This module provides an introduction to banking concepts, functions, and processes. It discusses commercial banking, central banking, and their key functions. The module will examine how banks operate, their role in the economy, and the relationship between banking activities and consumers/society. It also provides historical background on banking origins and developments, defines what constitutes a bank, and outlines some of the oldest surviving banks. Abdulahi Abukar “ ABAJEY”

1. Unit One
Islamic Banking Theory and Paretic

2. abuubakar hussein daud & introduction to banking
Abdulahi Abukar “ ABAJEY”

3. This module is about banking. The study is about
introducing student to the concept, functions and
processes of the banking. The study is about
commercial banking, central banking, functions,
Money and Capital Markets. The module will look
at the functions of banking, budgeting, auditing
and how to calculate a balance sheet. The module
aims to expose students the insight into Banking.
The module will look at the relationship between
banking activity and consumer as well as the
society as a whole.
Abdulahi Abukar “ ABAJEY”
Module information

4. Definition of Banking
Definition of bank The term ‘Bank’ has been
defined in different ways by different
economists.
 According to Prof. Kinsley, “A bank is an
establishment which makes to individuals
such advances of money as may be required
and safely made, and to which individuals
entrust money when not required by them
for use.”
Abdulahi Abukar “ ABAJEY”

5.  “A Bank is a financial institution
which accepts money from the
public for the purpose of lending
or investment repayable on
demand or otherwise withdraw
able by cheques, drafts or order
or otherwise.”
Abdulahi Abukar “ ABAJEY”

6. Bank plays a significant role in the
financial system the real economy , the
intermediate between all sectors of the
economy and other financial
intermediaries and institution
bank are able to create additional money
when by individual ,business and
government with assistance of the central
bank ,and its unique their balance sheet
and features and structure .
Abdulahi Abukar “ ABAJEY”

7. Bank History
 This is nowhere near a complete answer, but ...
 Wealth compressed into the convenient form of gold
brings one disadvantage. Unless well hidden or protected,
it is easily stolen.
The first prototype banks were the merchants of the
world, who made grain loans to farmers and traders who
carried goods between cities. This began around 2000 BC
in Assyria and [Babylonia]. Later, in ancient Greece and
during the Roman Empire, lenders based in temples made
loans, while accepting deposits and performing the
change of money. Archaeology from this period in ancient
China and India also shows evidence of money lending
activity.
Abdulahi Abukar “ ABAJEY”

8. Con…
 The development of banking spread from northern
Italy throughout the Holy Roman Empire, and in
the 15th and 16th century to northern Europe.
This was followed by a number of important
innovations that took place in Amsterdam during
the Dutch Republic in the 17th century, and in
London in the 18th century. During the 20th
century, developments in telecommunications and
computing caused major changes to banks'
operations and let banks dramatically increase in
size and geographic spread.
Abdulahi Abukar “ ABAJEY”

9. Some of the oldest Bank
these are Some of the oldest surviving banks in the world,
and they each tell a story.
1. Bank of New York (now Bank of New York Mellon)
New York, New York (Founded 1784)
2. The Bank of Scotland (now Halifax Bank of Scotland)
Edinburgh, Scotland (Founded 1695)
3. Berenberg Bank
Hamburg, Germany (Founded 1590)
4. The Oldest Bank in the World:
Banca Monte dei Paschi di Siena,
Italy (Founded 1472)
Abdulahi Abukar “ ABAJEY”

10. Brief Of Somali
Financial Institutions

11. Somali Financial Institutions
 1920 The first bank opened in Southern
Somalia was the Banca d’Italia (Central Bank of Italy) which
established its branch in Mogadishu.
 1925 The bank opened also another branch in Kisimayo on
the 2nd November 1925.
 1930The British Government opened in Northern Somalia
the Government Savings Bank with the objectives to
encourage the people to save parts of their
income
 1932 In Mogadishu a branch of Cassa di Risparmio di Torino,
an Italian commercial Bank, opens its office.
 1936 A branch of Banco di Roma, an Italian commercial
bank, was established in Mogadishu. In the same year Banca
d’Italia opened its third branch in the city of Merca.
Abdulahi Abukar “ ABAJEY”

