Lecture 4. Revision Lecture 3 History of Pakistan banking Introduction to banking.
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Transcript of Lecture 4. Revision Lecture 3 History of Pakistan banking Introduction to banking.
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Lecture 4
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Revision Lecture 3
• History of Pakistan banking
• Introduction to banking
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Revision Lecture 3
Q1: What are the types of bank accounts?
Q2: What are the types of negotiable instruments?
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Revision Lecture 3
A:1
1. Saving account2. Current account3. Fixed deposit account
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Revision Lecture 3
A:21. Promissory note2. Bill of exchange3. Cheque
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• Types of Banks
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Types of banks
• There are various types of banks which operate in our country to meet the financial requirements of different categories of people engaged in agricultural, business, profession, etc.
• The banking institution in Pakistan may be divided into various types on the basis of their functions.
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Types of banks
1. Central bank2. Commercial banks3. Development banks4. Co-operative banks5. Specialized banks
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• Central Bank
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Central bank
• A bank which is entrusted with the functions of guiding and regulating the banking system of a country is known as its Central Bank.
• Such a bank does not deal with the general public. It acts essentially as Government’s banker, maintains deposit accounts of all other banks and advances money to other banks when needed.
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Central bank
• It provides guidelines to other banks whenever they face any problem. It is therefore known as the banker’s bank.
• State bank of Pakistan SBP is the central bank of our country.
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Central bank
• It advises the government on monetary and credit policies and decides on the interest rates for bank deposits and bank loans.
• In addition, it also determined the foreign exchange rates.
• Another important functions of the Central bank is issuance of currency notes and regulations of their circulation in the country by different methods.
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•Commercial Banks
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Commercial banks
• Commercials banks are banking institutions that accept deposits and grant short-term loans and advances to their customers.
• It also give medium and long-term loan to business enterprise.
• Nowadays, some of the commercial banks are also providing housing loans to individuals.
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Commercial banks
Commercial banks are of three types:1. Public sector banks2. Private sector banks3. Foreign banks
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Commercial banks
Public Sector Banks:
• These are banks where majority of stake is held by the Government of Pakistan or SBP.
• Examples are, National bank of Pakistan, UBL, HBL, ABL
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Commercial banks
Private Sector Banks:
• In this type of banks the majority of their share capital is held by private individuals. These banks are registered as companies with limited liability.
• Examples are, Bank Alfalah, Meezan bank, Silk bank
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• Foreign Banks
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Commercial banks
Foreign Banks:
• These are registered banks with their headquarters in a foreign country but operate their branches in our country.
• Example, Hong Kong and Shanghai Banking Corporation (HSBC), Citibank, American Express Bank, Standard & Chartered Bank
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• Development Banks
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Development Banks
Business often requires medium and long-term capital for the purchase of machinery, for and equipment, for using latest technology or for expansion and modernization.
• Such financial assistance is provided by developments banks.
• Examples are, Small business finance corporation (now SME), PICC
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• Co-operative Banks
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Co-operative Banks
• People who come together to jointly serve their common interest often form a cooperative society under the cooperative societies Act.
• When a cooperative society engages itself in banking business, it is called a cooperative bank.
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Co-operative Banks
• Any cooperative bank as a society is to function under the overall supervision of the Registrar, cooperative societies of the state.
There are two types of cooperative banks operating in our country.
• The provincial cooperative banks in all provinces
• The central cooperative bank – Federal bank for cooperative Islamabad
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• Specialized Banks
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Specialized banks
• The specialized banks engage themselves in some specific area or activity. They cater to the requirements and provide overall support for setting up business.
• Examples
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Specialized banks
Industrial Development Bank of Pakistan IDBP• It provides loan on easy term to establish a
large- scale business unit or industry. • It also finance modernization of large-scale
industrial units, use of new technology and market activities.
• Its aim and focus is to promote, finance and develop large-scale industries.
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Specialized banks
• Agriculture Development Bank of Pakistan ADBP
• It is a central or apex institution for financing agricultural and rural sectors.
• It provides credit to those engaged in agriculture or other activities such as handloom weaving and fishing.
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Specialized banks
• It provides both short-term and long-term credits through regional rural banks.
• It provides financial assistance, especially to cooperative credit, in the field of agricultural, small-scale industries, cottage and village industries, handicrafts and allied economic activities in rural areas.