Description
This is a presentation explaining definition of bank, history of banking, history of money and other contributory sectors to banking and finance.
The Part 1 Para 5(ii)c of Banking Regulation Act 1949 states that : "banking company" means any company which transacts the business of banking. Para 5(ii)b explains that : "banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise. It further explains : Explanation: Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause
A bank could be a privately owned organization (a public limited company) or state owned, which: ?provides financial services ?receiving deposits of money ?lends money out of such funds ?Even can lend more than that available fund, when they raise funds from the market under permissible process. ?Some banks issue banknotes as legal tender (called Banks of issue – major function of Central Bank). ? ?offers ancillary services like rent safe deposit boxes, issue credit cards, provide ATM service etc.
?Does investments for the customers
?In one of the earliest codes of law, compiled by Hammurabi, king of Babylon (a part of modern Iraq) from 1792 to 1750 BC, several paragraphs were devoted to banking. ?By c 1000 BC in Babylon the transfer of bank deposits to a third party was common, and the palace or temple extended loans from its own assets.
?The Greeks established private banks, which accepted deposits and acted as agents in the settlement of debts. Pasion of Athens, a famous 4th-century BC banker, invested his own funds and those of his depositors in commercial ventures.
?Roman bankers acted as money changers, auctioneers, discounters and creditors; they formed a banking association and maintained something similar to a modern current accounts system. Continued……………….
?A semblance of banking system was devised around AD 1100 during the Crusade (AD 1095 to 1291) which was raging in Jerusalem for funding the fighting Catholics. ?But the root of modern day banking can be traced in Italy during the middle ages. ?The word Bank was derived from the Italian word Banco which means desk of more accurately bench. In the northern towns of Italy Bankers (say money lenders) used to transact their deals sitting on a bench in the open market and their set up used to be called “banco”. ?Later it was formalized and flourished in northern of Italy along with Renaissance i.e. during the 14th Century. ?Medici Bank of Florence run by Medici Family who led the Renaissance in Italy and produced three Popes was established in 1397 and was closed down in 1494. in 15th century it was the most respected bank of Europe.
Continued………
?The root of modern day banking can be traced in Italy during the middle ages. ?The word Bank was derived from the Italian word Banco which means desk or more accurately bench. In the northern towns of Italy Bankers (say money lenders) used to transact their deals sitting on a bench in the open market and their set up used to be called “banco”. ?Later it was formalized and flourished in northern of Italy along with Renaissance i.e. during the 14th Century. ?15th century AD saw rapid growth of banking in the mainland Europe. In 1401, the Bank of Barcelona was founded. In 1407, the Bank of St George was founded in Genoa. ?Medici Bank of Florence run by Medici Family who led the Renaissance in Italy and produced three Popes was established in 1397 and was closed down in 1494. in 15th century it was the most respected bank of Europe. Continued………
? The Barclays was established in 1690 founded by John Freame whose son in law James Barclay changed its name to the present one. ?The Bank of England was founded in 1694 to act as the Government's banker and debt-manager. Since then its role has developed and evolved, centred on the management of the nation's currency and its position at the centre of the UK
?The Bank of the United States, a central bank founded in 1791 at the initiative of the nation's first Secretary of the Treasury, Alexander Hamilton. Its Congressional charter expired in 1811. A second Bank of the United States was created in 1816 and operated until 1832. ?Federal & Reserve System (of US) was created in 1913 as a quasi-public (part private, part government) banking system.
?Banca Monte dei Paschi di Siena SPA, Italy, is the oldest surviving bank in the world, founded in 1472 and still operating.
?Cattle, which include anything from cows, to sheep, to camels, are the first and oldest form of money : 9,000 -- 6,000
BC.
?With the advent of agriculture came the use of grain and other vegetable or plant products as a standard form of barter in many cultures : 6,000 BC onwards.
