Financial Domain
Financial Organizations
banks
insurance companies
credit card companies
consumer finance companies
stock brokerage
investment funds
Financial Services
Loans
Credit Cards
Currency Exchange
Fund Transfer
Types
Banking
Non Banking
Difference
NBFC cannot accept demand deposits
NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself
Deposits in NBFCs are not insured
NBFI
Development Finance Companies
Investment Companies
Leasing Companies
Brokerage Firms
Foreign Exchange Companies
finance to public and private sector
invest money on behalf of its shareholders
raise finance to pay for assets,
buying and selling of financial securities
National Bank of Agriculture and Rural Development(NABARD)
Indian Finance Corporation of India(IFCI)
Franklin Templeton Investment
Fidelity
Infrastructure limited and Financial Services(IL&FS)
ARVAL
History of Banking
18th Century, Bank of Hindustan (1770-1829)
promote development
funded by government
securities, properties, debts, other funds
shareholders in turn share profits and losses resulting from investment in assets
entities in business
lessor
lessee
owner of asset
who takes the asset on lease
selects a asset which may be a vehicle, equipment or software
is a financial company
purchase assets and lease to customer
company will get rentals or installments from customer for use of that asset
will cover the cost of asset and earn interest from the rentals
intermediary between buyers and sellers
compensated via commission
when a trade order for a stock is carried out, an individual often pays a transaction fee or commission for the brokerage company's efforts to execute the trade. Some of the examples are Kotak Securities limited and Reliance Money who operate in India.
currency exchange
international payments
buy and sell currency notes and traveler cheques
eg: Thomas Cook, Western Union Money Transfer
Middle French "banque"
Medici Bank
Giovanni Medici in 1397
Monte dei Paschi di Siena
Sienna,Italy
1472
in 16th Century, Europe
20th Century
major changes in bank operations
telecommunications and computing
increase in size and geographic spread
Oldest and Still in existence
State Bank of India
Banking System-Global Prespective
Bank of International Settlement(BIS), Basel, Switzerland
Privately Owned Central Banks(Swiss National Banks)
central institution which manages a country’s currency, interest rates and money supply thereby regulating all banking activities in their respective countries
Mixed Ownership Central Banks(Bank of Japan,
Government Owned Central Banks(Reserve Bank of India)
The central bank is the banker of other banks in the country. It does not deal with public but deals with other banks
They are owned by private individuals and public institutions like cantons and cantonol banks
The confederation or government has no ownership in the bank
BIS does not accept deposits from, or provide financial services to, private individuals or corporate entities
offers a wide range of financial services specifically designed to assist central banks and other official monetary institutions in the management of their foreign exchange reserves
How Banks Make Money
Net Interest Income(NII)
Trading Profits
Fees and Commissions
The net interest is the difference between the interest charged on the customer for the loan and the interest given to the customer on their deposit
primary source of revenue for a bank
a bank may indulge into various trading activities like investing funds in shares and securities and earn income from the investments
income is high when compared to NII