Here are the answers to the questions: 1. b) Receives goods and provide currency. 2. d) All of above. 3. a) Commercial can buy up to 50% share of corporate firm. 4. c) 1970s 5. d) All of above 6. b) Direction for the adequate security. 7. d) None of them. 8. b) The Moghal Era. 9. c) 1784 10. a) 75

1. Submitted To:
Md. Mahiuddin Sabbir
Lecturer
Department of Marketing
University of Barisal.

2. Submitted By:
Blooms Bury
4th Batch, 6th Semester
Department of Marketing
University of Barisal.

3. Group Members Information
SL Name ID No.
1 RABIUL KHAN 14MKT004
2 TANU KIRTTANIA 14MKT038
3 MST. ROKSANA KHATUN 14MKT053
4 DOLON ROY 14MKT056
5 MITHUN SARDAR 14MKT059
6 MALIHAAKTHER 14MKT065
7 UMMEY SUMAIYA POROMA 14MKT069

5. Introduction:
Bank is a business organization. Like all other
business institutions, banks’ major objective is also to
earn profit. It is mentionable that banks do not sell
ready goods like other producers. But definitely , a
bank is a service-selling institution. The service of a
bank is considered as its product. So, many people say
that a bank is that kind of business institution whose
profit earning will be impossible by selling more if its
products’ virtual quality is not ensured.

6. What is Meant by Bank?
Bank is a financial institution that collects society’s
surplus cash and give a part of that as loan to
investors for earning profit.
So, bank is an intermediary institution that makes
relationship between the owner of surplus saving
and investor of deficit capital.

7. Some widely accepted definitions of
banks are given below:
a) A commercial bank is a trader of substitute currencies such as
currency, cheque and bill of exchange.
-New Encyclopedia Britannica.
b) A bank provides service activity and acts as an intermediary
between creditor and lender. In a broader sense, it is said that
bank is the heart of complex financial structure.
-American Institute of bankers.
c) A banker is one, who in the ordinary course of his business,
receives money which he repays by honouring checks of person
from whom or on whose account he receives it.
-Professor Hart.

8. Banking System Around the World:
We can divide the major commercial banking
systems in different countries in the following
groups:
1. Anglo-American Banking System
2. German Universal Banking System
3. Japanese Main Banking System
4. Indian Lead Banking System

9. 1. Anglo-American Banking System:
 This system is prevalent in most of the countries in the
world along with Bangladesh.
 There are difference between commercial banking and
investment banking.
 Commercial banks can not operate investment banking
activities.
 Separate investment banks are established in these
countries for the operation of investment banking
activities.

10. 2.German Universal Banking System:
This system is prevalent only in Germany.
 There is no difference between commercial
banking and investment banking in this system.
Commercial bank can operate any type of
business activities.
Commercial bank can buy up to 40% share of
corporate firms and participate in the ownership
of the firm.

11. 3. Japanese Main Banking System:
 This system is closely related to the relationship banking.
 In this system there are difference between investment
banking and commercial banking.
 But commercial have no restriction to participate in the
ownership of corporate firms.
 This is the hybrid form of the above two systems. That is
bank can not participate in the investment banking
activities.
 The bank can buy 5% share of any companies and
participate in the ownership.

12. 4. Indian Lead Banking System:
This system was developed in India by the end of
1960.
Every lead bank performs extra responsibilities with
the existing commercial banking system.
 This system divides the country’s geographical area
in different segments and only one leader bank is
selected for each area.
That area’s each and every commercial bank and
other operating financial institution loan activities are
transacted according to the lead bank.

13. Banking Issues in the 21st Century:
Financial Systems evolve through time, Passing through three phases:
Phase one:
This phase is bank oriented where most external finance is raised through
the bank loans which in turn is funded through savings. Banks are the
most important financial intermediaries in the financial systems and
interest income is the main source of revenue.
Phase two:
This phase is market oriented. Households and institutional investors
begin to hold more securities and equity and non banking financial
institutions offer near bank products such as money market accounts.
Phase three:
In this phase trading, underwriting, advising and asset management
activities have become more important for banks than the traditional core
banking functions.

14. The position of the banking sector at the beginning of
the new century:
1.It will be wise to begin with the performance of
banks measured by banks profitability: It is
mentionable that in 1980 Japanese banks were very
profitable, became even more so. But banks profit
elsewhere either trend less or slipping. The recovery to
average levels in 1999 was short lived.
2.The growth of bank assets: In the 1970s, banks asset
grew rapidly in nominal terms across the 14 countries.
But more restrictive monetary policies and lower
inflation contributed to the sharply lower growth of
banks assets almost everywhere in the 1980s and 1990s.