?The cowries, the shell of a mollusk, were used as money in China first. Historically, many societies have used cowries as money, and even as recently as the middle of the last century, The cowries are the most widely and longest used currency in history : 1,200 BC
?First metal coins came in china as well, curiously, in the shape of cowries. Cowry looks like this: :1,000 BC
?The first golden coins in history were coined by Lydian (a part of modern Turkey) king Croesus, around 560 BC. ?The transition from metallic money to paper money saw the use of leather money, used in China, in the form of onefoot-square pieces of white deerskin with colorful borders : 118 BC. ?The first paper banknotes widely used, again, in China, who experienced over 500 years of early paper money, spanning from the ninth through the fifteenth century. Over this period, paper notes grew in production to the point that their value rapidly depreciated and inflation soared. Then beginning in 1455, the use of paper money in China disappeared for several hundred years. ?In 1661, the Bank of Stockholm created the first banknotes in Europe.
1818: establishment of the Oriental Life Insurance Company in Calcutta 1912: The Indian Life Assurance Companies Act 1928: The Indian Insurance Companies Act update 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized 1907: The Indian Mercantile Insurance Ltd.
Contd…..
1957: General Insurance Council, frames a code of conduct 1968: The Insurance Act amended to regulate investments, set minimum solvency margins and the Tariff Advisory Committee set up 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973 1993: Malhotra Committee [which recommended entry of private sector into insurance, without supporting or opposing entry of foreign insurance companies] 1999: IRDA Bill
MANAGEMENT
The Authority is a ten member team consisting of: A Chairman 5 whole time members & 4 part time members.
ACTIVITIES
Framing regulations Registering the private sector insurance companies Issue and renewal of licenses to agents
Mostly Cash Rich : Significant player in the Call Money market. Also significant player in Re-discounting market. Offer products for the bank retail customers.
Company HDFC Standard ICICI Prudential Birla SunLife Tata AIG Old Mutual KM SBI Life ING Vysya Allianz Bajaj MetLife AMP Sanmar Aviva LIC
Banks Tie ups Union Bank of India, Indian Bank, HDFC Bank Federal Bank, ICICI Bank, Bank of India, Punjab & Maharashtra Cooperative Bank, Allahabad Bank, South Indian Bank, Citibank Citibank, Deutsche Bank, IDBI Bank, Development Credit Bank, Bank of Rajasthan HSBC, Citibank, Bank of Rajasthan, IDBI Bank None SBI , BNP Paribas Vysya Bank Standard Chartered Bank Dhanalakshmi Bank , J&K Bank, Karnataka Bank None ABN Amro, American Express, Canara Bank, Lakshmi Vilas Bank Corporation Bank, Oriental Bank of Commerce, Nedungadi Bank, Central Bank of India, Indian Overseas Bank, Bank of Punjab
LI FE I N S RERS U Bajaj Allianz Life Ins urance Company Limited . Birla S Life Ins un urance Co. Ltd H DFC S tandard Life Ins urance Co. Ltd ICICI Prudential Life Ins urance Co. Ltd IN G Vys Life Ins ya urance Company Ltd. Life Ins urance Corporation of IndiaYogaks hema M ax N ew York Life Ins urance Co. Ltd M et Life India Ins urance Company Pvt. Ltd. Kotak M ahindra Old M utual Life Ins urance Limited S Life Ins BI urance Co. Ltd Tata AIG Life Ins urance Company Limited Reliance Life Ins urance Company Limited. Aviva Life Ins urance Co. India Pvt. Ltd. S ahara India Life Ins urance Co, Ltd. S hriram Life Ins urance Co, Ltd.
N O N LI FE I N SU RER Bajaj Allianz General Insurance Co. Ltd. ICICI Lombard General Insurance Co. Ltd. IFFCO Tokio General Insurance Co. Ltd. National Insurance Co.Ltd. The New India Assurance Co. Ltd. The Oriental Insurance Co. Ltd. Reliance General Insurance Co. Ltd. Royal S undaram Alliance Insurance Co. Ltd Tata AIG General Insurance Co. Ltd. Peninsula Corporate Park, United India Insurance Co. Ltd. Cholamandalam MS General Insurance Co. Ltd. HDFC-Chubb General Insurance Co. Ltd. Export Credit Guarantee Corporation of India Ltd. Agriculture Insurance Co. of India Ltd.
