...TRANSFORMATIONAL FUNCTIONS OF COMMERCIAL BANKS The commercial banks are playing a decisive role in the transformation function. Their value is essential in function of the creation of new money, in replenishing and regulating of money supply. They value less as a function of ensuring the sustainability of banking and money market as the pursuit for high profits pushing them to the most risky operations. Therefore, in this function a decisive importance is own to in central bank, but the role of commercial banks also should not be underestimated. Let’s stop more detailed on the transformational function of commercial banks. It includes several areas: * Transformation of risks; * Transformation of terms; * Transformation of capital; * Spatial transformation. Transforming of risks means that banks whose activities are associated with high risk, are taking appropriate measures that can reduce these risks to their investors and shareholders to a minimum. Such measures include: asset diversification, provisioning , differentiation of interest rates depending on riskiness of loans, deposit insurance etc. Thanks to these measures banks take on an overwhelming portion of risk of default on loans. Transformation of the terms means that mobilizing usual amounts of short-term funds and keep adding them, some banks may direct a part of them in long-term loans and other long-term assets. This is benefits not only for banks (they receive a higher income), but also for their...
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...Commercial Bank Commercial bank: Commercial bank mostly deals with deposits and loans from corporations or large businesses. Famous Commercial Banks of Pakistan are Muslim Commercial Bank(MCB),United Bank,Habib Bank. Functions of Commercial Banks: The functions of a commercial banks are divided into two categories: - Primary functions - Secondary functions including agency functions. - Primary functions: The primary functions of a commercial bank include: - accepting deposits; and - granting loans and advances The role of commercial banks Commercial banks engage in the following activities: * processing of payments by way of telegraphic transfer, EFTPOS, internet banking, or other means * issuing bank drafts and bank cheques * accepting money on term deposit * lending money by overdraft, installment loan, or other means * providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures * safekeeping of documents and other items in safe deposit boxes * sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a “financial supermarket” * cash management and treasury services * merchant banking and private equity financing * traditionally, large commercial banks also underwrite bonds, and make markets in currency, interest rates, and credit-related...
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...COMMERCIAL BANKS Commercial banks are important financial intermediaries serving the general public in any society. In most cases, commercial banks hold more assets than any other financial institution, in some cases, even more than Central Banks. Apart from their many functions, commercial banks facilitate growth and development. They lend in many areas or sectors of the economy. Viewed from the real sector, they contribute to investments, employment creation, and by extension the process of economic growth. In Trinidad and Tobago there are 8 commercial banks as follows; • Bank of Baroda (Trinidad and Tobago) Limited • Citibank (Trinidad & Tobago) Limited • FirstCaribbean International Bank (Trinidad & Tobago) Limited • First Citizens Bank Limited • Intercommercial Bank Limited • Republic Bank Limited • Scotiabank Trinidad and Tobago Limited • RBC Royal Bank (Trinidad and Tobago) Limited There are many other institutions such as credit unions, development banks, mutual funds to name a few. However, notwithstanding this commercial banks can be described as the head of the financial system. They are by far the largest mobilizers of savings and providers of loanable funds. They now account for over 50% of the total assets of the financial system and far more than half of the financial savings of the domestic economy. (See Table 1) Assets of the banking System (2001-2008) [pic]With all these resources...
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...Commercial bank: Commercial bank mostly deals with deposits and loans from corporations or large businesses. Famous Commercial Banks of Pakistan are Muslim Commercial Bank(MCB),United Bank,Habib Bank. Functions of Commercial Banks: The functions of a commercial banks are divided into two categories: - Primary functions - Secondary functions including agency functions. - Primary functions: The primary functions of a commercial bank include: - accepting deposits; and - granting loans and advances The role of commercial banks Commercial banks engage in the following activities: * processing of payments by way of telegraphic transfer, EFTPOS, internet banking, or other means * issuing bank drafts and bank cheques * accepting money on term deposit * lending money by overdraft, installment loan, or other means * providing documentary and standby letter of credit, guarantees, performance bonds, securities underwriting commitments and other forms of off balance sheet exposures * safekeeping of documents and other items in safe deposit boxes * sale, distribution or brokerage, with or without advice, of insurance, unit trusts and similar financial products as a “financial supermarket” * cash management and treasury services * merchant banking and private equity financing * traditionally, large commercial banks also underwrite bonds, and make markets in currency, interest rates, and credit-related securities, but today...
