in Money Market: • T-Bill: Treasury bills are considered the benchmark of safety because the have essentially no risk • Negotiable Certificates of Deposits: They are simply pieces of paper that certify that you have deposited a certain amount of money in the bank, to be paid back on a certain amount of money in the bank. • Commercial Papers: A type of short term promissory note issued by large corporations with strong credit rating. • Eurodollars: Euro dollar are deposited and borrowed by large institutions with good credit rating. • Banker’s Acceptance: A banker’s acceptance is a short term debt instrument that is guaranteed for payment by a commercial bank. Securities in Capital markets: • Bonds:
  • 10. Bond is the promise to pay their owner a certain amount of money on some specified date in the future. • Treasury Notes: When the federal government wants to borrow the money for period of more than one year, it issues treasury notes. • Municipal Bonds: The bonds issued by state and local governments are known as municipal bonds. • Corporate Bonds: Corporate bonds are similar as treasury notes but issued by the corporations. Types of Finance Companies: Consumer Finance Companies These are some times known a small loan companies, make small loans to consumers for car purchases, medical expenses, vacations, and the like.interst rate charged on these types of loans a little bit higher. Commercial Finance Companies These firms concentrate on providing credit to other business firms. Sales Finance Companies These companies help to sale of some corporation. Insurance Companies: Life Insurance Companies: Life insurance companies sell policies that pay the beneficiary of the insured hen the insured person dies. Property and Casualty Insurance Companies:
  • 11. Property and casualty insurance companies insure against a wide range hazards associated person and property. These include theft, weather damage for hurricanes and earthquake. Pension Funds: Pension funds are set up by companies, government and unions to pay retirement benefit to their employees. Employees generally contribute money to the funds now in order to draw it later, on retirement. Annuities: Sometime the sponsor of pension funds will use the funds accumulated during the retire person’s working year to purchase an annuity from an insurance company.insurane companies also sell annuities to investors.