Classification of bank on the basis of non-banking financial institutions

There are various kinds of non-bank financial institutions operating in Bangladesh. The leading of those banks are as follows-
1. Merchant banking companies: Merchant banking companies help business house or the government corporation in raising capital from the open market through share capital, debenture, and long-term deposits. They act as middlemen between businessman and the investors. They underwrite issue of share and provide consultancy services to the clients. In Bangladesh, separate merchant banking companies are yet to seen. These jobs are partly done by some of the commercial banks. Some leasing companies also do merchant banking.

Classification of bank on the basis of origin

On the basis of birth or origin or registration, banks may be classified as follows-

1. Local banks: Local banks are those banks which are incorporated and registered in Bangladesh. All other commercial banks operating in Bangladesh except the foreign banks are local banks.

Classification of bank on the basis of ownership

On the basis of ownership, the banks in our country may be classified as follows-
1. Fully government owned or nationalized banks- Sonali bank, Janata bank
2. Denationalized banks- Rupali bank
3. Banks in the private sectors- Prime bank, Standard bank, City bank etc
4. Joint venture banks- Dutch Bangla bank ltd, IFIC bank ltd

Distinguish between scheduled bank and non-scheduled bank

The different types of banks that are operating in our money market, are divided into two groups- scheduled bank and non-scheduled bank.
1. Scheduled bank: The banks that are enlisted or included in the scheme of the central bank are called scheduled bank. According to Bangladesh bank order-1972 article (1), A scheduled bank means a bank for the time being included in the list of banks maintained by the central bank under sub-clause (a) of clause (2) of article 32. Any bank not included in this list is a non-scheduled bank. For example, as of today, Grameen bank is not a scheduled bank. All the commercial banks in Bangladesh are, however, scheduled banks. Now the total number of scheduled banks is 51.

Features of scheduled bank

A scheduled bank means a bank for the time being included in the list of banks maintained by the central bank under sub-clause (a) of clause (2) of article 32. Any bank not included in this list is a non-scheduled bank. For example, as of today, Grameen bank is not a scheduled bank. All the commercial banks in Bangladesh are, however, scheduled banks. Now the total number of scheduled banks is 51.

What is Scheduled bank

A bank may be scheduled or non-scheduled bank. ‘Scheduled bank’ has been defined by the Bangladesh bank order-1972.
According to Bangladesh bank order-1972 article (1), A scheduled bank means a bank for the time being included in the list of banks maintained by the central bank under sub-clause (a) of clause (2) of article 32. Any bank not included in this list is a non-scheduled bank. For example, as of today, Grameen bank is not a scheduled bank. All the commercial banks in Bangladesh are, however, scheduled banks. Now the total number of scheduled banks is 51.

A bank is a dealer of debts-explain

A bank is a financial intermediary, a dealer of loan. Crowther has defined a bank as a dealer of debts-his own and of other people. In one side ,a bank becomes borrower through collecting deposits from people by various account types.—to another side, the bank establish itself as a lender offering debts/loan to people.

Liquidity principle of a bank

Liquidity means the capacity to produce cash on demand. Commercial banks keep sufficient cash in their own vaults as well as with the central bank of the country from where they can draw if necessity arises.
Deposits are the life blood of the commercial banks. These are the borrowings by the banks from the depositors. Depositors are repayable on demand or after expiry of a certain period. Everyday depositors either deposit or withdraw cash. To meet the demand for cash of the depositors, all commercial banks have to keep a certain amount of cash in their tills. This is called liquidity principle of bank.

Distinguish or difference between bank and banking

Bank

Bank is a financial institution that accepts the surplus money of the people in the form of deposit and gives it to other in the form of loans and advances.

According to professor Chamber, “bank is an office or institution for keeping, lending and exchanging etc of money.”

Banking

Banking is the process of performing the activities of a bank.

Functions of a bank or a Commercial bank

A commercial bank can undertake activities as defined and indicated in objective clause of its memorandum of association. Normally it performs the following important functions-

General functions:

1. Receiving deposits: The first and foremost function of commercial bank is to receive or collect deposit from the public. Generally deposits are collected from the public in different forms of accounts e.g. current, savings, term deposit accounts. No interest is charged in the current accounts, lower rate of interest charged in the savings account and comparatively higher interest rates given in fixed deposits. Thus commercial bank builds up customer network.
2. Accommodate loans and advances: Commercial bank attaches much importance providing loans and advances at higher rates than the deposit rates and thus earns profits on it. For expansion and smooth running of business working capital finance is given to the borrower. In the similar manner, commercial bank extends financial accommodation for the development of agriculture and industry. Credit accommodation is provided to the entrepreneurs and also reviving sick and old industries as per government directives. Thus commercial bank extends welfare service to people at large.
3. Create loan deposits: Commercial bank not only receives deposits from public and accommodates loans to public but also creates loan deposits. Example- While paying money in the form of loan is deposited to the borrower’s account. The borrower does not withdraw the full amount at a time. The balance left in the account creates loan deposits.
4. Create medium of exchange: Sometime in the past, commercial bank used to issue notes. At present central bank has got its exclusive right to issue notes. Of late, Commercial bank creates medium of exchange by issuing cheque-like notes, cheque is transferable and cheque is popularly used in the banking transactions.
5. Contribute in foreign trades: commercial bank plays a vital role in enhancing imports and exports business in the country. It contributes much in the economy by financing both import and export and thus earns foreign exchange for the country.
6. Form capital: commercial bank extends financial assistance for the formation of capital in the trade, commerce and industry in the country which ultimately expedites its economic development.
7. Create investment environment: Commercial bank plays a significant role in creating investment environment in the country.

Public utility function:

1. Remit money: Remittance of money to the public from one place to another is one of the functions of commercial bank. Remittance of money is affected in the form of demand draft, mail transfer, telegraphic transfer through different branches and correspondents home and abroad.
2. Help in trade and commerce: Commercial bank helps in expanding trade and commerce. In inland and foreign trade customers are allowed credit accommodation in the form of letter of credit, bills purchased and discounted etc.
3. Safe custody of valuables: Commercial bank introduces ‘lockers’ service to the customers for safe custody of valuables documents, shares & securities etc.
4. Help in foreign exchange business: While opening letter of credit commercial bank obtains credit report of the suppliers and thus help in expediting import and export business.
5.Act as a referee: Commercial bank act as a referee for and on behalf of the customers.
6. Act as an adviser: Commercial bank provides valuable advice to the customers on the feasibility of business and industry.
7. Collect utility service bills: As a social commitment, commercial bank collects utility service bills e.g. electricity, gas phone etc from the public.
8. Purchase and sale of prize bond and sanchaya patra: Commercial bank undertakes to purchase and sale of sanchaya patra and prize bonds as part of social commitments.
9. Help people traveling abroad: Commercial bank helps customers in traveling abroad through issuance of travelers cheque, draft etc.

Agency functions:

Besides above stated functions commercial bank acts as a representative of the customers.

1. Collection and payment: Commercial bank collects and pays values of cheque, bill of exchange, promissory notes, pension, dividends, subscription, insurance premium, interest etc on behalf of the clients.
2. Purchase and sale of shares and securities: Commercial bank is entrusted with the responsibility of purchase and sale of shares and securities on behalf of the customers.
3. Maintenance of secrecy: Maintenance of secrecy is one of the most important functions of commercial bank.
4. Act as a trustee: Commercial bank acts as a trustee on behalf of the customers.
5. Economic development and welfare activities: Commercial bank contributes much for the welfare and economic development of the country.

Others function:

1. Take part in the formation, management supervision or control in the banking business.
2. Appoint officers, staff, experts, advisors
3. Publish yearly annual report.
4. Involves in research work

Principles of modern bank or commercial bank

A successful and ideal modern bank follows some principles in order to ensure smooth running of banking business. To cope up with the prevailing competition, to provide better services to the clients and to gain competitive advantages commercial banks or modern banks have to be careful about their services. These are referred as principles.

Origin of the word “Bank”

It is observed that there are at least three schools of thought about its origin. These are as follows-
Some of the economists believe that the word ‘bank’ originates from the German word ‘BANC’ meaning a joint stock firm.
The second category of economists believes that the word ‘bank’ has been derived from the Italian word ‘BANCO’ which means heap or mound.
There is another group of people who traces the origin of the word ‘bank’ to the Greek word “BANQUE’ meaning a bench.

natural disaster River bank erosion of Bangladesh

Rivers in Bangladesh are morphologically highly dynamic. Erosion processes are highly unpredictable, and not compensated by accretion. These processes also have dramatic consequences in the lives of people living in the erosion prone areas. Around 10,000 hectares land is eroded by river per year in Bangladesh affecting about 1 million people on a yearly basis. Kurigram, Gaibandha, Jamalpur, Bogra, Sirajganj, Tangail, Pabna and Manikganj districts lie in the erosion prone area along Jamuna River. Erosion of total area and settlement is higher along the left bank than that of the right bank. Along Padma River, there are the districts of Rajbari, Faridpur, Manikganj, Dhaka, Munshiganj and Shariatpur. Chandpur on Lower Meghna is also seriously erosion prone.