Capital Market Brokers or Stockbrokers. Call Money Market Brokers Foreign Exchange Dealing Brokers or Forex Brokers.
? Execution-only, which means that the broker will only carry out the client's instructions to buy or sell. ? Advisory dealing, where the broker advises the client on which shares to buy and sell, but leaves the final decision to the investor. ? Discretionary dealing, where the stockbroker ascertains the client's investment objectives and then makes all dealing decisions on the client's behalf.
What is Call Money Market ?Market in which bankers (& other participants) borrow (and lend) money to manage their treasury needs or for assets and liabilities is call money market. ?This is the market for very short term funds, ranging from ‘overnight’ to 14 days. known as money on call. The rate at which funds are borrowed in this market is called `Call Money rate'.
?The size of the market for these funds in India is between Rs. 60,000 million to Rs. 70,000 million, of which public sector banks account for 80% of borrowings and foreign banks/private sector banks account for the balance 20%. ?Non-bank financial institutions like IDBI, LIC, GIC, Mutual Funds etc participate only as lenders in this market, because of their huge short term cash positions. 80% of the requirement of call money funds is met by the non-bank participants and 20% from the banking system. ?The Brokers who deal between such lenders and borrowers are the Call Money Market brokers.
? The banks, who are authorized dealers of foreign exchange as licensed to do so by RBI, need to buy and/or sell foreign currency on a daily basis.
? The office of the bank which is entrusted with this job is called the ‘dealing room’ and the official who actually does the job is called the ‘forex dealer’ or only ‘dealer.’ This is the front office of the foreign currency business of the bank. ? Instead of the dealers themselves looking for who they can buy from or who they can sell to, a set of people/firms with required skill and proficiency come in between the dealers of two banks (authorized dealers) in a sell/buy foreign currency transaction. They are the Foreign Exchange Brokers.
? They too are licensed by RBI to carry on this business under set guidance and dos and don’ts. ?They receive their brokerage for the services rendered.
doc_102913297.ppt
This is a presentation explaining definition of bank, history of banking, history of money and other contributory sectors to banking and finance.
The Part 1 Para 5(ii)c of Banking Regulation Act 1949 states that : "banking company" means any company which transacts the business of banking. Para 5(ii)b explains that : "banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise. It further explains : Explanation: Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause
A bank could be a privately owned organization (a public limited company) or state owned, which: ?provides financial services ?receiving deposits of money ?lends money out of such funds ?Even can lend more than that available fund, when they raise funds from the market under permissible process. ?Some banks issue banknotes as legal tender (called Banks of issue – major function of Central Bank). ? ?offers ancillary services like rent safe deposit boxes, issue credit cards, provide ATM service etc.
?Does investments for the customers
?In one of the earliest codes of law, compiled by Hammurabi, king of Babylon (a part of modern Iraq) from 1792 to 1750 BC, several paragraphs were devoted to banking. ?By c 1000 BC in Babylon the transfer of bank deposits to a third party was common, and the palace or temple extended loans from its own assets.
?The Greeks established private banks, which accepted deposits and acted as agents in the settlement of debts. Pasion of Athens, a famous 4th-century BC banker, invested his own funds and those of his depositors in commercial ventures.
?Roman bankers acted as money changers, auctioneers, discounters and creditors; they formed a banking association and maintained something similar to a modern current accounts system. Continued……………….
?A semblance of banking system was devised around AD 1100 during the Crusade (AD 1095 to 1291) which was raging in Jerusalem for funding the fighting Catholics. ?But the root of modern day banking can be traced in Italy during the middle ages. ?The word Bank was derived from the Italian word Banco which means desk of more accurately bench. In the northern towns of Italy Bankers (say money lenders) used to transact their deals sitting on a bench in the open market and their set up used to be called “banco”. ?Later it was formalized and flourished in northern of Italy along with Renaissance i.e. during the 14th Century. ?Medici Bank of Florence run by Medici Family who led the Renaissance in Italy and produced three Popes was established in 1397 and was closed down in 1494. in 15th century it was the most respected bank of Europe.
