SlideShare ist ein Scribd-Unternehmen logo
1 von 47
Downloaden Sie, um offline zu lesen
Role of Commercial Banks
BY
ASHA PRIYA GOUD
GITAM INSTITUTE OF MANAGEMENT
GITAM UNIVERSITY.
Bank
• A bank is a commercial or state
institution that provides financial
services , including issuing money
in various forms, receiving deposits
of money, lending money and
processing transactions and the
creating of credit.
• A commercial bank accepts
deposits from customers and in turn
makes loans, even in excess of the
deposits; a process known as
fractional-reserve banking. Some
banks (called Banks of issue) issue
banknotes as legal tender.
Commercial Bank
• A commercial bank is usually
defined as an institution that both
accepts deposits and makes loans;
there are also financial institutions
that provide selected banking
services without meeting the legal
definition of a bank.
• Many banks offer ancillary financial
services to make additional profit;
for example, most banks also rent
safe deposit boxes in their
branches.
• Currently in most jurisdictions
commercial banks are regulated
& require permission to operate.
Operational authority is granted by
bank regulatory authorities which
provides rights to conduct the most
fundamental banking services such
as accepting deposits and making
loans.
Purpose of a bank
• Banks have influenced economies &
politics for centuries. Historically, the
primary purpose of a bank was to
provide loans to trading companies.
Banks provided funds to allow
businesses to purchase inventory, and
collected those funds back with
interest when the goods were sold.
Commercial
Lending
• For centuries, the banking industry
only dealt with businesses, not
consumers. Commercial lending
today is a very intense activity, with
banks carefully analyzing the
financial condition of their business
clients to determine the level of risk
in each loan transaction.
Banking Services
• Banking services have expanded
to include services directed at
individuals, and risk in these much
smaller transactions are pooled.
A Bank’s Profit
• A bank generates a profit from the
differential between the level of
interest it pays for deposits and
other sources of funds, and the
level of interest it charges in its
lending activities.
• This difference is referred to as the
spread between the cost of funds
and the loan interest rate.
Historically, profitability from lending
activities has been cyclic and
dependent on the needs and
strengths of loan customers.
• In recent history, investors have
demanded a more stable revenue
stream and banks have therefore
placed more emphasis on
transaction fees, primarily loan fees
but also including service charges
on array of deposit activities and
• ancillary services (international
banking, foreign exchange,
insurance, investments, wire
transfers, etc.). However, lending
activities still provide the bulk of a
commercial bank's income.
• The name bank derives from the
Italian word banco "desk/bench",
used during the Renaissance by
Florentines bankers, who used to
make their transactions above a
desk covered by a green tablecloth.
• However, there are traces of
banking activity even in the
Babylonian times, and indeed a
book about the history of banking is
named : Banking, from Babylon to
Wall Street.
Services Typically
Offered by Banks
• Although the basic type of services
offered by a bank depends upon
the type of bank and the country,
services provided usually include:
1. Taking deposits from their
customers and issuing current
(Pak) or checking (US) accounts
and savings accounts to individuals
and businesses.
2. Extending loans to individuals and
businesses.
3. Cashing cheque
4. Facilitating money transactions
such as wire transfers and
cashier's checks
5. Issuing credit cards, ATM cards,
and debit cards
6. Storing valuables, particularly in a
safe deposit box
7. Consumer & commercial financial
advisory services
8. Pension & retirement planning
Financial transactions can
be performed through
many different channels:
1. A branch, banking centre or
financial centre is a retail location
where a bank or financial institution
offers a wide array of face to face
service to its customers.
2. ATM is a computerized
telecommunications device that
provides a financial institution's
customers a method of financial
transactions in a public space
without the need for a human clerk
or bank teller
3. Mail is part of the postal system
which itself is a system wherein
written documents typically
enclosed in envelopes, and also
small packages containing other
matter, are delivered to destinations
around the world
4. Telephone banking is a service
provided by a financial institution
which allows its customers to
perform transactions over the
telephone
5. Online banking is a term used for
performing transactions, payments
etc. over the Internet through a
bank, credit union or building
society's secure website
Types of banks
• Banks' activities can be divided into
retail banking, dealing directly with
individuals and small businesses;
business banking, providing
services to mid-market business;
corporate banking, directed at large
business entities; and investment
banking, relating to activities on the
financial markets.
• Most banks are profit-making,
private enterprises. However, some
are owned by government, or are
non-profits.
• Central banks are non-commercial
bodies or government agencies
often charged with controlling
interest rates and money supply
across the whole economy. They
generally provide liquidity to the
banking system and act as Lender
of last resort in event of a crisis.
• Commercial bank: the term used
for a normal bank to distinguish it
from an investment bank. After the
Great Depression, the U.S.
Congress required that banks only
engage in banking activities,
whereas investment banks were
• limited to capital market activities.
Since the two no longer have to be
under separate ownership, some
use the term "commercial bank" to
refer to a bank or a division of a
bank that mostly deals with
deposits and loans from
corporations or large businesses.
• Community Banks: locally
operated financial institutions that
empower employees to make local
decisions to serve their customers
and the partners
• Community development banks:
regulated banks that provide
financial services and credit to
underserved markets or
populations.
• Postal savings banks: savings
banks associated with national
postal systems.
• Private banks: manage the assets
of high net worth individuals.
• Offshore banks: banks located in
jurisdictions with low taxation and
regulation. Many offshore banks are
essentially private banks.
• Savings bank: in Europe, savings
banks take their roots in the 19th or
sometimes even 18th century. Their
original objective was to provide
easily accessible savings products
to all strata of the population. In
some countries, savings banks
• were created on public initiative, while in
others socially committed individuals
created foundations to put in place the
necessary infrastructure. Nowadays,
European savings banks have kept their
focus on retail banking: payments,
savings products, credits and
insurances for individuals or small and
medium-sized enterprises.
• Apart from this retail focus, they
also differ from commercial banks
by their broadly decentralized
distribution network, providing local
and regional outreach and by their
socially responsible approach to
business and society.
• Building societies and
Landesbanks: conduct retail
banking.
• Ethical banks: banks that prioritize
the transparency of all operations
and make only what they consider
to be socially-responsible
investments.
THANK YOU

