Introduction to Banking

1. Shetu Ranjan Biswas
BBA(MS) & MBA(IM),CU.
Lecturer
Dept. of Business Administration
Dhaka International University.

2. Chapter One
Introduction
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3. Outline
 Bank & Banking
 Importance for studying banking environment
 Factors of environment of banking
 Types of banks
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4. 1. Bank & Banking
 Bank is a financial institution that collects society’s cash and
gives a part of that as loan to investors for earning profit.
 Bank is a financial organization that is registered by central
bank and mainly perform the following activities:
- receives current deposit and give the withdrawal
facilities to clients through cheque.
- receives term deposit & pay interest on it.
- discounting notes, approving loans, & invest in Govt.
& other credit instruments.
- collect cheque, draft, & notes etc.
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5. 3. Importance for Studying Banking Environment
Bankers need to study closely the changes in the
environment of banking in order to aptly handle many
problems, such as
 Variations in demand for money
 Variations in credit demand
 Variations in funds supply
 Variation in interest rates
 Variations in credit condition
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6. 4. Factors of Environment of Banking
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Elements of Banking
environment
Relating to
bank
employee
Relating to
Organization
External Factors
Internal Factors
Economic
Legal Technological
Political
Socio-
cultural

7. 4.a.1 Internal Factor- Relating to Organization
1. Location of bank
2. Lay out- designing of bank
3. Defined goals & policies
4. Adequate place & logistics for work
5. Trade union
6. Promotion & transfer on the basis of efficiency
7. Efficient deposit & credit operations
8. Efficient management
9. Financial solvency
10. Use of modern technology
11. Relation of bank with customers
12. Bureaucratic complexity
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8. 4.a.2. Internal Factor- Relating to Bank Employee
1. Number of employees
2. Efficient employee
3. service oriented attitude
4. Loyalty to the bank
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9. 4.b.1 External Factors- Economic
1. State of development of financial system
2. Adequacy of fund
3. Communication system
4. Free market economy
5. Monetary & Fiscal Policy
6. Investment opportunity
7. Healthy competition
8. Import- export policy
9. Income level
10. Savings Propensity
11. Role of Govt.
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10. 4.b.1 External Factors- Political
1. Ideology of the state
2. Attitude of the Govt.
3. Development work
4. Support to the business
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11. 4.b.1 External Factors- Socio-cultural
1. Values
2. Security
3. Social Status of the businessman
4. Education
5. Cultural Consciousness
6. Banking Habits
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12. 4.b.1 External Factors- Legal
1. Business control law
2. Tax laws
3. Import & export law
4. Fiscal law
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13. Bank management
Bank
management
Planning
Organizing
Coordinat
ing
Motivating
Controlling
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14. Board of Directors (BOD)
 The representatives of the shareholder who are elected to
direct the bank are called BOD.
 BOD , as the agents of the shareholders, monitors the
functions of the bank whether it is performing efficiently or
not and also solves all the emerging problems.
 BOD is elected in the AGM by the interested and
concerned authorities.
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15. Powers of the BOD
 The article of association (AOA) describes the limit of the
power of the directors.
 Powers of the BOD are as follows:
1. To call the uncalled share capital.
2. To invest funds of the funds.
3. To adopt rules and policies.
4. To appoint directors as necessary
5. To appoint the CEO & Chairman of the board.
6. To inspect the accounts.
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16. Responsibilities of the bank directors
 The directors should look after the rights & perform proper
duties to the following persons:
 Depositors
 Shareholders
 Central bank
 Tax authority
 Government
 Society
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17. Relationship between BOD & bank management
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Shareholders of the bank
Managing directors
Bank Management
Board of Directors Chairman of the directors

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