15. 3. Bank foreign assets:
 Foreign assets growth rates tended to outpace domestic asset in
all three decades.
 The average ratio of total assets to nominal GDP for most
industrial countries rose in 1970.
 For Switzerland, banking assets had been more than 100% off
national income in 1970s & very nearly so for Japan and
Germany.
 In other countries, there had been a steady rise from 40% to 60%
of national income in 1970s to well over 100% by the 1970s.
4. Employee cost: While profitability was fairly static, banks were
looking for other sources of income by expanding into non- interest
income areas.
5.Share price performance: The relative share price performance
of banks gives the most important idea of what the market thinks
about future prospects of the bank compared to the other sectors.

16. New Technology and Innovation:
World is rapidly marching to be turn into cashless society because e-
cash or digital cash has replaced currency in circulation. E-cash can
consist of stored value cards, network money and e-wallets:
 Stored value cards store prepaid funds electronically on a chip in
the card. Customer can download cash from their accounts so that
they can be used like cash.
 Network money is also prepaid but stored on a computer hard disc
and transferred between agents via network such as internet. Agents
can only use that transferred amount for purchasing goods and
services
 The e-wallet is an electronic version of a credit or debit card.
Money is transferred from an individual’s account to the e-wallet
that can be used to purchase via internet.

17. For the emergence of e-cash, it is sometimes questioned whether
bank intermediary function will be challenged. It can be
discussed by considering the following function:
Payments Facilities:
Central bank plays an important role in the settlement function.
Banks use central bank for the settlement of balances with the
help of of deposit kept with the central bank.
Taking deposit & making loans:
In case of e-cash, the time and cost of collecting the information
required to locate the optimal place for a deposit, to pool risk
with other depositors or to locate the most suitable borrower will
be high. In this case, the chance of banks being replaced is thin.
Liquidity position:
The liquidity service offered by banks is more suitable than e-
cash system. The matching between the borrower and lender is
hard to find.

18. The contributions of Goldsmith,
money-leader, and the businessmen:
The Goldsmiths:
 The goldsmith used to act as custodians of the surplus funds of the
general people of the society.
 On receipt of money they used to issue receipts and on return of
money they used to take acknowledgements.
 The deposits receipts were undoubtedly acceptable and popular as
notes of the Goldsmiths and afterwards converted into bank notes.
 They used to lend money with interest to the needy people and thus ,
the words interest and profit were introduced.
 In the middle ages, Goldsmiths used to deposit their money with the
treasury of England.
 In 1640, the reserve funds of the Goldsmiths with London Tower
were confiscated and they had to pay penalty for taka two lacks
pounds.
 Then they left gold business and got involved with banking business.

19. The Money-Lenders ( Mahajan) :
 The Money-Leaders used to keep surplus
money of the people and refund those in case
of need as a profession.
 They used to pay interest to the depositors
and earn interest on loans.
 They also used to take security, mortgage
against loan.
 In Europe they were called Medici,
Bengkuci, Piti, Missouri etc.

20. Businessmen:
The ancient periods the Business Class were
trustworthy to the general people.
They were honest, faithful and solvent.
As a result, general people used to deposit
money to them for the safety and security of
fund.
The businessmen of seven-hills of Rome were
world-famous.

21. History of Banking system of Bangladesh
and Indo-Pak Subcontinent:
a) The Ancient Era :
Many Evidence are found with the archaeological symbols of
Harappa and Mohenjodaro. From different religious
scriptures we find a lot of information regarding modern
banking activities.
b) The Moghal Era :
The banking system has been extensively developed during
the Moghal Era. During that time government treasury was
formed. The Govt. introduced gold and silver coins of
different denominations named ‘Ashrafi’. In the seventeenth
century, English Tradesmen were involved with them. In 1700
The Hindustan Bank was established as a joint venture bank.

22. c) The British Era:
In 1784 the Bangal Bank introduce paper currency
notes and gold coins of different denominations.
Leter, in 1787 General Bank of India, in 1806
Bank of Bangal, in 1840 Bank of Bombay and in
1843 Bank of Madras were established. With
merging of three banks , the Imperial Bank of
India was established in 1920 and in 1935 the
Reserve Bank of India came into being.

23. d) The Pakistan Era:
In 1947 during the separation of India, 639 branches of
different banks were the parts of Pakistan. In 1948 the
State Bank of Pakistan was established.
e) The Bangladesh Era:
In 1971 a branch of state bank of Pakistan stationed at
Dhaka was declared Central Bank of Bangladesh
named as Bangladesh Bank under special Act.
Excepting other banks, Head Offices of two banks:
1. Eastern Mercantile Bank Limited(1959)
2. Eastern Banking Corporation Limited(1965).