Weitere ähnliche Inhalte

Was ist angesagt? (20)

Commercial bank
Commercial bank Commercial bank
Commercial bank
 
Functions of commercial banks
Functions of commercial banksFunctions of commercial banks
Functions of commercial banks
 
Origin of banking
Origin of bankingOrigin of banking
Origin of banking
 
History of Banking
History of BankingHistory of Banking
History of Banking
 
Role of Commercial Banks in India
Role of Commercial Banks in IndiaRole of Commercial Banks in India
Role of Commercial Banks in India
 
History of banking
History of bankingHistory of banking
History of banking
 
non banking financial institution
non banking financial institutionnon banking financial institution
non banking financial institution
 
Ppt on-money-market-1
Ppt on-money-market-1Ppt on-money-market-1
Ppt on-money-market-1
 
INTRODUCTION TO BANKING
INTRODUCTION TO BANKINGINTRODUCTION TO BANKING
INTRODUCTION TO BANKING
 
Financial services
Financial servicesFinancial services
Financial services
 
Factoring
FactoringFactoring
Factoring
 
Loans and advances ppt
Loans and advances pptLoans and advances ppt
Loans and advances ppt
 
Wholesale banking
Wholesale bankingWholesale banking
Wholesale banking
 
Importance Of Banks In An Economy
Importance Of Banks In An EconomyImportance Of Banks In An Economy
Importance Of Banks In An Economy
 
Presentation on financial services
Presentation on financial servicesPresentation on financial services
Presentation on financial services
 
Commercial bank
Commercial bankCommercial bank
Commercial bank
 
Indian Banking Structure
Indian Banking Structure Indian Banking Structure
Indian Banking Structure
 
Bank lendings and loans ppt
Bank lendings and loans pptBank lendings and loans ppt
Bank lendings and loans ppt
 
Functions of commercial banks
Functions of commercial banksFunctions of commercial banks
Functions of commercial banks
 
Merchant Banking ppt
Merchant Banking pptMerchant Banking ppt
Merchant Banking ppt
 

