Professional Documents
Culture Documents
C1T2 Banking PDF
C1T2 Banking PDF
Banking and
Financial Institutions
Banking and
Financial Institutions
What is a bank?
What is a bank?
Interest
Loan
Interest
BANK
Deposit Loan
Interest Interest
BANK
Interest on
Balance Pool
Credited of Money
to AC
BANK
Amount
Deducted AC
from Credited
balance
Write
Cheque
Deposit
money
Interest on
Balance Pool
Credited of money
to AC
BANK
Amount
Deducted AC
from Credited
balance
Write
Cheque
Deposit
money
Interest on
Balance Pool
Credited of money
to AC
BANK
Amount
Deducted A/C
from credited
balance
Write
Cheque
Deposit
money
Interest on
Balance Pool
Credited of money
to AC
BANK
Amount
Deducted A/C
from credited
balance
Write
cheque
Deposit
money
Interest on
Balance Pool
Credited of money
to AC
BANK
Amount
deducted A/C
from A/C credited
balance
Write
cheque
Deposit
money
Interest on
balance Pool
credited of money
to A/C
BANK
Amount
deducted A/C
from A/C credited
balance
Write
cheque
What would have happened if you
didn't use banks as an intermediary?
Fund holders would have invested
directly in markets, capital markets
or bullion market
What is a bank?
Assets Liability
MONEY
MONEY
BORROWED
LENT TO
FROM
CUSTOMERS
CUSTOMERS
LOANS FD/CB
BANK
Assets Liability
MONEY
MONEY
BORROWED
LENT TO
FROM
CUSTOMERS
CUSTOMERS
LOANS FD/CB
BANK
Assets Liability
Secured loans
Unsecured
loans
BANK
Assets Liability
House
An LIC policy
House
In case of a default
Unsecured
Secured
Banks portfolio - Loans
Unsecured
Interest 10 - 14%
Secured
Banks portfolio - Loans
Unsecured
Interest 10 - 14%
Tenure high
Secured
Banks portfolio - Loans
Unsecured
Interest 10 - 14%
Tenure high
Lend - long time
Secured
BANK
Assets Liability
Secured loans
Unsecured
loans
NO Collateral
backing
Unsecured loans
Money on-call
Uncertainty
Savings bank
account
Lowest interest rate
Money on-call
Uncertainty
Savings bank
account
Lowest interest rate
Money on-call
Uncertainty
Savings bank Fixed maturity plans
account
Lowest interest rate Higher interest rates
Money
BANK
Money Loan
Interest
Banks can legally extend considerably more
credit than they have cash
How do banks create money?
We trust banks with our money
Honour our checks
Deposit money every day
Lending the same money and more
Extend more credit than they have cash
Demand our money, well get it
We trust banks with our money
Honour our checks
Deposit money every day
Lending the same money and more
Extend more credit than they have cash
Demand our money, well get it
We trust banks with our money
Honour our checks
Deposit money every day
Lending the same money and more
Extend more credit than they have cash
Demand our money, well get it
We trust banks with our money
Honour our checks
Deposit money every day
Lending the same money and more
Extend more credit than they have cash
Demand our money, well get it
We trust banks with our money
Honour our checks
Deposit money every day
Lending the same money and more
Extend more credit than they have cash
Demand our money, well get it
We trust banks with our money
Honour our checks
Deposit money every day
Lending the same money and more
Extend more credit than they have cash
Return our money when demanded
Fish
Retail Bank
market
Bank
Loans
Certificates of deposit
Other financial products
Interest they charge on
loans
is higher
Deposit
Rs 100
Reserve Rs
10
Lend Rs 90
Bank Bank
A B
Deposit
Rs 100
Reserve Rs
10
Lend Rs 90
Bank Bank
A B
Deposit Deposit
Rs 100 Rs 90
Reserve Rs
Reserve Rs 9
10
Lend Rs 90 Lend Rs 81
Bank Bank
Bank C
A B
Reserve Rs Reserve Rs
Reserve Rs 9
10 8.1
Reserve Bank
Or
Clearinghouse
Deposit Bank Encode &
cheque A endorse
Reserve Bank
Or
Clearinghouse
Recon
Bank A to B Bank B to A
cumulative
Deposit Bank Encode &
cheque A endorse
Reserve Bank
Or
Clearinghouse
Recon
Bank A to B Bank B to A
cumulative
What is a bank?
Nationalised Private
Nationalised Private
Nationalised Private
Board of governors
Board of governors
Board of governors
Board of governors
Board of governors
Board of governors
Board of governors
25
Federal reserve banks
Board of governors
25
Federal reserve banks
343,000
Member banks and other Non-bank financial
depository institutions companies (NBFCs)
Banking and
Financial Institutions
What is a bank?
Basel
BANK FOR INTERNATIONAL SETTLEMENTS
International organization
which fosters international monitoring
and financial cooperation and serves as a bank
for central banks
BANK FOR INTERNATIONAL SETTLEMENTS
What is a bank?
1. Product is money
Interest rate for borrowers
Interest
Deposit Loan
Interest Interest
Profit cycle of a bank
1. Product is money
2. Banking fees
Banking fees
1. Product is money
2. Banking fees
3. Low risk investments
Banking fees