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...Services offered by Nepalese Commercial Banks Introduction The term bank is either derived from old Italian word banca or from a French word banque both mean a Bench or money exchange table. In olden days, European money lenders or money changers used to display (show) coins of different countries in big heaps (quantity) on benches or tables for the purpose of lending or exchanging. A bank is a financial institution which deals with deposits and advances and other related services. It receives money from those who want to save in the form of deposits and it lends money to those who need it. A financial institution licensed as a receiver of deposits. There are two types of banks: commercial/retail banks and investment banks. In most countries, banks are regulated by the national government or central bank. Commercial banks are mainly concerned with managing withdrawals and deposits as well as supplying short-term loans to individuals and small businesses. Consumers primarily use these banks for basic checking and savings accounts, certificates of deposit and sometimes for home mortgages. Investment banks focus on providing services such as underwriting and corporate reorganization to institutional clients. According to Nepal Company Act 2031 B.S, a commercial bank refers to such type of bank which deals in money exchange accepting deposit advance loan and commercial transaction except specific banking related to co-operative agriculture industry and other objective. Basic...
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...Saving Banks Saving banks are established to create saving habit among the people. These banks are helpful for salaried people and low income groups. The deposits collected from customers are invested in bonds, securities, etc. At present most of the commercial banks carry the functions of savings banks. Postal department also performs the functions of saving bank. Type 2. Commercial Banks Commercial banks are established with an objective to help businessmen. These banks collect money from general public and give short-term loans to businessmen by way of cash credits, overdrafts, etc. Commercial banks provide various services like collecting cheques, bill of exchange, remittance money from one place to another place. In India, commercial banks are established under Companies Act, 1956. In 1969, 14 commercial banks were nationalised by Government of India. The policies regarding deposits, loans, rate of interest, etc. of these banks are controlled by the Central Bank. Type 3. Industrial Banks / Development Banks Industrial / Development banks collect cash by issuing shares & debentures and providing long-term loans to industries. The main objective of these banks is to provide long-term loans for expansion and modernisation of industries. In India such banks are established on a large scale after independence. They are Industrial Finance Corporation of India (IFCI), Industrial Credit and Investment Corporation of India (ICICI) and Industrial Development Bank of India...
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...What are Banks? Banks are the largest lending institutions through out the globe; the basic purpose of banks is to secure money of the people/organizations and to lend the money to the people/organizations as a creditor/lender. When they start returning money back to the bank either at once or in portions take interest on it. This interest is the prime source of the banks profit; interest is also known as “Usury”. The History of Banks The history of banks is old, but it is not exactly in that form which today we have, as we developed the way of banking and other related features are also changed. Initially people store money in the royal palaces and temples, at that time there were no concept of money they secure their grains and other commodities into it, the reason behind this they feel that these places are very secure and the chance of robbery or theft is very less as compare to secure in there own houses. Banking Today Today banks are playing very essential role in our country economy as well as in global economy; they are giving loans to the organization and individuals, trying to make humans life easier and developed. Without bank we cannot even think to live, for example how do you feel if someone says that I have one million or ten million dollar save in my cupboard locker, obviously you can laugh over the person wisdom? Now banks are providing greater facilities and constantly improving their standards day by day, Stronger security, locker facilities (where...
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...Commercial Banks A commercial bank is a type of financial intermediary and a type of bank. It raises funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time deposits. It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets are loans and bonds. For Eg: - Arab-islamic Bank, Amman-Cairo Bank etc… .Commercial banks work with short term funds. Their working capital consists mainly of moneys deposited by customers and withdraw able by them on demand or on short notice. If a bank lends such moneys for long periods or keeps them blocked in any other way, it will be unable to meet the demands of its depositors for withdrawal of cash, and will be forced to go into liquidation. Commercial banks are the most important source of institutional credit in the money market. A commercial bank is a profit seeking business firm, dealing in money or rather dealing in claims to money. Commercial banks are the most important bank in such as USA , Europe and Palestine . The commercial banks account for over 80% of the total bank credit. Functions of Commercial Banks The commercial banks perform a number of vital functions. The functions of a commercial bank can be broadly classified into the followings: (1) Accepting Deposits: -The bank collects deposits from the public. The deposits can be of different types – such as: Savings Deposits:...