Ähnlich wie ROLE OF COMMERCIAL BANKS

Study On Customer Relationship Management Practices Employed By Private Secto...
Study On Customer Relationship Management Practices Employed By Private Secto...Study On Customer Relationship Management Practices Employed By Private Secto...
Study On Customer Relationship Management Practices Employed By Private Secto...hingal satyadev
 
Lecture 1 financial institutions #
Lecture 1 financial institutions #Lecture 1 financial institutions #
Lecture 1 financial institutions #Latifa Ben Hamouda
 
Banking and financial institutions
Banking and financial institutionsBanking and financial institutions
Banking and financial institutionsAbbas Vattoli
 
banking-171026063821.pdf
banking-171026063821.pdfbanking-171026063821.pdf
banking-171026063821.pdfKashishMittal53
 
Presentation on Banking
Presentation on BankingPresentation on Banking
Presentation on BankingMayank Sahu
 
banking-171026063821.pptx
banking-171026063821.pptxbanking-171026063821.pptx
banking-171026063821.pptxkarunabakde
 
Banking and Financial Institutions (as per UGC NET syllabus)
Banking and Financial Institutions (as per UGC NET syllabus)Banking and Financial Institutions (as per UGC NET syllabus)
Banking and Financial Institutions (as per UGC NET syllabus)Abbas Vattoli
 
Financeinenterprisemanagement
FinanceinenterprisemanagementFinanceinenterprisemanagement
FinanceinenterprisemanagementMARISSA TAN
 
Business studies project
Business studies projectBusiness studies project
Business studies projectNi234
 

Ähnlich wie ROLE OF COMMERCIAL BANKS (20)

Study On Customer Relationship Management Practices Employed By Private Secto...
Study On Customer Relationship Management Practices Employed By Private Secto...Study On Customer Relationship Management Practices Employed By Private Secto...
Study On Customer Relationship Management Practices Employed By Private Secto...
 
Lecture 1 financial institutions #
Lecture 1 financial institutions #Lecture 1 financial institutions #
Lecture 1 financial institutions #
 
Banking
BankingBanking
Banking
 
bank_1.pptx
bank_1.pptxbank_1.pptx
bank_1.pptx
 
Banking and financial institutions
Banking and financial institutionsBanking and financial institutions
Banking and financial institutions
 
banking-171026063821.pdf
banking-171026063821.pdfbanking-171026063821.pdf
banking-171026063821.pdf
 
ppt_bifs.pdf
ppt_bifs.pdfppt_bifs.pdf
ppt_bifs.pdf
 
lecture two.pptx
lecture two.pptxlecture two.pptx
lecture two.pptx
 
Presentation on Banking
Presentation on BankingPresentation on Banking
Presentation on Banking
 
banking-171026063821.pptx
banking-171026063821.pptxbanking-171026063821.pptx
banking-171026063821.pptx
 
PROJECT ON Banks
PROJECT ON Banks PROJECT ON Banks
PROJECT ON Banks
 
60702666 org-study
60702666 org-study60702666 org-study
60702666 org-study
 
Banking and ins.
Banking and ins.Banking and ins.
Banking and ins.
 
Unit 1-2
Unit 1-2Unit 1-2
Unit 1-2
 
Banking and Financial Institutions (as per UGC NET syllabus)
Banking and Financial Institutions (as per UGC NET syllabus)Banking and Financial Institutions (as per UGC NET syllabus)
Banking and Financial Institutions (as per UGC NET syllabus)
 
Bc77 core banking
Bc77 core bankingBc77 core banking
Bc77 core banking
 
Finance Enterprise Management
Finance Enterprise ManagementFinance Enterprise Management
Finance Enterprise Management
 
Financeinenterprisemanagement
FinanceinenterprisemanagementFinanceinenterprisemanagement
Financeinenterprisemanagement
 
Unit 1
Unit 1Unit 1
Unit 1
 
Business studies project
Business studies projectBusiness studies project
Business studies project
 

