An Overview of Banks and
Their Services
Chapter 1
Structure of Financial System:
Flow of Funds
Answerssssssssssssss…………??????
 The Basel Committee
 The State Bank of Pakistan’s Prudential
regulations
 The largest bank:
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By deposits
By number of branches
By capital
The banking industry is consolidating and
diversifying simultaneously.
 The traditional definition of a bank has been blurred
by the introduction of new products and a wave of
mergers, which have dramatically expanded the
scope of activities that banks engage in and where
products and services are offered.
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Formerly, a commercial bank was defined as a firm
that both accepted demand deposits and made
commercial loans.
Today, these two products are offered by many
financial services companies: including commercial
banks, savings banks, credit unions, insurance
companies, investment banks, finance companies,
retailers, and pension funds.
 What constitutes a bank, today is not as important
as what products and services are offered and in
what geographic markets the financial services
company competes in.
While competition has increased the number of
firms offering financial products and services,
 Consolidation, in turn, has increased the proportion
of banking assets controlled by the largest banks.
 Not surprisingly, the same trends appear globally.
 The United States currently has several banks that
operate in all 50 states and many
places outside the U.S.
 The largest foreign banks have
significant operations in the U.S.
and throughout the world.
NonBank Banks
 Depository institutions offering
checking accounts or commercial
loans but NOT “both”
The key Non bank competitors
Bankers face
page 7
 Insurance companies and pension plans
 Mutual Funds
 Real Estate Developers and Mortgage
Companies
 Checking-Cashing Firms, Small loan
Vendors, and Finance Companies
 Security Brokers and Dealers
 Credit Union and Other Thrift Institutions
Service Areas in the Modern Bank
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The Credit Loan function
The payments (transactions)
The Thrift (Saving)
The investment/financial planning function
The real estate and community developments
function
 The cash management function
 The merchant banking (temporary stock
investment)
 The investment banking (security
underwriting)
 The security brokerage (trading)
 The insurance (risk management)
Services banks offers to the public
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Currency exchange
Discounting commercial notes
Saving deposits
Demand deposit
Trust services….
Granting consumer loans (City Bank)
Financial advisory
Cash management
Equipment leasing service
Insurance policies
Retirement plans
Dealing in securities
 Security brokerage
 Offering mutual funds and annuities
 Merchant banking
The fundamental forces of change
… increased competition
 Competition for deposits
 Competition for loans
 Competition for payment services
 Competition for other financial services
Basel Committee
 The Basel Committee on Banking Supervision
provides a forum for regular cooperation on
banking supervisory matters. Its objective is to
enhance understanding of key supervisory
issues and improve the quality of banking
supervision worldwide. It seeks to do so by
exchanging information on national supervisory
issues, approaches and techniques, with a view
to promoting common understanding
 At times, the Committee uses this common
understanding to develop guidelines and
supervisory standards in areas where they are
considered desirable. In this regard, the
Committee is best known for its international
standards on capital adequacy; the Core
Principles for Effective Banking Supervision;
and the Concordat on cross-border banking
supervision.
Prudential Regulations (SBP)
 Prudential Regulations for Agriculture Financing
 Prudential Regulations for Corporate /
Commercial banking
 Prudential Regulations for SMEs Financing (as
of 31st January, 2009)
 Prudential Regulations for Consumer Financing
(as of 31st January, 2009)
 Prudential regulations for Micro Finance Banks
commercial Banking