Presentation1

WELCOME ROLE OF BANKS IN ECONOMIC GROWTH

PREPARED FOR
Dr. Nazibul Islam
Lecturer
PRINCIPLES & PRACTICES
OF BANKING
FACULTY OF BUSINESS STUDIES
UNIVERSITY OF DHAKA

INTRODUCTION
A nation's money supply consists of bank deposits ownership of which can be transferred by means of cheques, debit cards or other forms of money transfer. Deposit money and currency are money in the sense that both are acceptable as a means of payment.

HISTORY OF MONEY & TRANSACTIONS
Currency evolved from two basic innovations, both of which had occurred by 2000 BC. Originally money was a form of receipt, representing grain stored in temple granaries in Sumer in ancient Mesopotamia, then Ancient Egypt.
Early currency
Cionage
Paper money
Bank Note
Plastic money

EVOLUTION OF BANKING
ANCIENT WORLD (3000 BC)
Temple banks in Egypt, Babylon, Greed valuables for safe keeping. The valuables consisted of grains, agricultural implements and cattle.
At later stage precious metals, gold and silver featured as deposits.
Ancient India developed its own banking system. Manu framed regulations on commercial transactions.
18 th Century BC
The temple priests of Babylon provided loans to merchants.
Hammurabi, the great, framed laws for banking operations. Around this time, Greek temples conducted financial transactions such as loans, deposits, currency exchange, and issued credit notes payable in another city.
Ancient Romans made regulations concerning financial practices. They paid interest on deposits and charged interest on loans.
Advent on Christianity and the taboo on interest brought an end to perpetuation of banking.

CONT’D
Around 1100 AD
The banking system revived in Western Europe to finance the crusades. They also found a way to circumvent the religious taboo on interest.
1100 AD ONWARDS
Settlement of debts and payments took place in trade fairs held regularly at various locations in Europe.
MEDIEVAL ITALY
ITALY pioneered banking in Europe. The word bank comes from banco means bench.
1157 AD Bank of Venice established which is supposed to be the most ancient bank.
1349 AD
Cloth merchants of Barcelona set up banks.
1609 AD
The Bank of Amsterdam was established in Netherlands.
In 1600 AD Goldsmiths pioneered banking business in England. The notes they issued against deposits of gold is considered as the precursor of modern day bank note.
1694 AD
Bank of England, the first central bank. It sets the stage of modern banking.

BANKS OF THE SUBCONTINENT
NATIONAL BANK OF INDIA
1864
MAHALAXMI BANK
1910
CENTRAL BANK OF INDIA
1911
COMILLA BANKING CORPORATION
1914
DINAJPUR BANK
1914
BENGAL CENTRAL BANK
1918
NEW STANDARD BANK
1920
IMPERIAL BANK OF INDIA
1921
IONEER BANK LTD
1922
COMILLA UNIOUN BANK
1923

Cont’d
UNITED INDUSTRIAL BANK
1942
BHARAT BANK
1942
UNITED COMMERCIAL BANK
1942
HINDUSTAN COMMERCIAL BANK
1942
HINDU BANK
1946
NATH BANK 1926 TRIPURA MODERN BANK 1929 BANK OF COMMERCE 1929 SOUTHERN BANK LTD 1934 CALCUTTA COMMERCIAL BANK 1934 CALCUTTA NATIONAL BANK 1935

Formal Financial sectors of Bangladesh
BANGLADESH BANK
COMMERCIAL BANKS
DEVELOPMENT FINANCING INSTITUTIONS
INSURANCE COMPANIES
STOCK EXCHANGES
BANGLADESH SOMOBAYA BANK
COOPERATIVE BANKS
BANGLADESH RURAL DEVELOPMENT BOARD
BANGLADESH POST OFFICE SAVINGS BANKS
MICO FINANCE INSTITUTIONS

GROWTH OF BANKS IN BANGLADESH
1971
Pre liberation commercial & DFIs nationalized.
1971
Bangladesh bank established to over the operation of the state bank of Pakistan.
1980s
Reversion of Pubali bank & Uttara bank to private sector, first finance company – IFIC Ltd established.
1991-1996
Second batch of private sector banks emerged.
1996-01
Third generation of Commercial bank setup.

Function of Commercial banks
Accept deposits with or without interest – current, savings, fixed deposits and others accounts.
• Collects cheques bills etc.
• Lends money- Long term & Short term.
• Handles foreign exchange transactions.
• Arrange transfer of funds.
• Issue guarantee, indemnity bond.
• Maintain safe deposit box.
• Perform agency functions.

Role of Banks in the Economic Development of a Country
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 economic activity

Cont’d
7. Implementation of Monetary policy,
8. Monetization of the economy
9. Export promotion cells
10. Virtual Banking

SPECIALISED FINALCIAL INSTITUTIONS:
Bangladesh Shilpa Bank (BSB)
Bangladesh Shilpa Rin sangstha (BSRS)
Bangladesh Krishi Bank
Rajshahi Krishi Unnayan Bank
Investment corporation of Bangladesh
BASIC BANK Ltd
House Building Finance Corporation
Ansar VDP Unnayan Bank
Karma Sangsthan Bank

M-Banking and M-Payments Systems in the Developing World
The terms m-banking , m-payments , m-transfers , m-payments , and m-finance refer collectively to a set of applications that enable people to use their mobile telephones to manipulate their bank accounts, store value in an account linked to their handsets, transfer funds, m-banking or even access credit or insurance products.

Negative effects of economic growth
• Consumerism
• Resource depletion
• Environmental impact
• Equitable growth
Implications of global warming

CONCLUSION
Banks were the earliest credit institutions extending loans (credit) to customers. It was their job to transform short-term liquid deposits into long-term illiquid financial assets that can fund long gestation activities and enhance economic growth.

THANKS
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