Mehr von ashapriyagoud

Retail Bank Management
Retail Bank ManagementRetail Bank Management
Retail Bank Managementashapriyagoud
 
presentation on Green marketing
presentation on Green marketing presentation on Green marketing
presentation on Green marketing ashapriyagoud
 
Sunsilk gang of girls
Sunsilk gang of girls Sunsilk gang of girls
Sunsilk gang of girls ashapriyagoud
 
Project management presentation.
Project management presentation.Project management presentation.
Project management presentation.ashapriyagoud
 
Knowledge management
Knowledge managementKnowledge management
Knowledge managementashapriyagoud
 

Mehr von ashapriyagoud (11)

Retail Bank Management
Retail Bank ManagementRetail Bank Management
Retail Bank Management
 
presentation on Green marketing
presentation on Green marketing presentation on Green marketing
presentation on Green marketing
 
Sunsilk gang of girls
Sunsilk gang of girls Sunsilk gang of girls
Sunsilk gang of girls
 
RURAL MARKETING PPT
RURAL MARKETING PPTRURAL MARKETING PPT
RURAL MARKETING PPT
 
GOOGLE WORK CULTURE
GOOGLE WORK CULTUREGOOGLE WORK CULTURE
GOOGLE WORK CULTURE
 
CAFE COFFEE DAY
CAFE COFFEE DAYCAFE COFFEE DAY
CAFE COFFEE DAY
 
Project management presentation.
Project management presentation.Project management presentation.
Project management presentation.
 
Knowledge management
Knowledge managementKnowledge management
Knowledge management
 
RURAL MARKETING
RURAL MARKETINGRURAL MARKETING
RURAL MARKETING
 
Nokia final
Nokia finalNokia final
Nokia final
 
Kfc proj docu
Kfc proj docuKfc proj docu
Kfc proj docu
 

Kürzlich hochgeladen

Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Guillaume Ⓥ Sarlat
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...mwangimwangi222
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfMichael Silva
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfAdnet Communications
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingHenry Tapper
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...Antonis Zairis
 
Stock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfStock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfMichael Silva
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Commonwealth
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI360factors
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources PresentationAdnet Communications
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?Stephen Perrenod
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxSlideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxOffice for National Statistics
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.KumarJayaraman3
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.Arifa Saeed
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESKumarJayaraman3
 

Kürzlich hochgeladen (20)

Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024Sarlat Advisory - Corporate Brochure - 2024
Sarlat Advisory - Corporate Brochure - 2024
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
 
Stock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdfStock Market Brief Deck for March 26.pdf
Stock Market Brief Deck for March 26.pdf
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB funding
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...The unequal battle of inflation and the appropriate sustainable solution | Eu...
The unequal battle of inflation and the appropriate sustainable solution | Eu...
 
Stock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdfStock Market Brief Deck for March 19 2024.pdf
Stock Market Brief Deck for March 19 2024.pdf
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptxSlideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
Slideshare - ONS Economic Forum Slidepack - 18 March 2024.pptx
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
 
Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024Commercial Bank Economic Capsule - March 2024
Commercial Bank Economic Capsule - March 2024
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
 

