The document discusses different types of banks and their roles. It describes central banks as the apex monetary institutions that regulate and stabilize banking systems through functions like note issue, advising governments, acting as lenders of last resort, and implementing monetary policy. Commercial banks are described as accepting deposits, providing loans, and facilitating domestic and international trade. Investment banks assist with securities issuance and mergers/acquisitions. Specialized banks meet sector-specific financial needs, and retail banks provide basic services to individuals like savings accounts and consumer loans.

1. BANKING
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It is well said that banking plays a silent, yet crucial
part in our day-to-day lives. The banks perform
financial intermediation by pooling savings and
channelizing them into investments through maturity
and risk transformations, thereby keeping the
economy’s growth engine reviving.
Prof. Hart
A system under which various institutions are engaged
to deal financial activities related to accepting deposit
from public, advances funds to meet the desperate
needs of the customers and facilitating mobilization of
remittance from one place to another.
G. Crowther

2. ROLE OF BANKING SYSTEM IN ECONOMY
Capital formation
Banking system helps to collect scattered
idle saving to accumulate capital so as to
mobilize it for productive purposes.
monetization
Banking system , by opening branches in
backward areas can promote the process
of monetization in the economy.
Finance of priority sector
Banking finances for development of
priority sectors of economy that includes
primary, secondary and tertiary sectors.
Cheap money policy
A sound banking system is of essential to
follow cheap money policy to stimulate
economic activity as well as to meet the
threat of business recessions.
Provision of long term finance
A sound banking system ensures guarantee
of long term finance for industrialization to
achieve sustainable development.
Motivation to entrepreneurial innovations
Entrepreneurs generally are stimulated
to venture new business and undertake
innovations if there exists sound banking
system.
Implementation of monetary policy
The control and regulation of credit by
monetary authority is not possible without
active cooperation of banking system .
Promotion of trade and industry
Today banking system has promoted
entrepreneurship and accelerated the
pace of industrialization.
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3. CLASSIFICATION OF BANKS

4. Central bank is the Supreme monetary institution which is at the apex
of the whole monetary system and banking structure of the economy.
In other words the central bank is an apex banking and monetary
institution whose main function are to control, regulate and stabilize
the banking and the monetary system of the country in national
interests. In context of Nepal , Nepal Rastra Bank was established in
the year 2013 Baisakh 14, under Nepal Rastra Bank act, 2012 b.s as a
central bank of Nepal.
The common functions performed by a central bank are discussed with
under the following headings.
1. Monopoly of note issue
2. Agent and adviser to the government
3.Banker's bank
4. Lender of the last resort
5. Clearing house agents
6.Custodian of foreign exchange
7. Credit control
8. Development and other functions :development of money market
and capital market, promote economic development, maintain price
and exchange rate stability, establish relation with world Bank and IMF,
collecting and publishing statistics about current state of economy,
promote banking habit among people

5. Commercial Bank
Commercial Bank as financial intermediaries has a great role in
the process of monetization of the economy. The emergence of
commercial banks is mandatory because of fulfilling the needs
of capital formation in the economy by mobilizing small ideas
saving. It also advances loans demanded by General people.
Nepal Bank Limited is the first commercial bank of Nepal. It was
established in 1937 which marked the beginning of an era of
formal banking in Nepal.
The main functions performed by commercial banks are
discussed below.
1. Acceptance of deposit
2. Advances loan
3. Creation of credit
4. Promotion of modern banking
5. Agency functions : payment of insurance premium, transfer
funds, collecting customer's funds, purchase and sale of
securities of its customers, collecting dividends on the shares of
the customers
6. Financing domestic and international trade
7. Purchase and sale of foreign exchange
8. Other functions : safe custody facility, issuing traveler's
cheque, collection of statistics, accepting bills of exchange on
behalf of its customers, remitting funds

6. An investment bank often called merchant banks is a
financial institution that assists individuals, corporations
and governments in raising capital by underwriting and/or
acting as the client's agent in the issuance of securities.
The major functions of investment banks are discussed as
follows:
1. Assist companies involved in mergers and acquisitions
2. Provide ancillary services such as market making,
trading of derivatives, fixed income instruments,
foreign exchange, commodities, and equity securities.
3. Aid companies in acquiring funds and they provide
advice for a wide range of transactions
4. Offer financial consulting services to companies and
give advice on mergers and acquisitions and
management of public assets.

7. Specialized banks are the financial institution operating at the
specialized sector of economy to meet the short term and
long term financial need of the sector. The common types of
specialized banks are:
1. Industrial banks
2. Agricultural banks
3. Development banks
4. Exchange banks

8. Retail banks provide basic banking services to individual
consumers. Examples include savings banks, savings and loan
associations, microfinance and cooperatives. These banks are
established with the motive of promoting saving habits among
general public and mobilize their small savings also known as
saving banks.
The function of retail banks are :
1. Offer consumers credit to purchase homes, cars, and
furniture. These include mortgages, auto loans, and credit
cards.
2. provide small business loans to entrepreneurs
3. provide a safe place for people to deposit their money.
Savings accounts, certificates of deposit and other financial
products offer a higher return than stuffing money under a
mattress