Continued………
?The root of modern day banking can be traced in Italy during the middle ages. ?The word Bank was derived from the Italian word Banco which means desk or more accurately bench. In the northern towns of Italy Bankers (say money lenders) used to transact their deals sitting on a bench in the open market and their set up used to be called “banco”. ?Later it was formalized and flourished in northern of Italy along with Renaissance i.e. during the 14th Century. ?15th century AD saw rapid growth of banking in the mainland Europe. In 1401, the Bank of Barcelona was founded. In 1407, the Bank of St George was founded in Genoa. ?Medici Bank of Florence run by Medici Family who led the Renaissance in Italy and produced three Popes was established in 1397 and was closed down in 1494. in 15th century it was the most respected bank of Europe. Continued………
? The Barclays was established in 1690 founded by John Freame whose son in law James Barclay changed its name to the present one. ?The Bank of England was founded in 1694 to act as the Government's banker and debt-manager. Since then its role has developed and evolved, centred on the management of the nation's currency and its position at the centre of the UK
?The Bank of the United States, a central bank founded in 1791 at the initiative of the nation's first Secretary of the Treasury, Alexander Hamilton. Its Congressional charter expired in 1811. A second Bank of the United States was created in 1816 and operated until 1832. ?Federal & Reserve System (of US) was created in 1913 as a quasi-public (part private, part government) banking system.
?Banca Monte dei Paschi di Siena SPA, Italy, is the oldest surviving bank in the world, founded in 1472 and still operating.
?Cattle, which include anything from cows, to sheep, to camels, are the first and oldest form of money : 9,000 -- 6,000
BC.
?With the advent of agriculture came the use of grain and other vegetable or plant products as a standard form of barter in many cultures : 6,000 BC onwards.
?The cowries, the shell of a mollusk, were used as money in China first. Historically, many societies have used cowries as money, and even as recently as the middle of the last century, The cowries are the most widely and longest used currency in history : 1,200 BC
?First metal coins came in china as well, curiously, in the shape of cowries. Cowry looks like this: :1,000 BC
?The first golden coins in history were coined by Lydian (a part of modern Turkey) king Croesus, around 560 BC. ?The transition from metallic money to paper money saw the use of leather money, used in China, in the form of onefoot-square pieces of white deerskin with colorful borders : 118 BC. ?The first paper banknotes widely used, again, in China, who experienced over 500 years of early paper money, spanning from the ninth through the fifteenth century. Over this period, paper notes grew in production to the point that their value rapidly depreciated and inflation soared. Then beginning in 1455, the use of paper money in China disappeared for several hundred years. ?In 1661, the Bank of Stockholm created the first banknotes in Europe.
1818: establishment of the Oriental Life Insurance Company in Calcutta 1912: The Indian Life Assurance Companies Act 1928: The Indian Insurance Companies Act update 1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized 1907: The Indian Mercantile Insurance Ltd.
Contd…..
1957: General Insurance Council, frames a code of conduct 1968: The Insurance Act amended to regulate investments, set minimum solvency margins and the Tariff Advisory Committee set up 1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973 1993: Malhotra Committee [which recommended entry of private sector into insurance, without supporting or opposing entry of foreign insurance companies] 1999: IRDA Bill
MANAGEMENT
The Authority is a ten member team consisting of: A Chairman 5 whole time members & 4 part time members.
ACTIVITIES
Framing regulations Registering the private sector insurance companies Issue and renewal of licenses to agents
Mostly Cash Rich : Significant player in the Call Money market. Also significant player in Re-discounting market. Offer products for the bank retail customers.