12.  1938 Banco di Napoli took over the branch of
Cassa di Risparmio di Torino branch in Mogadishu.
 1941 All Italian banks were closed by the British Administration.
 1943 The Barclays Bank DCO, a British Commercial Bank, was
opened in Mogadishu.
 1950 Italian commercial banks, such as Banco di Roma and Banco
di Napoli re-ope-ned their branches in Mogadishu.
Abdulahi Abukar “ ABAJEY”

13.  1950 The Italian Trusteeship Administration (A.F.I.S.) established on 8th
April, 1950 a new currency institution regulator “ Cassa per la circolazione
monetaria della Somalia” with its head quarter in Rome
 1960 Was established the Central Bank of Somalia named
“Somali National Bank” by Decree No.3 of 30 June
 The Somali National Bank has been authorized to extend to its
activities to all the regions of the Republic of Somalia and
opened the following branches:
 Finally, the under listed banks were operating in Somalia at 30
December, 1990:
1) Central Bank of Somalia
2) Commercial and Savings Bank of Somalia
3) Somali Development Bank
4) Somali Commercial Bank
Abdulahi Abukar “ ABAJEY”

14. Role Of Banking
 Banks provide funds for business as well as
personal needs of individuals. They play a
significant role in the economy of a nation. Let us
know about the role of banking
1. It encourages savings habit amongst people and
thereby makes funds available for productive use.
2. It acts as an intermediary between people
having surplus money and those requiring money
for various business activities.
Abdulahi Abukar “ ABAJEY”

15. Role Of Banking
3. It facilitates business transactions through
receipts and payments by cheques instead of
currency.
4. It provides loans and advances to businessmen
for short term and long-term purposes.
5. It helps in national development by providing
credit to farmers, small-scale industries and self-
employed people as well as to large business
houses which lead to balanced economic
development in the country.
Abdulahi Abukar “ ABAJEY”

16. Role Of Banking
6. It helps in raising the standard of
living of people in general by
providing loans for purchase of
consumer durable goods, houses,
automobiles.
7. It also facilitates import export
transactions.
Abdulahi Abukar “ ABAJEY”

17. Principles of Banking
Principles of Banking
Introduces fundamental banking concepts
and principles, the basics of how banks
operate as service providers and
businesses, their obligation to operate in a
safe and sound manner and manage risks,
and the responsibilities of bank employees
in a customer-focused financial services
environment.
Abdulahi Abukar “ ABAJEY”

18. Principle Of Bank
The bank management its assets and liabilities
to earn the highest possible profit, the bank
manger has four primary concerns :
 liquidity management : to make sure that
the bank has enough ready cash to pay its
depositors when there deposits outflows
 Assets management : the bank manger must
ensure low level of risk through diversifying
assets
Abdulahi Abukar “ ABAJEY”

19. Objectives Of The Bank
1. Reconstruction and development
2. Encouragement to capital investment
3. Encouragement to international trade
4. Establishment of peace time economy
5. Environment protection
6. Infrastructure development
7. Loan for meeting deficit of the balance of
payment
Abdulahi Abukar “ ABAJEY”

20. ATM
Automated Teller Machines
Allow you to make deposits and withdrawals
without visiting a bank teller. Lines are usually
shorter (or non existent), you can access your
cash even when the bank itself is closed, and
there's no human interaction involved. ATMs can
be found at banks, in grocery stores, in airports,
in hotels, in clubs, in restaurants, in gas stations,
and at a few other places. If you use an ATM at
any branch of your bank, it will be free.
Abdulahi Abukar “ ABAJEY”

21. Put Your Rock Collection And Bottle Caps
In A Shoebox, Put Your Money In A Bank
Now is the time to learn about how a
bank works and the importance of saving
your money wisely. As you grow older and
begin to work and need more money,
you’ll want to ensure you have a safe,
smart place to save your hard-earned
dollars and cash gifts. A bank is that
place. Here is why???
Abdulahi Abukar “ ABAJEY”

22. Abdulahi Abukar “ ABAJEY”