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Fundamentals of Banking., Schemes and Mind Maps of Banking and Finance

The document is a notes on banking. Topics are covered shortly. Best for last moment revise. Also if anyone want details notes kindly let me know in the comments.

Typology: Schemes and Mind Maps

2023/2024

Available from 12/23/2024

trisha-22
trisha-22 🇮🇳

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1.Introduction to Banking
Banking is a fundamental pillar of the modern economy, playing a crucial role in
facilitating financial transactions, promoting economic growth, and ensuring financial
stability. At its core, banking is the business of accepting deposits from the public
and lending money to borrowers. This seemingly simple definition, however,
encompasses a vast array of activities and services that banks offer to individuals,
businesses, and governments.
2.The Functions of a Bank
Banks serve as intermediaries between depositors and borrowers, connecting those
who have surplus funds with those who need them. This intermediary role is central
to the functioning of a modern economy, enabling the efficient allocation of capital
and promoting economic growth.
Accepting Deposits: Banks accept deposits from individuals and businesses in
various forms, such as savings accounts, checking accounts, and fixed deposits.
These deposits serve as the primary source of funds for banks to lend out.
Lending Money: Banks lend money to individuals and businesses for a variety of
purposes, including personal loans, mortgages, business loans, and agricultural
loans. Lending money is a core function of banks, and it plays a vital role in
stimulating economic activity.
Payment Services: Banks provide a range of payment services, including check
clearing, electronic fund transfers, and debit and credit card transactions. These
services facilitate the smooth flow of money within the economy and make it easier
for individuals and businesses to conduct transactions.
Investment Services: Banks offer a variety of investment products, such as mutual
funds, insurance products, and investment advisory services. These services help
individuals and businesses to grow their wealth and achieve their financial goals.
Other Services: Banks also provide a range of other services, such as safe deposit
boxes, locker facilities, foreign exchange services, and credit card services. These
FUNDAMENTALS OF BANKING
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1.Introduction to Banking Banking is a fundamental pillar of the modern economy, playing a crucial role in facilitating financial transactions, promoting economic growth, and ensuring financial stability. At its core, banking is the business of accepting deposits from the public and lending money to borrowers. This seemingly simple definition, however, encompasses a vast array of activities and services that banks offer to individuals, businesses, and governments. 2.The Functions of a Bank Banks serve as intermediaries between depositors and borrowers, connecting those who have surplus funds with those who need them. This intermediary role is central to the functioning of a modern economy, enabling the efficient allocation of capital and promoting economic growth.  Accepting Deposits: Banks accept deposits from individuals and businesses in various forms, such as savings accounts, checking accounts, and fixed deposits. These deposits serve as the primary source of funds for banks to lend out.  Lending Money: Banks lend money to individuals and businesses for a variety of purposes, including personal loans, mortgages, business loans, and agricultural loans. Lending money is a core function of banks, and it plays a vital role in stimulating economic activity.  Payment Services: Banks provide a range of payment services, including check clearing, electronic fund transfers, and debit and credit card transactions. These services facilitate the smooth flow of money within the economy and make it easier for individuals and businesses to conduct transactions.  Investment Services: Banks offer a variety of investment products, such as mutual funds, insurance products, and investment advisory services. These services help individuals and businesses to grow their wealth and achieve their financial goals.  Other Services : Banks also provide a range of other services, such as safe deposit boxes, locker facilities, foreign exchange services, and credit card services. These

FUNDAMENTALS OF BANKING

services add value to the banking experience and cater to the diverse needs of customers. 3.Types of Banks There are many different types of banks, each with its own specific functions and services. Some of the most common types of banks include:  Commercial Banks: Commercial banks are the most common type of bank, offering a wide range of services to individuals and businesses. They are often referred to as " retail banks " and play a central role in serving the needs of the general public.  Investment Banks: Investment banks specialize in providing financial advisory services to corporations, such as mergers and acquisitions, IPOs, and debt underwriting. They also engage in trading activities and other investment banking services.  Central Banks : Central banks are the apex banks of a country, responsible for regulating the monetary system and controlling the money supply. They also act as lenders of last resort to commercial banks and play a crucial role in maintaining financial stability.  Cooperative Banks : Cooperative banks are owned and operated by their members, typically serving a specific community or group. They are often characterized by their focus on social and economic development.  Specialized Banks: Specialized banks cater to specific sectors or industries, such as agricultural banks, industrial banks, and export-import banks. They offer specialized financial products and services tailored to the needs of their target market.

Social Development : Banks promote social development by providing financial services to underserved populations, such as low-income individuals and rural communities. They also support community development initiatives and promote financial literacy. 6.Banking Regulation Banking is a highly regulated industry, with governments and central banks implementing various measures to ensure the safety and soundness of the banking system.  Importance of Regulation: Banking regulation is essential to protect depositors' interests, maintain financial stability, and prevent financial crimes. It also ensures fair competition among banks and promotes consumer protection.  Regulatory Bodies: Central banks play a key role in regulating the banking sector, setting monetary policy, and overseeing the operations of commercial banks. Other regulatory bodies, such as securities and exchange commissions and consumer protection agencies, also play a role in regulating specific aspects of the banking industry.  Regulatory Measures: Banking regulations cover a wide range of areas, including capital adequacy requirements, liquidity requirements, interest rate regulations, consumer protection regulations, and anti-money laundering regulations. Challenges and Future of Banking The banking industry is constantly evolving, facing new challenges and opportunities in the digital age.  Challenges: The rise of fintech companies, the increasing use of digital currencies, and the threat of cyberattacks are some of the challenges facing the banking industry.  Future of Banking: The future of banking is likely to be increasingly digital, with a focus on online and mobile banking, artificial intelligence, and block chain technology. Open banking initiatives, which allow customers to share their financial data with third-party providers, are also expected to gain traction. Conclusion

Banking is a complex and multifaceted industry that plays a vital role in the modern economy. By understanding the functions, types, evolution, importance, and challenges of banking, we can gain a deeper appreciation for its role in our daily lives and its impact on the world around us.