Company HDFC Standard ICICI Prudential Birla SunLife Tata AIG Old Mutual KM SBI Life ING Vysya Allianz Bajaj MetLife AMP Sanmar Aviva LIC
Banks Tie ups Union Bank of India, Indian Bank, HDFC Bank Federal Bank, ICICI Bank, Bank of India, Punjab & Maharashtra Cooperative Bank, Allahabad Bank, South Indian Bank, Citibank Citibank, Deutsche Bank, IDBI Bank, Development Credit Bank, Bank of Rajasthan HSBC, Citibank, Bank of Rajasthan, IDBI Bank None SBI , BNP Paribas Vysya Bank Standard Chartered Bank Dhanalakshmi Bank , J&K Bank, Karnataka Bank None ABN Amro, American Express, Canara Bank, Lakshmi Vilas Bank Corporation Bank, Oriental Bank of Commerce, Nedungadi Bank, Central Bank of India, Indian Overseas Bank, Bank of Punjab
LI FE I N S RERS U Bajaj Allianz Life Ins urance Company Limited . Birla S Life Ins un urance Co. Ltd H DFC S tandard Life Ins urance Co. Ltd ICICI Prudential Life Ins urance Co. Ltd IN G Vys Life Ins ya urance Company Ltd. Life Ins urance Corporation of IndiaYogaks hema M ax N ew York Life Ins urance Co. Ltd M et Life India Ins urance Company Pvt. Ltd. Kotak M ahindra Old M utual Life Ins urance Limited S Life Ins BI urance Co. Ltd Tata AIG Life Ins urance Company Limited Reliance Life Ins urance Company Limited. Aviva Life Ins urance Co. India Pvt. Ltd. S ahara India Life Ins urance Co, Ltd. S hriram Life Ins urance Co, Ltd.
N O N LI FE I N SU RER Bajaj Allianz General Insurance Co. Ltd. ICICI Lombard General Insurance Co. Ltd. IFFCO Tokio General Insurance Co. Ltd. National Insurance Co.Ltd. The New India Assurance Co. Ltd. The Oriental Insurance Co. Ltd. Reliance General Insurance Co. Ltd. Royal S undaram Alliance Insurance Co. Ltd Tata AIG General Insurance Co. Ltd. Peninsula Corporate Park, United India Insurance Co. Ltd. Cholamandalam MS General Insurance Co. Ltd. HDFC-Chubb General Insurance Co. Ltd. Export Credit Guarantee Corporation of India Ltd. Agriculture Insurance Co. of India Ltd.
Capital Market Brokers or Stockbrokers. Call Money Market Brokers Foreign Exchange Dealing Brokers or Forex Brokers.
? Execution-only, which means that the broker will only carry out the client's instructions to buy or sell. ? Advisory dealing, where the broker advises the client on which shares to buy and sell, but leaves the final decision to the investor. ? Discretionary dealing, where the stockbroker ascertains the client's investment objectives and then makes all dealing decisions on the client's behalf.
What is Call Money Market ?Market in which bankers (& other participants) borrow (and lend) money to manage their treasury needs or for assets and liabilities is call money market. ?This is the market for very short term funds, ranging from ‘overnight’ to 14 days. known as money on call. The rate at which funds are borrowed in this market is called `Call Money rate'.
?The size of the market for these funds in India is between Rs. 60,000 million to Rs. 70,000 million, of which public sector banks account for 80% of borrowings and foreign banks/private sector banks account for the balance 20%. ?Non-bank financial institutions like IDBI, LIC, GIC, Mutual Funds etc participate only as lenders in this market, because of their huge short term cash positions. 80% of the requirement of call money funds is met by the non-bank participants and 20% from the banking system. ?The Brokers who deal between such lenders and borrowers are the Call Money Market brokers.
? The banks, who are authorized dealers of foreign exchange as licensed to do so by RBI, need to buy and/or sell foreign currency on a daily basis.
? The office of the bank which is entrusted with this job is called the ‘dealing room’ and the official who actually does the job is called the ‘forex dealer’ or only ‘dealer.’ This is the front office of the foreign currency business of the bank. ? Instead of the dealers themselves looking for who they can buy from or who they can sell to, a set of people/firms with required skill and proficiency come in between the dealers of two banks (authorized dealers) in a sell/buy foreign currency transaction. They are the Foreign Exchange Brokers.
? They too are licensed by RBI to carry on this business under set guidance and dos and don’ts. ?They receive their brokerage for the services rendered.
doc_102913297.ppt