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Lecture Retail and merchant banking – Lecture 6

After studying this chapter you will be able to understand: What is mean by schedule and non- schedule banks? What are the primary functions of commercial banks? What is agency service means in commercial banking? Central Bank - SBP | Lecture 6 Revision 1 Lecture 6 - Revision Q1: What is mean by schedule and non- schedule banks? Gives examples. 2 Lecture 6 - Revision What are the primary functions of commercial banks? 3 Lecture 6 - Revision What is agency service means in commercial banking? 4 Lecture 7 5 Central Bank - SBP 6 Central Bank The banking system of a country can work systematically and in a coordinated manner only if there is an apex institution to direct the activities of the banks. Such an apex institution is popularly known as Central Bank. 7 Central Bank There is no standard terminology for the name of a Central bank. Many countries use the form, for example, Bank of England, Bank of Canada and Bank of Russia. Some are styled as national banks, such as the National Bank of Ukraine. Some countries may incorporate the word ‘central’ for example, European Central Bank and Central Bank of Ireland. 8 Central Bank The central bank of a country is an autonomous institution, entrusted with powers of control | Lecture 6 Revision 1 Lecture 6 - Revision Q1: What is mean by schedule and non- schedule banks? Gives examples. 2 Lecture 6 - Revision What are the primary functions of commercial banks? 3 Lecture 6 - Revision What is agency service means in commercial banking? 4 Lecture 7 5 Central Bank - SBP 6 Central Bank The banking system of a country can work systematically and in a coordinated manner only if there is an apex institution to direct the activities of the banks. Such an apex institution is popularly known as Central Bank. 7 Central Bank There is no standard terminology for the name of a Central bank. Many countries use the form, for example, Bank of England, Bank of Canada and Bank of Russia. Some are styled as national banks, such as the National Bank of Ukraine. Some countries may incorporate the word ‘central’ for example, European Central Bank and Central Bank of Ireland. 8 Central Bank The central bank of a country is an autonomous institution, entrusted with powers of control and supervision of the monetary and banking system of the country. Its primary responsibility is to maintain the stability of the national currency and money supply. 9 Central Bank In addition, its active duties include controlling subsidized loan interest rates, acting as a ‘bail out’ lender of last resort to the banking sector during times of financial crisis, as banker’s bank and as custodian of the foreign currency reserves and the government treasury. It may also have supervisory powers to ensure that banks and other financial institutions do not behave recklessly or fraudulently. 10 Central Bank Functions of Central Bank 11 Central Bank Functions The main functions of a Central Bank are common all over the world. But the scope and content of policy objectives may vary with respect to the country of origin, the period and depending on the country’s economic situations. Generally, all Central Banks aim at achieving economic stability along with a high growth rate and a favourable