Friday, May 20, 2011

Discuss the various types of bank.

Banks these days provide a variety of services. They provide both short-term and long-term credits. Bank can be classified into the following categories:-

Classification on the basis of ownership:-
    Ownership banks can be classified into follwing four categories:- 
    i.   State owned bank,
    ii.  Private ownership bank,
    iii. Government and Private joint ownership bank
    iv. Autonomous banks.

Classification on the basis of functions:-
    Banks based on functions can be classified into following categories:
a. Central bank: A central bank functions as a top controlling bank for all other banks of the country. It functions as a controller of credit, bankers, bank and enjoys the monopoliness in issuing currency notes on behalf of the government.
b. Agricultural Bank: An agricultural bank functions as a specialized institution providing credit to agriculture, co-operative banks, land mortgages banks fall in this categories.
c. Exchange banks: An exchange bank primarily funances the foreign trades of a country most of the major commercial banks of our country and foreign banks having offices in our country are engaged in this business.
d. Industrial banks: An industrial bank primarily meets the long-term capital requirements of industry. They include Industrial Finance Corporation of Bangladesh Ltd. State Finance Corporation.
e. Commercial banks: A commercial bank is essentially meant for providing short-term credit to trade and industry.
f. Other banks:
    i.    Investment Bank             ii.    Merchant Bank
    iii.  Savings Bank                   iv.   Export-Import Bank,
    v.   Consumer Bank               vi.   Mortgage Bank
    vii. Grameen Bank                 viii. International Bank.

Classification on the basis of organization structure:-

    Bank's can be classified in to five categories according to their organization structure. They are:-
    i.   Unit Bank,                    ii.  Branch Bank,
    iii. Chain Bank,                 iv. Group Bank.
    v.  Mixed Bank

Classification on the basis of scheduling:-
    On the basis of scheduling banks can be sub-divided in to following categories:
a. Sheduled Bank,                 b. Non-scheduled Bank

Source: Here

Discuss the various forms of bank credit. (Bangladesh)

Bank is an institution which is engaged in the business of money and loan. The more loans a bank can provide the better and beneficial for the bank it will be. Loans can be of different types according to users, term and security. The types of loans are discussed below which are available in the Bangladesh:

Classification on the basis of Users:

A. Individual Loan:
    i.   Consumer Loan Banks provide loans for durable goods/ appliances and commodities like- loans for TV, Freeze, Computer, Car, Furniture etc.
    ii.  Housing Loans This is given to the fixed or low income people for housing purposes. This loan is usually intermediate and/or long term.
    iii. Education/ Medical and Other Loan  Some of the banks also provide loans to the people of the society in order to meet their educational or medical neeeds after being sure about the repayment.

B. Industry Loan:
    i.   Working Capital Loan This type of loan is given to the business/industry to provide capital required for purchasing raw materials, paying wages and fuel expenses etc.
    ii.  Fixed Capital Loan Huge amount of capital is required for procurement and replacement of mechinery/equipments for the industrial organizations.

C. Loan for Business Persons:
    i.   Working Capital Loan For maintaining day to day transactions businessmen need working capital. This problem is solved by the provision of loan.
    ii.  Export/Import Loan Banks also help the export-import firm by issuing Letter of Credit (LC), Bills of Exchange (BOE), etc.

D. Loans for Farmers:
    i.   Crop Loan  Banks provide loans to farmers to buy seeds ,cows and fertilizers.
    ii.  Non-crop Loan Farmers also need money for poultry, fisheries, agro-business etc. In this case socialized or commercial banks provide Small and Medium Enterprise (SME) loan to the farmers.
    iii. Farming Equipment Loan To purchase farming equipments banks also provide loans to farmers.

E. Loans for Landless people:
    i.   Small Business Loans Banks provide loans to the landless people to establishing income generating small business.
    ii.  Housing Loan Banks may provide loans to landless for housing purposes.
    iii. Medical Loan Loans may be given to landless people also for medical purposes.

Classification on the basis of Terms:

A. Short Term Loans: These loans are sanctioned for less that one year. These can be of two types as follows:-
    a. Loans provided for immidiate use and payable on demand,
    b. Loans payable on short notice.
B. Midium Term Loan: Loans with the maturity of one to five years are called mid-term loans. 
C. Long Term Loans: Loans with the maturity of more that five years are long-term loans. 

Classification on the basis of Security:

A. Unsecured Loan: Loans those are provided without any collateral usually for poor clients or reputed persons. 
B. Fully secured loan: If the loan is given by taking a security or collateral of the amount exceeding the amount of loan or just equal to the amount of loan, it is called  "fully secured loan" .
C. Partly secured loan: If the amount of loan is not fully secured, rather partial amount of collateral is provided to acover the lan sanctioned; it is called "Partly secured loan".

Source: Here

Definition of Commercial Banking.

Commercial Bank:
    The bank that deposits surplus fund of individual or business enterprises and provide loan facilities to them who has deficit fund and demand of money is called commercial bank. The intensity of this bank is to transact money and to acquire profit. That means the bank operated for commercial purpose is called commercial bank.

According to New Encyclopedia Britannica - "A commercial bank is a trader of substitue currencies such as cheque and bill of exchange."
Source: Here

What is Banking? Write down the functions of commercial bank?

    The term "Banking" refers to the performances of duties such as reception of surplus fund of individuals, trading or non-trading institution, government or private institution as deposit and supply of the money with assurance of repayment against security in exchange of profit or interest to trading or not-trading institution, government or private institution who has deficit fund and demand for money and to facilitate this process, creating various credit instruments and giving facility of withdrawal of deposit as and when needed by the financial internediary or institution called bank.

Functions of Commercial Bank:
    The functions performend by the commercial bank are briefly notified below:
  1. Commercial banks deposit the surplus amount that is scattered to the public.
  2. Commercial banks provide various loan facilities to the people,
  3. Commercial bank receives current deposit and gives teh withdrawal facilities to clients through cheque.
  4. It receives term deposit and pays interest on it,
  5. It discounts notes, approves loans, and invests in government and other credit instruments,
  6. It collects cheques, notes and drafts etc,
  7. It issues drafts and cashier's cheque,
  8. It notifies of depositor's cheque,
  9. It acts as a trustee in accordance with government permission,
  10. It helps to build a business by providing different loan policies,
  11. It purchases or sales the bonds, securities or pays for the insurance premium or tax on behalf of the client.
Source: Here