Commercial banks also allow for a mixture of deposit accounts, such as checking, savings, and time deposit. These institutions are run to create a profit and owned by a group of persons, however a few may be members of the Federal Reserve System. function of Commercial banks the general function of commercial banks is to give financial services to general public and business, ensure economic and social strength and sustainable increase of the economy. While permission a loan to a customer, they do not give cash to the borrower. in its place, they open a deposit account from which the borrower can take out.
At the point when a central bank is hoping to build the amount of cash in circulation, it buys government securities from business banks and foundations. This arranges for bank resources—they now have more cash to advance. This is a part of an expansionary or facilitating monetary policy which cuts down the interest rate in the economy. The inverse is done on the off chance that where cash needs to take out from the framework. In the certain countries, the Central Bank utilizes open market operations to come to a focused on government funds rate.
First, loans, leases and mortgages are transformed to tradable instruments through securitization. Second, their funding is conducted in capital markets with commercial papers and repos. In this case, savers direct their money to money market funds instead of depositing at traditional banks. The whole process is performed in several steps through a chain of non-bank financial intermediaries in contrast to a single bank in traditional credit intermediation. Moreover, the process is performed in a strict and sequential order and each step is conducted by a specific entity (a shadow bank).
Banks issue the debit and credit cards and provide online banking to its customers. The commercial Banks are interested in making profit. They give loans to needy people on interest bases and earn profit in shape of interest. Mostly the customers of the banks are business communities. Bank provides the loan to SME and agricultural sectors fulfill their needs at reasonable interest rate.
CHAPTER I INTRODUCTION 1.1. Background of Study Based on Law No. 10 of 1998 bank as an intermediary’s institution has an important role between parties who have the funds with the parties who need the funds. Bank compiles the fund from the surplus unit and distributes the fund to the deficit unit in order to improve the standard living of people. In running the business, the bank divided into Conventional Bank and Islamic Bank that run their business in the Syariah principle.
The objective of the article is to understand what the treasury department does and why it’s so important. According to Langworth, one of the main function of treasury management towards banking institution is to control and manage the bank’s money which in terms of capital and liquidity. It is to ensure that the banks have enough cash and can be readily access to the cash so that the bank can remains in a stable and secure condition which can give confidence and provide services effectively in helping the clients. Other than that, the function of treasury management is to control the capital and liquidity requirements as the bank is responsible in setting the rules regarding the bank’s capital and liquidity. The capital and liquidity requirements of the bank become an important area to focus to ensure that the banks are able to withstand the future market stresses.
Retail Banking Features: (Rao, 2014) Explains the main feature of retail banking which is centered around reducing the risk through distribution risk to the largest number of individuals rather than focusing the risk on a few companies. With this feature in Retail Banking, banks need to have high efficiency to manage this large portfolio of financial and banking services. 2.2.4. Types of Borrowers According to (APOSTOLIK, DONOHUE, & WENT, 2009) the main borrowers types in the banks include Retail borrowers, Corporate borrowers, Sovereign Borrowers and Public borrowers. For our research we will focus on the retail borrowers (individuals).
Introduction Banks and other financial institutions plays an active role in meeting the financial needs of individuals and corporate entities. One of the principal activities performed by banks is to serve as intermediary between lenders and borrowers. Indeed, banking can be said to thrive principally on intermediation which is the process of lending money out to borrowers at a relatively high rate compared to the deposit interest rate. However, some conditions subsist that leads to the erosion of this role performed by banks and this is referred to as disintermediation. In the general sense, disintermediation refers to a situation where the activities of middlemen are avoided in the course of a transaction.
Research has shown that the Chinese formal banking sector has a significant stake in the shadow banking industry. This stake appears in different forms, but we wil consider two. Firstly, formal banks make on-balance finance available directly to non-bank financial institutions who use the money directly for shadow banking activities. Secondly, some banks and their affiliates have ownerships in trusts companies or other non-bank financial institutions which offer shadow banking services. Hence, commercial banks are not only financing the shadow banking industry, they also have a big part in the ownership of these shadow banking institutions.
Part Two INTRODUCTION OF INDUSTRY & COMPANY 2.1 Introduction of company/organization Bank in general is meant an institution established by law, which deals with money and credit. So it deals with money, receiving it on deposits from customers, honoring customers drawing against such deposits on demand, collecting cheques for customers and lending or investing surplus deposit until they are required for repayment. “The banker’s business is to take the debts of other people, to offer his own in exchange and thereby create money”. Crowthier, The bank started its banking services from Magh 6, 2042 after registration in the company act, 2021 and Nepal Banijya bank act 2031. The French partner (holding 50% of the capital of NIBL) was Credit Agricole Indosuez, a subsidiary of one the largest banking group in the world.