Commercial Banking

COMMERCIAL BANKING Facilitator: Prof. Satish Kumar

• The proper management of money is called finance • “Managing or the Science of managing money matters” • Finance refers to funds or monetary resources needed by individuals, business houses and the government

Financial System in India • Financial Markets • Financial Institutions • Financial Instruments • Financial Services

Financial Markets • Money Market – Lenders – Borrowers

• Capital Market – Primary capital Market – Secondary capital Market Government Securities Market Foreign Exchange Market

Financial Institutions • Monetary Institutions: central bank, commercial banks, and cooperative banks • Non Monetary Institutions: savings banks, development banks, Unit Trust • Intermediaries – Banks • Non intermediaries- IDBI, IFC, NABARD

Financial Instruments • Money market instruments- treasury bills, bills of exchange or trade bills etc. • Capital Market Instruments – ordinary shares , preference shares etc.

Financial Services • Financial services include all activities connected with the transformation of savings into investment - fund or asset based financial services - lease fianancing - housing finance - bills discounting

Banking – Origin and Evolution • Bank word derived from Italian word Banco • Banck for joint stock fund • Banca – accumulation of either stock or money • Bancus or banque – bench (Jews ) Bankrupt

Evolution of Banking Institutions