This document discusses the origins and history of banking. It begins by explaining that the word 'bank' originated from Germanic and Italian words referring to a bench or joint stock fund. It then outlines some of the earliest public banks, including the Bank of Venice in 1157. The development of exchange banking in the 1600s and establishment of central and commercial banks are also summarized, along with the founding of the Bank of England in 1694. The key functions of central banks and commercial banks are defined.

1. Chapter 8

2.  ‘Bank 'is usually used in the sense of commercial bank.
 Bank seems to have originated from the Germanic
word ‘bank’—joint stock fund or heap.
 French word ‘banque’and the Italian word ‘banco’

3.  The Italian word banco refers to a bench at which the
money changers used to change one kind of money
into another

 The first public banking –the Bank of Venice (1157)
 The bank of Barcelona and the Bank of Venice –1401
and 1407 respectively.

4.  Exchange banking was developed after the installation
of the Bank of Amsterdam in 1609 and Bank of
Hamburg in 1690.
 The credit of laying the foundation of modern banking
in england goes to the Lombards of Italy
 The bankers of lombardy –money lending business in
england

5.  The bank of England -1694
 The development of joint stock commercial banking
started functioning in 1833.
 Modern banking developed in 19th century.
 In India ,the first modern bank ‘bank of Bengal’ in
1806

6. Central bank
Commercial bank
Apex institution of the monetary and It is only a constituent unit of the
banking system
banking system
Monopoly of note issue
Do not have this right
Not profit making institution ,but to
promote economic policy of the
government.
It is to earn profit for the
shareholders
It maintain foreign exchange of the
country
It deals with foreign exchange under
the guidance of central bank
It is the advisor, banker to the
government
It is the banker, advisor to the public

11.  Regulator of currency
 Banker ,agent and adviser to government
 Custodian of cash reserves of commercial banks
 Custodian and management of foreign exchange
reserves
 Leader of the last resort
 Clearing function
 Controller of credit

12.  Bank rate
 Open market operation
 Variable reserve ratio
 Qualitative /selective credit control
 Margin requirements
 Regulation of consumer credit
 Rationing of credit
 Direct action
 Moral suasion
 publicity

13.  Accepting or attracting deposits
 a).saving deposits
 b)demand deposits
 c)fixed deposits
 Advancing loans
 a)cash credit
 b)provision of overdraft facilities
 c)discounting bills of exchange
 Advancing funtion

14.  Creation of money for credit
• Other function
transfer of funds
Agency function
 General utility services
Safty lockers
Letter of credit
Under writing loans
Compiling statistics

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Any questions
?

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Thank you
S.madan kumar

M.A.,M.A.,B.Ed.,M.Phil.,M.B.A.