24. After nationalization the banks were renamed
as under :
SL Former Name Present Name
01 The National Bank of Pakistan,
The Bank of Bhowalpur Limited,
The Premier Bank Limited
Sonali Bank
(Sonali Bank Limited)
02 The United Bank Limited,
The Union Bank Limited
Janata Bank
(Janata Bank Limited)
03 The Habib Bank Limited,
Commerce Bank Limited
Agrani Bank
(Agrani Bank Limited)
04 The Muslim Commercial Bank Limited,
The Standard Bank Limited,
The Australasia Bamk limited
Rupali Bank
(Rupali Bank Limited)
05 The Eastern Mercantile Bank Limited Pubali Bank Limited
06 The Eastern Banking Corporation Limited Uttara Bank Limited

25. Banking System in Bangladesh

26. Rationale of Increasing Importance
of Bank Management:
Bank is profit oriented organization; therefore its
management procedure is more challenging as
regulatory system always is there to control the
bank management.
Following diagram shows how the bank
management becomes more challenging over
time:

28. So above diagram shows the day by day, bank
management becomes more complicated due to the
effect of these three determinants.A small
description of these three factor are given below:
Changing Regulation for Banks:
It is a normal phenomenon to change banking
procedure from time to time in the same country or
in different countries according to public benefits.
Banks regulatory authorities are more careful to
prevent bank failure, to ensure the safety of the fund
of depositors and ensure loan distribution for all.

29. Some techniques followed by the bank regulatory authorities
to control over the activities of commercial banks are:
 Direction for the right price of bank services
 Introduction of deposit insurance
 Direction for adequate liquidity
 Direction for capital adequacy
 Direction for approval & non approval of bank loan
operation
 Recruitment of directors and direction regarding
recruitment and directing their duties and responsibilities.
 Loan supervision, review and examination.
 Direction for adequate reserve etc.

30. 2. Increasing competition due to changing technological
development:
Number of served clients and quality & dimensions of services are
the basis of competition. The bank which provides better service
with high quality is capable of being successful in competition.
Two banks jointly create new services that provide the customer
with a sustainable competition advantage. The new benefit or
service that bank offers is unique and different from that of the
other organization requires the commercial banks to participate in
the multidimensional competitive environment. The client of one
bank may go to another bank of the same locality just because of
better service. So, in order to withstand competition bank
management needs to innovative and challenging. Technological
environment absorbs more investment and new training. So the
management of bank creates new strategy of banking services
adjusted in competitive banking business.

31. 3. Changing international relationship:
In international banking business, the bank faces
extensive amount of legislation in the event of a new
problem. International relations, global or bilateral,
create more competition in banking business. Other
factors, such as changes in international trade and
commerce, laws of fund transfer, change in social and
cultural factors establish new operational management
system which challenge the banking business.

32. Question
1. which following information is not true for bank……
a) Receives current deposit & give the withdrawal facilities to clients through cheque .
b) Receives goods and provide currency.
c) Notification of depositors cheque.
d) Discounting notes ,approving loans & invest in government and other credit instrument.
2. Commercial bank can …….
a) Operate investment banking activities.
b) Be the owner or director of other corporate house.
c) Any type of business activities.
d) All of above.
3. Which type of banking system is called universal banking system?
a) Commercial can buy up to 50% share of corporate firm.
b) Commercial bank participate in determining financial policy along with the
investment.
c) Can not participate in the ownership of the form.
d) Not any one.

33. 4. The rapidly growth of bank asset in…
a) 1960s
b) 1965s
c) 1970s
d) 1940s
5. E-Cash can consist of ….
a) Stored value.
b) Network money.
c) The E-Wallet.
d) All of above
6. which techniques are not followed by the bank regulatory
authorities to control over the activities of commercial bank?
a) Direction for the right price of bank services.
b) Direction for the adequate security.
c) Direction for the capital adequacy.
d) Direction for the adequate reserves.

34. 7. Who is renowned as the title of “World Bank”?
a) King First Charles.
b) The Emperor Farook shayar.
c) Patheh Chand.
d) None of them.
8. In which era Govt. introduced “ ASHRAFI”?
a) The Ancient Era.
b) The Moghal Era.
c) The British Era.
d) The Pakisthan Era.
9. When “Bengal Bank” introduced currency notes?
a) 1843
b) 1787
c) 1784
d) 1920
10. How many schedule bank are in Bangladesh?
a) 75
b) 63
c) 58
d) 67