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...STATEMENT OF GENERAL OBJECTIVE, RESEARCH QUESTION, STATEMENT OF HYPOTHESIS) 3. EFFECT OF FOREIGN CURRENCY DEPOSIT ON THE CREDIT CREATION OF COMMERCIAL BANKS IN NIGERIA (AN ABSTRACT) 4 STRATEGY FOR ECONOMIC DEVELOPMENT IN SOUTH KOREA: LESSONS FOR NIGERIA (REVIEW OF RELATED LITERATURE) LECTURER: PROF I. O. C. ABARA ABSTRACT Foreign currency deposits or domiciliary account, are accounts maintained in designated foreign currencies by authorized Nigerian banks for their customers. Such customer could be government, individuals, or corporate bodies. The account falls within the statutory functions of commercial banks in Nigeria, ie mobilization of deposits and credit creation. The introduction of the domiciliary account regime according to the Central Bank of Nigeria (CBN), the monitory policy regulatory agency, is to boost the commercial banks mobilization of deposits and ability to create credit. The implication would be a more robust commercial banking environment. It would also prepare the grounds for a free, open and consequently a deregulated foreign exchange market in Nigeria. The effect of these economic variables in the ability of the commercial banks to discharge on its above statutory function is the focus of this empirical study. Both primary and secondary data sources were used in the study. In analyzing, the researcher used exponential function as the lead equation because it depicted far better result...
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...------------------------------------------------- Batch: PGDM 2011 - 13 Term: IV ------------------------------------------------- ------------------------------------------------- Course: Commercial Bank Management (CBM) Credits: 3 ------------------------------------------------- ------------------------------------------------- Course Instructor: Prof. D N Panigrahi Objectives of the course: The course inputs are designed to accomplish the following objectives. * To help students to understand the role and functions of Commercial Banks, main strategic issues in retail and corporate banking and the risks faced by the Banking Industry in India. * To familiarise the students with the new Banking Practices and Processes including new banking technologies. * To familiarise the students with the legal and regulatory framework for banks in India. * To equip the students with the tools and techniques used in interpreting and evaluating the performance, profitability, productivity, and efficiency of the Commercial Banks. * To equip the students with the in-depth knowledge of Bank Financial Management Process including Treasury, Investment, Asset Liability Management & Risk Management. * To equip the students with the in-depth knowledge and skills in Credit Analysis & Appraisal Processes relating to the banks’ lending decisions like Working Capital Financing, Term Loan & Project Financing, Domestic & International Trade Finance including Export-Import Finance, BG...
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...1. Define Finance. Discuss the principles of Finance. According to L J Gitman, “Finance is the art and science of managing money.” Finance is concerned with the process, institutions, markets and instruments involved in the transfer of money among and between individuals, business and governments. Finance deals with-Financing, investment and dividend. Principles of Finance * Principles of risk and return: It says, “No risk, No gain” * Principles of time value of money: while making any investment decision, time value of money should be considered. * Principles of Liquidity and Profitability: Need balance of liquid money. * Principles of Perfection: Current assets, fixed assets should be collected with careful consideration. * Principles of Business Cycle: Business depends on various economic conditions (Boom-Recession-Depression-Recovery-Boom.) * Principles of Diversification: Do not put all eggs in one basket. 2. The ultimate goal of a business is to maximize wealth, not profit maximization-Explain. Shareholder’s Wealth Maximization means maximizing the price of the firm’s common stock. It means to increase the net present value of a firm. Shareholders' wealth is maximized when a decision generates net present value. The net present value is the difference between present value of the benefits of a project and present value of its costs. A decision that has a positive net present value creates wealth for shareholders and a decision that has a negative...