ROLE OF COMMERCIAL BANKS

  • 1. Role of Commercial Banks BY ASHA PRIYA GOUD GITAM INSTITUTE OF MANAGEMENT GITAM UNIVERSITY.
  • 2. Bank • A bank is a commercial or state institution that provides financial services , including issuing money in various forms, receiving deposits of money, lending money and processing transactions and the creating of credit.
  • 3. • A commercial bank accepts deposits from customers and in turn makes loans, even in excess of the deposits; a process known as fractional-reserve banking. Some banks (called Banks of issue) issue banknotes as legal tender. Commercial Bank
  • 4. • A commercial bank is usually defined as an institution that both accepts deposits and makes loans; there are also financial institutions that provide selected banking services without meeting the legal definition of a bank.
  • 5. • Many banks offer ancillary financial services to make additional profit; for example, most banks also rent safe deposit boxes in their branches.
  • 6. • Currently in most jurisdictions commercial banks are regulated & require permission to operate. Operational authority is granted by bank regulatory authorities which provides rights to conduct the most fundamental banking services such as accepting deposits and making loans.
  • 8. • Banks have influenced economies & politics for centuries. Historically, the primary purpose of a bank was to provide loans to trading companies. Banks provided funds to allow businesses to purchase inventory, and collected those funds back with interest when the goods were sold.
  • 10. • For centuries, the banking industry only dealt with businesses, not consumers. Commercial lending today is a very intense activity, with banks carefully analyzing the financial condition of their business clients to determine the level of risk in each loan transaction.
  • 12. • Banking services have expanded to include services directed at individuals, and risk in these much smaller transactions are pooled.
  • 14. • A bank generates a profit from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities.
  • 15. • This difference is referred to as the spread between the cost of funds and the loan interest rate. Historically, profitability from lending activities has been cyclic and dependent on the needs and strengths of loan customers.
  • 16. • In recent history, investors have demanded a more stable revenue stream and banks have therefore placed more emphasis on transaction fees, primarily loan fees but also including service charges on array of deposit activities and
  • 17. • ancillary services (international banking, foreign exchange, insurance, investments, wire transfers, etc.). However, lending activities still provide the bulk of a commercial bank's income.
  • 18. • The name bank derives from the Italian word banco "desk/bench", used during the Renaissance by Florentines bankers, who used to make their transactions above a desk covered by a green tablecloth.
  • 19. • However, there are traces of banking activity even in the Babylonian times, and indeed a book about the history of banking is named : Banking, from Babylon to Wall Street.
  • 21. • Although the basic type of services offered by a bank depends upon the type of bank and the country, services provided usually include:
  • 22. 1. Taking deposits from their customers and issuing current (Pak) or checking (US) accounts and savings accounts to individuals and businesses.
  • 23. 2. Extending loans to individuals and businesses. 3. Cashing cheque
  • 24. 4. Facilitating money transactions such as wire transfers and cashier's checks
  • 25. 5. Issuing credit cards, ATM cards, and debit cards 6. Storing valuables, particularly in a safe deposit box
  • 26. 7. Consumer & commercial financial advisory services 8. Pension & retirement planning
  • 27. Financial transactions can be performed through many different channels:
  • 28. 1. A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face to face service to its customers.
  • 29. 2. ATM is a computerized telecommunications device that provides a financial institution's customers a method of financial transactions in a public space without the need for a human clerk or bank teller
  • 30. 3. Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world
  • 31. 4. Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone
  • 32. 5. Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society's secure website
  • 34. • Banks' activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; and investment banking, relating to activities on the financial markets.
  • 35. • Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profits.
  • 36. • Central banks are non-commercial bodies or government agencies often charged with controlling interest rates and money supply across the whole economy. They generally provide liquidity to the banking system and act as Lender of last resort in event of a crisis.
  • 37. • Commercial bank: the term used for a normal bank to distinguish it from an investment bank. After the Great Depression, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were
  • 38. • limited to capital market activities. Since the two no longer have to be under separate ownership, some use the term "commercial bank" to refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses.
  • 39. • Community Banks: locally operated financial institutions that empower employees to make local decisions to serve their customers and the partners
  • 40. • Community development banks: regulated banks that provide financial services and credit to underserved markets or populations.
  • 41. • Postal savings banks: savings banks associated with national postal systems. • Private banks: manage the assets of high net worth individuals.
  • 42. • Offshore banks: banks located in jurisdictions with low taxation and regulation. Many offshore banks are essentially private banks.
  • 43. • Savings bank: in Europe, savings banks take their roots in the 19th or sometimes even 18th century. Their original objective was to provide easily accessible savings products to all strata of the population. In some countries, savings banks
  • 44. • were created on public initiative, while in others socially committed individuals created foundations to put in place the necessary infrastructure. Nowadays, European savings banks have kept their focus on retail banking: payments, savings products, credits and insurances for individuals or small and medium-sized enterprises.
  • 45. • Apart from this retail focus, they also differ from commercial banks by their broadly decentralized distribution network, providing local and regional outreach and by their socially responsible approach to business and society.
  • 46. • Building societies and Landesbanks: conduct retail banking. • Ethical banks: banks that prioritize the transparency of all operations and make only what they consider to be socially-responsible investments.