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This document discusses the role of banks in economic growth. It begins by defining money and the evolution of banking from ancient temples to modern institutions. It then outlines the history of banking in regions like India, Bangladesh and the functions of commercial banks. Banks promote capital formation, investment, trade, agriculture and balanced regional development. Specialized financial institutions in Bangladesh are also introduced. The document concludes that banks transform deposits into long term loans to fund activities and enhance economic growth.
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- 1. WELCOME ROLE OF BANKSIN ECONOMIC GROWTH
- 2. PREPARED FOR • Dr.Nazibul Islam • Lecturer • PRINCIPLES & PRACTICES OF BANKING • FACULTY OF BUSINESS STUDIES • UNIVERSITY OF DHAKA
- 3. INTRODUCTION • A nation'smoney supply consists of bank deposits ownership of which can be transferred by means of cheques, debit cards or other forms of money transfer. Deposit money and currency are money in the sense that both are acceptable as a means of payment.
- 4. HISTORY OF MONEY& TRANSACTIONS • Currency evolved from two basic innovations, both of which had occurred by 2000 BC. Originally money was a form of receipt, representing grain stored in temple granaries in Sumer in ancient Mesopotamia, then Ancient Egypt. • Early currency • Cionage • Paper money • Bank Note • Plastic money
- 5. EVOLUTION OF BANKING •ANCIENT WORLD (3000 BC) • Temple banks in Egypt, Babylon, Greed valuables for safe keeping. The valuables consisted of grains, agricultural implements and cattle. • At later stage precious metals, gold and silver featured as deposits. • Ancient India developed its own banking system. Manu framed regulations on commercial transactions. • 18th Century BC • The temple priests of Babylon provided loans to merchants. • Hammurabi, the great, framed laws for banking operations. Around this time, Greek temples conducted financial transactions such as loans, deposits, currency exchange, and issued credit notes payable in another city. • Ancient Romans made regulations concerning financial practices. They paid interest on deposits and charged interest on loans. • Advent on Christianity and the taboo on interest brought an end to perpetuation of banking.
- 6. CONT’D • Around 1100AD • The banking system revived in Western Europe to finance the crusades. They also found a way to circumvent the religious taboo on interest. • 1100 AD ONWARDS • Settlement of debts and payments took place in trade fairs held regularly at various locations in Europe. • MEDIEVAL ITALY • ITALY pioneered banking in Europe. The word bank comes from banco means bench. • 1157 AD Bank of Venice established which is supposed to be the most ancient bank. • 1349 AD • Cloth merchants of Barcelona set up banks. • 1609 AD • The Bank of Amsterdam was established in Netherlands. • In 1600 AD Goldsmiths pioneered banking business in England. The notes they issued against deposits of gold is considered as the precursor of modern day bank note. • 1694 AD • Bank of England, the first central bank. It sets the stage of modern banking.
- 7. BANKS OF THE SUBCONTINENT •NATIONAL BANK OF INDIA • 1864 • MAHALAXMI BANK • 1910 • CENTRAL BANK OF INDIA • 1911 • COMILLA BANKING CORPORATION • 1914 • DINAJPUR BANK • 1914 • BENGAL CENTRAL BANK • 1918 • NEW STANDARD BANK • 1920 • IMPERIAL BANK OF INDIA • 1921 • IONEER BANK LTD • 1922 • COMILLA UNIOUN BANK • 1923
- 8. Cont’d • UNITED INDUSTRIAL BANK •1942 • BHARAT BANK • 1942 • UNITED COMMERCIAL BANK • 1942 • HINDUSTAN COMMERCIAL BANK • 1942 • HINDU BANK • 1946 NATH BANK 1926 TRIPURA MODERN BANK 1929 BANK OF COMMERCE 1929 SOUTHERN BANK LTD 1934 CALCUTTA COMMERCIAL BANK 1934 CALCUTTA NATIONAL BANK 1935
- 9. Formal Financial sectorsof Bangladesh • BANGLADESH BANK • COMMERCIAL BANKS • DEVELOPMENT FINANCING INSTITUTIONS • INSURANCE COMPANIES • STOCK EXCHANGES • BANGLADESH SOMOBAYA BANK • COOPERATIVE BANKS • BANGLADESH RURAL DEVELOPMENT BOARD • BANGLADESH POST OFFICE SAVINGS BANKS • MICO FINANCE INSTITUTIONS
- 10. GROWTH OF BANKSIN BANGLADESH • 1971 • Pre liberation commercial & DFIs nationalized. • 1971 • Bangladesh bank established to over the operation of the state bank of Pakistan. • 1980s • Reversion of Pubali bank & Uttara bank to private sector, first finance company – IFIC Ltd established. • 1991-1996 • Second batch of private sector banks emerged. • 1996-01 • Third generation of Commercial bank setup.
- 11. Function of Commercialbanks • Accept deposits with or without interest – current, savings, fixed deposits and others accounts. • • Collects cheques bills etc. • • Lends money- Long term & Short term. • • Handles foreign exchange transactions. • • Arrange transfer of funds. • • Issue guarantee, indemnity bond. • •Maintain safe deposit box. • • Perform agency functions.
- 12. Role of Banksin the Economic Development of a Country • 1. Banks promote capital formation • 2. Investment in new enterprises. • 3. Promotion of trade and industry • 4. Development of agriculture • 5. Balanced development of different regions • 6. Influencing economic activity
- 13. Cont’d • 7. Implementationof Monetary policy, • 8. Monetization of the economy • 9. Export promotion cells • 10. Virtual Banking
- 14. SPECIALISED FINALCIAL INSTITUTIONS: • BangladeshShilpa Bank (BSB) • Bangladesh Shilpa Rin sangstha (BSRS) • Bangladesh Krishi Bank • Rajshahi Krishi Unnayan Bank • Investment corporation of Bangladesh • BASIC BANK Ltd • House Building Finance Corporation • Ansar VDP Unnayan Bank • Karma Sangsthan Bank
- 15. M-Banking and M-PaymentsSystems in the Developing World • The terms m-banking, m-payments, m-transfers, m-payments, and m- finance refer collectively to a set of applications that enable people to use their mobile telephones to manipulate their bank accounts, store value in an account linked to their handsets, transfer funds, m-banking or even access credit or insurance products.
- 16. Negative effects ofeconomic growth • •Consumerism • •Resource depletion • •Environmental impact • •Equitable growth • Implications of global warming
- 17. CONCLUSION • Banks werethe earliest credit institutions extending loans (credit) to customers. It was their job to transform short-term liquid deposits into long-term illiquid financial assets that can fund long gestation activities and enhance economic growth.
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