Assignment Submitted to Sir Faiz Rasool (Ms)

1:- Hassan Raza2:- Usman Nazir3:- Usman Nawaz

Commercial Banking in Pakistan

Group members

Origin of wordBanke, Banc or BanckDefinition:Bank: “A financial institution which receives deposits and advances loans.”Commercial Bank: “A bank that offers services to the general public and to companies.”Types of commercial Banks:1. Saving Banks2. Deposit Banks3. Industrial Banks4. Exchange Banks5. Miscellaneous Banks6. Agricultural Banks

BANK

1. Bank Al-Habib2. Bank Alfalah3. Standard Charted Bank4. Askari Bank5. Faysal Bank6. HBL7. MCB8. NIB9. Soneri Bank10.Summit Bank11.United Bank Limited12.Samba Bank13.Silk Bank

BANKS IN PAKISTAN

1. Primary function2. Secondary function

Primary Functions 1. Acceptance of deposits i. current depositsii. Savings depositsiii. Fixed deposits 2. Advancing loans overdraft facilities Cash credit

FUNCTIONS OF COMMERCIAL BANKS

discounting bills of exchange consumer credit 3. Creation of credit4. Promote the use of cheques5. Financing internal and foreign trade6. Remittance of funds

Secondary function1. Agency Services2. Discounting Bills of Exchange:

Agency Services:“Commercial banks also perform certain agency functions for their customers. For these services, banks charge some commission from their clients.Discounting Bills of Exchange:“It refers to a facility in which holder of a bill of exchange can get the bill discounted with bank before the maturity. After deducting the commission, bank pays the balance to the holder. On maturity, bank gets its payment from the party which had accepted the bill.”

1. Meezan Bank2. Al Baraka Bank3. Bank Islamic Pakistan ltd.4. Burj Bank5. Dubai Islamic Bank

ISLAMIC BANKS

History of Islamic banking in Pakistan

• The Islamic summit of Lahore ,Pakistan held in 1974 recommended the creation of Islamic banks and Islamic development bank

• On 14 Ramadan 1420 , the bench of the supreme court of Pakistan gave its landmark decision banning in all its forms. The court also specified a step by step approach to rid the country of the evil of interest.

After 55 years its creation in the name of Islam , Pakistan became the first Muslim country of officially declare modern bank interest as

“ ar-riba ” declared haram by Quran

Role of Commercial Banks in the Economy

Banks promote capital formation Investment in new enterprises Promotion of trade and industry Development of agriculture Balanced development of different regions Influencing economy activity Implementation of Monetary policy Monetization of the economy Export promotion cells

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1. Banks promote capital formationCommercial banks accept deposits from individuals and businesses, these deposits are then made available to the businesses which make use of them for productive purposes in the country2. Investment in new enterprisesBusinessmen normally hesitate to invest their money in risky enterprises. The commercial banks generally provide short and medium term loans to entrepreneurs to invest in new enterprises and adopt new methods of production

3. Promotion of trade and industryThe use of bank draft, check, bill of exchange, credit cards and letters of credit etc has revolutionized both national and international trade.

4. Development of agricultureThe banks in developing countries are now provided credit rural areas. The arrangement of credit to agriculture sector has greatly helped in increasing the agriculture productivity and income of the farmers..

5. Balanced development of different regionsThe commercial banks play an important role in

achieving balanced development in different regions of the country.

They help in transferring surplus capital from developed regions to the less developed regions.

6. Influencing economic activityIf the commercial banks are able to increase the amount of money in circulation through credit creation or by lowering the rate of interest, it directly affects economic development.

7. Implementation of Monetary policy It helps in bringing price stability and promotes economic growth with in the shortest possible period of time.8. Monetization of the economyThe commercial banks by opening branches

in the rural and backward areas are reducing the exchange of goods through barter.

The use of money has greatly increased the volume of production of goods.

9. Export promotion cellsIn order to increase the exports of the country,

the commercial banks have established export promotion cells.

They provide information about general trade and economic conditions both inside and outside the country to its customers.