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...Commercial Banks A commercial bank is a type of financial intermediary and a type of bank. It raises funds by collecting deposits from businesses and consumers via checkable deposits, savings deposits, and time deposits. It makes loans to businesses and consumers. It also buys corporate bonds and government bonds. Its primary liabilities are deposits and primary assets are loans and bonds. For Eg: - Bank of Baroda, Canara Bank, Dena Bank etc.Commercial banks work with short term funds. Their working capital consists mainly of moneys deposited by customers and withdrawable by them on demand or on short notice. If a bank lends such moneys for long periods or keeps them blocked in any other way, it will be unable to meet the demands of its depositors for withdrawal of cash, and will be forced to go into liquidation. Commercial banks are the most important source of institutional credit in the money market. A commercial bank is a profit seeking business firm, dealing in money or rather dealing in claims to money. Commercial banks are the most important bank in India. The commercial banks account for over 80% of the total bank credit. Functions of Commercial Banks The commercial banks perform a number of vital functions. The functions of a commercial bank can be broadly classified into the followings: (1) Accepting Deposits: -The bank collects deposits from the public. The deposits can be of different types – such as: Savings Deposits: - This type of deposits...
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...The Reserve Bnak Of India With Specific Reference To Credit Control Policy The Reserve Bank of India (RBI) is India's central banking institution, which controls the monetary policyof the Indian rupee. It was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of India Act, 1934.[4] The share capital was divided into shares of 100 each fully paid, which were initially owned entirely by private shareholders.[5] Following India's independence in 1947, the RBI was nationalised in the year 1949. Structure Structure of RBI The organization of RBI can be divided into three parts: 1) Central Board of Directors. 2) Local Boards 3) Offices of RBI 1.Central Board of Directors : The organization and management of RBI is vested on the Central Board of Directors. It is responsible for the management of RBI.Central Board of Directors consist of 20 members. It is constituted as follows. a)One Governor: it is the highest authority of RBI. He is appointed by the Government of India for a term of 5 years. He can be re-appointed for another term. b)Four Deputy Governors: Four deputy Governors are nominated by Central Govt. for a term of 5 years c)Fifteen Directors :Other fifteen members of the Central Board are appointed by the Central Government. Out of these , four directors,one each from the four local Boards are nominated by the Government separately by the Central Government. Ten directors nominated by the Central Government...
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...finance Epoka University Table of contents Chapter 1 4 Financial system, meaning and its constituent’s elements 4 Chapter 2 5 Financial bank institutions. Meaning and their functions 5 Chapter 3 6 Banking System 6 Non bank financial institutions. Meaning and their functions 6 Chapter 4 9 The role of government in the credit market 9 The role of other financial credit institutions credit in financing the economy in Albania 9 The role of banks in lending activity in the country 10 Conclusions 11 Abreviations 11 Entry Progression and technological innovations are continuously effecting in a sensible way in every field of life, but especially and faster those has been felt in the Bank System. In now days, we are not only in front of a fast liberalization, globalization, but also in expanding financial market, updated always with new bank’s products. Albania is integrating everyday its self with this progress, despite national and international challenges that it faces time by time. Credit process has a main and important role in the economic progress, of financial system in our country. It is named like the locomotive that draws the most of economy growth. Since our agents are operating in a very flexible background, business world is more and more combined and conditioned by banks and financial institutions. Bank institutions are raising economy efficiency, through channeling of funds, by so contributing in the economic welfare of every individual, so they...
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...The central bank has been described as "the lender of last resort", which means that it is responsible for providing its economy with funds when commercial banks cannot cover a supply shortage. In other words, the central bank prevents the country's banking system from failing. However, the primary goal of central banks is to provide their countries' currencies with price stability by controlling inflation. A central bank also acts as the regulatory authority of a country's monetary policy and is the sole provider and printer of notes and coins in circulation. Time has proved that the central bank can best function in these capacities by remaining independent from government fiscal policy and therefore uninfluenced by the political concerns of any regime. The central bank should also be completely divested of any commercial banking interests. The Rise of the Central Bank Today the central bank is government owned but separate from the country's ministry of finance. Although the central bank is frequently termed the "government's bank" because it handles the buying and selling of government bonds and other instruments, political decisions should not influence central bank operations. Of course, the nature of the relationship between the central bank and the ruling regime varies from country to country and continues to evolve with time. To ensure the stability of a country's currency, the central bank should be the regulator and authority in the banking and monetary systems...
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