Unit One: This unit is designed to introduce the meaning of a bank, identifies the types of banks as commercial banks, development banks, agricultural banks, investment banks, foreign exchange banks, e.t.c. and banking systems like branch banking system, unit banking system, holding banking system, group banking system, investment banking system and mixed banking systems.
Unit Two: This unit is designed so as to create awareness of the students about banker and customer and the relationship that exists between them and the types of accounts that customers could open at the bank. It demonstrates the types of customer’s accounts and their opening, operating and closing procedures. It also discuss about special types of customers and the necessary precautions.
Unit Three: Lending is one of the most important functions of banks. The bank creates loans on funds it accepts from the public in a form of deposits. Hence, the bank is lending, in practice, not his own money, but the public money. Therefore, the bank should take the necessary precautions while lending money so as to insure the repayment of once advanced money. Otherwise, it will be closed if the loan is not collected and money is not available at his possession to honor cheques issued by customers. In order to avoid this problem banks develop loan policies. This enables them to follow uniformity and minimizes possible errors while lending. This unit discusses about the meaning of a loan, its classification, loan policy, loan pricing, loan administration, etc.
Unit Four: Banks are organized under joint company system, primarily for the purpose of earning a profit to share holders in a form of dividends. The economic environment of banking is ever changing, and like other businesses, banks are profit-maximizing firms. As banking becomes more competitive, bank management must become more sophisticated and must more closely scrutinize revenues, expenses, and the five key risks of banking: liquidity risk, interest rate risk, credit risk(deposit risk), foreign exchange risk and political risk.
We begin the chapter by providing an overview of the banking industry. Next, we examine the principal business activities summarized on a bank’s balance sheet. Then we will discuss in detail how banks manage their activities to survive as a going concern.
What Will You Learn?
- understand the peculiar characteristics of banks
- define and discuss the nature of the balance sheet of the bank
- identify the elements and nature of the balance sheet
- understand the banking dilemma.
- Define concepts of solvency, liquidity and profitability
- understand the methods used to reconcile the banking dilemma.
UNIT 1: An Overview of Banks and their Function
Unit 1 Lesson: An Overview of Banks and their Function
Unit 2: Relationship between Banker and Customer
Unit 2 Lesson: Relationship between Banker and Customer
Unit 3: Loans and Advances
Unit 3 Lesson: Loans and Advances
Unit 4: THE BANKING FIRM
Unit 4 Lesson: THE BANKING FIRM