2. PREPARED FOR
• Dr. Nazibul Islam
• Lecturer
• PRINCIPLES & PRACTICES
OF BANKING
• FACULTY OF BUSINESS STUDIES
• UNIVERSITY OF DHAKA
3. INTRODUCTION
• A nation's money supply consists of
bank deposits ownership of which can
be transferred by means of cheques,
debit cards or other forms of money
transfer. Deposit money and currency
are money in the sense that both are
acceptable as a means of payment.
4. HISTORY OF MONEY &
TRANSACTIONS
• Currency evolved from
two basic innovations,
both of which had
occurred by 2000 BC.
Originally money was
a form of receipt,
representing grain
stored in temple
granaries in Sumer in
ancient Mesopotamia,
then Ancient Egypt.
• Early currency
• Cionage
• Paper money
• Bank Note
• Plastic money
5. EVOLUTION OF BANKING
• ANCIENT WORLD (3000 BC)
• Temple banks in Egypt, Babylon, Greed valuables for safe keeping. The
valuables consisted of grains, agricultural implements and cattle.
• At later stage precious metals, gold and silver featured as deposits.
• Ancient India developed its own banking system. Manu framed
regulations on commercial transactions.
• 18th
Century BC
• The temple priests of Babylon provided loans to merchants.
• Hammurabi, the great, framed laws for banking operations. Around this
time, Greek temples conducted financial transactions such as loans,
deposits, currency exchange, and issued credit notes payable in
another city.
• Ancient Romans made regulations concerning financial practices. They
paid interest on deposits and charged interest on loans.
• Advent on Christianity and the taboo on interest brought an end to
perpetuation of banking.
6. CONT’D
• Around 1100 AD
• The banking system revived in Western Europe to finance the crusades. They
also found a way to circumvent the religious taboo on interest.
• 1100 AD ONWARDS
• Settlement of debts and payments took place in trade fairs held regularly at
various locations in Europe.
• MEDIEVAL ITALY
• ITALY pioneered banking in Europe. The word bank comes from banco means
bench.
• 1157 AD Bank of Venice established which is supposed to be the most ancient
bank.
• 1349 AD
• Cloth merchants of Barcelona set up banks.
• 1609 AD
• The Bank of Amsterdam was established in Netherlands.
• In 1600 AD Goldsmiths pioneered banking business in England. The notes they
issued against deposits of gold is considered as the precursor of modern day
bank note.
• 1694 AD
• Bank of England, the first central bank. It sets the stage of modern banking.
7. BANKS OF THE
SUBCONTINENT
• NATIONAL BANK OF
INDIA
• 1864
• MAHALAXMI BANK
• 1910
• CENTRAL BANK OF
INDIA
• 1911
• COMILLA BANKING
CORPORATION
• 1914
• DINAJPUR BANK
• 1914
• BENGAL CENTRAL
BANK
• 1918
• NEW STANDARD BANK
• 1920
• IMPERIAL BANK OF
INDIA
• 1921
• IONEER BANK LTD
• 1922
• COMILLA UNIOUN
BANK
• 1923
8. Cont’d
• UNITED INDUSTRIAL
BANK
• 1942
• BHARAT BANK
• 1942
• UNITED COMMERCIAL
BANK
• 1942
• HINDUSTAN
COMMERCIAL BANK
• 1942
• HINDU BANK
• 1946
NATH BANK
1926
TRIPURA MODERN BANK
1929
BANK OF COMMERCE
1929
SOUTHERN BANK LTD
1934
CALCUTTA COMMERCIAL BANK
1934
CALCUTTA NATIONAL BANK
1935
9. Formal Financial sectors of
Bangladesh
• BANGLADESH
BANK
• COMMERCIAL
BANKS
• DEVELOPMENT
FINANCING
INSTITUTIONS
• INSURANCE
COMPANIES
• STOCK
EXCHANGES
• BANGLADESH
SOMOBAYA BANK
• COOPERATIVE
BANKS
• BANGLADESH
RURAL
DEVELOPMENT
BOARD
• BANGLADESH
POST OFFICE
SAVINGS BANKS
• MICO FINANCE
INSTITUTIONS
10. GROWTH OF BANKS IN
BANGLADESH
• 1971
• Pre liberation
commercial & DFIs
nationalized.
• 1971
• Bangladesh bank
established to over
the operation of the
state bank of
Pakistan.
• 1980s
• Reversion of Pubali
bank & Uttara bank
to private sector, first
finance company –
IFIC Ltd established.
• 1991-1996
• Second batch of
private sector banks
emerged.
• 1996-01
• Third generation of
Commercial bank
setup.
11. Function of Commercial banks
• Accept deposits with or without interest –
current, savings, fixed deposits and others
accounts.
• • Collects cheques bills etc.
• • Lends money- Long term & Short term.
• • Handles foreign exchange transactions.
• • Arrange transfer of funds.
• • Issue guarantee, indemnity bond.
• •Maintain safe deposit box.
• • Perform agency functions.
12. Role of Banks in the Economic
Development of a Country
• 1. Banks promote capital formation
• 2. Investment in new enterprises.
• 3. Promotion of trade and industry
• 4. Development of agriculture
• 5. Balanced development of
different regions
• 6. Influencing economic activity
13. Cont’d
• 7. Implementation of Monetary
policy,
• 8. Monetization of the economy
• 9. Export promotion cells
• 10. Virtual Banking
14. SPECIALISED FINALCIAL
INSTITUTIONS:
• Bangladesh Shilpa Bank (BSB)
• Bangladesh Shilpa Rin sangstha
(BSRS)
• Bangladesh Krishi Bank
• Rajshahi Krishi Unnayan Bank
• Investment corporation of Bangladesh
• BASIC BANK Ltd
• House Building Finance Corporation
• Ansar VDP Unnayan Bank
• Karma Sangsthan Bank
15. M-Banking and M-Payments Systems in the
Developing World
• The terms m-banking, m-payments,
m-transfers, m-payments, and m-
finance refer collectively to a set of
applications that enable people to use
their mobile telephones to manipulate
their bank accounts, store value in an
account linked to their handsets,
transfer funds, m-banking or even
access credit or insurance products.
16. Negative effects of economic
growth
• •Consumerism
• •Resource depletion
• •Environmental impact
• •Equitable growth
• Implications of global warming
17. CONCLUSION
• Banks were the earliest credit
institutions extending loans (credit) to
customers. It was their job to
transform short-term liquid deposits
into long-term illiquid financial assets
that can fund long gestation activities
and enhance economic growth.
