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Banking Operation Operations of commercial banks are two sided: >Involve attracting funds from depositors. >Employment of funds in lacerative and viable investments >Banks is a business firm with aim to earn profit through funds that are banks own funds as well depositors funds.
Banking Operation Operations of commercial banks are two sided: >Involve attracting funds from depositors. >Employment of funds in lacerative and viable investments >Banks is a business firm with aim to earn profit through funds that are banks own funds as well depositors funds.
Copyright:
Attribution Non-Commercial (BY-NC)
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Banking Operation Operations of commercial banks are two sided: >Involve attracting funds from depositors. >Employment of funds in lacerative and viable investments >Banks is a business firm with aim to earn profit through funds that are banks own funds as well depositors funds.
Copyright:
Attribution Non-Commercial (BY-NC)
Verfügbare Formate
Als PPT, PDF herunterladen oder online auf Scribd lesen
sided: ►Involve attracting funds from depositors. ►Employment of funds in lacerative and viable investments ►Banks is a business firm with aim to earn profit through funds that are Banks own Funds as well depositors funds. ► Paid up Capital is amount on which a banking company is registered. ► Reserve Funds maintained by all banks at a time of declaring the Profit. ► Profit which is taken from the yearly earned gross profit and taken prior to distribution to depositors, sponsors or shareholders. Borrowed funds Depositors Funds Borrowing from the Central Bank The above two funds are the liabilities of the bank. Other Sources of funds are Charges, Fee, Commission that is earned from banking Service Funds received through interbank transaction by way of parking. EMPLOYMENT OF FUNDS ► Employment or application of funds by a bank is a profitable and source of safe utilization of available funds. ► Employment of funds explained in form of: ► Bank keep legal minimum reserve ratio of its demand and time liabilities with central bank ► To remain solvent bank has to keep sufficient cash in hand or access to cash to meet the probable demand for cash by the depositor. ►Funds that bank prefer to invest in those projects which yield a fair return and are less risky. ►There is unending tug of war on the use of funds between liquidity and safety on one hand and earning and profitability on the other. ►Funds that are place with Central Bank as statuary requirement is the capital of bank Utilization of Funds
Non Earning Assets
Non Earning Assets ►Cash Reserve ►Capital Assets Earning Assets of the Bank
Earning Assets of a Bank
►Money at call and short notice ►Bill discounted ►Investments ►Advances to customers Guiding Principles of application Employment of Funds ► Safety and deal in the borrowed money and act as trustee and custodian. ► Liquidity to keep the commitment of the withdrawals. ► Profitability ► Purpose of Service like Funding and Non Funding facilities ► Security of services given ► Spread of Risk ► National interest Summery
►|An ideal advance is one which is
granted to a reliable customer for an approved purpose against marketable securities is liquid and profitable. Sentimental and personal relation have no place in lending as a function. Loans Repayable at Short Notice
In order to earn profit with keeping reserves
for meeting cash requirement of the customer, bank tries to maintain effective balance between liquidity of its assets and profitability on assets For this maintenance bank keeps its assets in downward order on the liquidity and upward on cash availablilty. Loans repayable at short notice
►Call Loans are highly liquid Assets of the
bank and kept in money market for purchasing or discounting the documents. ►Investment in projects or transactions for various terms ►Advances to the customers like various kind of financing facilities