Introduction and definition of bank History of banks, kinds of banking sector

2. Introduction and definition of bank
History of banks, kinds of banking sector
By: Zara Ahsan
THE SUPERIOR COLLEGE LAHORE
ASSOCIATE DEGREE IN ACCOUNTING AND
FINANCE

3. Bank History:
Form around 1600 (Only make profit)
The bank of America 1782 Colonial land North banks
End of 18th Century Formed Dozen of banks
Pooled the wealth & lent (on loan) to group of
Enterprises
Since 1920 commercial banks equal about
50% aggregate output of U.S Economy
Glass steagall act 1933 (Repealed 1999)

4. Pakistan
O Comprehensive restructuring in 1997
O • Promotion of Saving, investment, growth
O • Pressure points on commercial banks since
1997
O 1) Multipronged reforms introduce by SBP
O 2) Freezing of foreign currency
O 3) Fluctuation in economic activities and
growth
O 4) Drive for accountability (liability) and loan
recovery

5. Introduction
Banking sector
Basic Definition: A system of trading money which:
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.
(b) of the Banking Regulation Act 1949 defines
“Banking” as “Accepting for the purpose of lending and
investment, deposits of money from the public repayable
on
demand or otherwise and withdraw able by cheque, draft,
order or otherwise”

6. O Institutions which deals in money and
credit. An intermediary, which handles
other people’s money both for their
advantage and to its own profits. A
financial institution that links the flow of
funds from savers to the users. Plays an
important role in the economy of any
country as they hold the saving of the
public.

7. Structure of the Banking
Sector Pakistan
O Structure of the Pakistani banking sector has
significantly changed in the last decade,
particularly following the privatization of the
state-owned banks in 1990.
O Muslim Commercial Bank (MCB) and Allied
Bank (ABL), were privatized between 1991
and 1993 United bank(UBL) was privatized in
year 2002; i.e. causing the end of domination
of state owned banks As of September 2003,
the asset share of local private banks and
public sector commercial
.

8. Analysis of Banking Sector in
the Present Decade
O The Banking sector, which was fully
dominated by Nationalized Commercial
Banks (NCBs) until a few years ago, has
been opened up to the private sector Four
of out five largest NCBs have been
privatized The Central Bank in Pakistan
has strengthened its capacity by acquiring
new skills, upgrading the quality of the
existing human resources base, adopting
technology and re-engineering business
processes

9. O Central bank, banking regulation and
supervision are risk-based and are fully
compliant with the international standards
and codes prescribed by Basle Committee
Pakistan banking sector has now
diversified its product base and carried out
a lot of innovation Banks in Pakistan have
expanded their out reach to agriculture ,
SMEs, mortgage financing and consumer
financing.

10. Types of Banking
Banking is mainly divided into four parts
:-
O • Retail Banking
O • Wholesale Banking
O • Universal Banking
O • Rural Banking

11. Retail Banking
O Meaning:-
O • When a bank executes transactions directly with consumers.
Retail Banking deals directly with individuals and small
businesses.
O • It is also known as consumer banking or personal banking.
O • Retail Banking aims to be the one stop for as many financial
services as possible on behalf of retail clients.

12. Products and Services:
O Checking and Savings accounts:-
Customers are generally Charged a
monthly fee for checking accounts, saving
accounts offer higher interest rates than
checking account.
O • Mortgages on residential and investment
properties. Debit and Credit Cards:- Retail
Banks provide the facility of Debit & Credit
cards for easy availability of money.

13. O Foreign Currency and Transfer services
Personal and Home Equity Loans:- Retail
banks also provide personal & home
equity loans for meeting the expenses
such as home repairs, medical bills or
collage education etc.

14. Wholesale Banking
O Wholesale Banking deals with larger
institutions, where as retail banking would
focus more on the individual or smaller
business.
O • In Simple words, wholesale Banking refers
to banking, where large companies or large
infrastructure project or government accounts
are handled. Modern wholesale banks are
engaged in finance wholesaling, underwriting,
market making, consultancy, mergers and
acquisitions, fund management

15. Product and Services
O Currency Conversion
O • Working capital financing
O • Large trade transactions
O • Cash Management
O • Loan participation
O • Merchant banking
O • Trust services

16. Universal Banking
O A banking system in which banks provide
a wide variety of financial services,
including both commercial and investment
services.
O • These are also called full-service
financial firms although there can also be
full service investment banks which
provide asset management, trading and
underwriting

17. Products & Services
• Credit
• Loans
• Deposits
• Asset management
• Investment advisory
• Payment processing
• Securities transactions
• Underwriting and financial analysis.

18. Rural Banking
O Regional Rural Banks are the banking
organizations being operated in different
states of India.
O • These are created to serve the rural
areas with banking and financial services

19. O Rural banks may have set up branches for
urban operations. The main purpose of
RRB’s (Regional Rural Banks) is to
mobilize financial resources from rural
areas and grant loans and advances
mostly to small and marginal farmers,
agricultural and rural artisans. Regional
Rural Banks were established under the
provisions of an ordinance passed on 26
Sept. 1975 and the RRB act.

20. 1976 to provide sufficient banking and credit facility
for agriculture and other rural sectors
O Examples are:-
O • Allahbad UP Gramin Bank
O • Baroda Gujrat Gramin Bank
O • Bihar Gramin Bank
O • Dena Gujrat Gramin Bank
O Himachal Gramin
O • JK Gramin Bank
O • Maharashtra Gramin Bank

21. O • Punjab Gramin Bank
O • Uttarakhand Gramin Bank
O • Odisha Gramin Bank