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SUBJECT: Banking Laws and Practices Assignment # 1 SUBMITTED TO: PROF. Khalil Rao SUBMITTED BY: M.Qasim zafar M. Aleem Ashraf Rana Ali Hamza

(MBA 3rd SMASTER)

FINANCIAL INSTITUTIONS
INTRODUCTION:
A financial institution is any organization in the business of moving, investing or lending money, dealing in financial instruments or providing financial services. Banking section plays important role in national & international business. Includes commercial banks, federal and state savings banks, savings and loan associations and credit unions. Refers to any bank, credit unions or other entity that distribute cash. Banking section plays important role in national & international business.

INTERMEDIARIES:
Most of the people do not enter financial markets directly but use intermediaries or middlemen. Commercial banks are the financial intermediary we meet most often in macroeconomics, but mutual funds, pension funds, credit unions, savings and loan associations, and to some extent insurance companies are also important financial intermediaries. A person who has extra money could, of course, seek out borrowers himself and bypass the intermediary.

DIFFERENT FINANCIAL INSTITUTIONS IN PAKISTAN:

Sr#

Name of Bank

NATIONALIZED COMMERCIAL BANKS 1 2 3 4

First Women Bank Ltd Habib Bank Limited National Bank of Pakistan United Bank Limited

DE-NATIONALIZED BANKS
5 6

Allied Bank of Pakistan Ltd Muslim Commercial Bank Ltd

SPECIALIZED SCHEDULED BANKS

7 8 9 10

Agricultural Development Bank of Pakistan Federal Bank for Co-operatives Industrial Development Bank of Pakistan Punjab Provincial Co-operative Bank Ltd

PRIVATE SCHEDULED BANKS

11 12 13

Askari Commercial Bank Ltd Bank Alfalah Limited Bank Al-Habib Limited

14 15 16 17 18 19 20 22 23

Bolan Bank Limited Faysal Bank Limited Meezan Bank Limited Metropolitan Bank Limited PICIC Commercial Bank Ltd Platinum Commercial Bank Ltd Prime Commercial Bank Ltd Soneri Bank Limited Union Bank Limited

PROVINCIAL BANKS
24 25

The Bank of Khyber The Bank of Punjab

MICRO FINANCE BANKS

27

The First Micro Finance Bank Limited

DEVELOPMENT FINANCIAL INSTITUTIONS

28 29. 30 31. 32.

Investment Corporation of Pakistan National Investment Trust Limited Pak Kuwait Investment Company(Pvt) Limited Pak Libya Holding Company (Pvt) Limited Pak Oman Investment Company (Pvt) Limited

33. 34. 35.

Pakistan Industrial Credit & Investment Corp. Ltd. Saudi Pak Industrial & Agricultural Investment Company (Pvt) Limited SME Bank Limited

INVESTMENT BANKS
36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. `

First Standard Investment Bank Limited Asset Investment Bank Limited Atlas Investment Bank Limited Crescent Investment Bank Limited Escorts Investment Bank Limited Fidelity Investment Bank Limited First International Investment Bank Limited Franklin Investment Bank Limited Islamic Investment Bank Limited Jehangir Siddiqui Investment Bank Limited Orix Investment Bank (Pak) Limited Prudential Investment Bank Limited Security Investment Bank Limited Trust Investment Bank Limited

The Role of Financial Institutions in Trade & Business

Financial institutions play an important and active role in the economic growth and development of a country. If the Financial institution system in a country is effective, efficient and disciplined it brings about a rapid growth in the various sectors of the economy. The following is the significance of financial institutions in the economic development of a country. 1. Banks promote capital formation 2. Investment in new enterprises 3. Promotion of trade and industry 4. Development of agriculture 5. Balanced development of different regions 6. Influencing economy activity 7. Implementation of Monetary policy 8. Monetization of the economy 9. Export promotion cells

1. Banks promote capital formation:

Commercial banks accept deposits from individuals and businesses, these deposits are then made available to the businesses which make use of them for productive purposes in the country. The banks are, therefore, not only the store houses of the countrys wealth, but also provide financial resources necessary for economic development.

2. Investment in new enterprises:

Businessmen normally hesitate to invest their money in risky enterprises. The commercial banks generally provide short and medium term loans to entrepreneurs to invest in new enterprises and adopt new methods of production. The provision of timely credit increases the productive capacity of the economy.

3. Promotion of trade and industry:

With the growth of commercial banking, there is vast expansion in trade and industry. The use of bank draft, check, bill of exchange, credit cards and letters of credit etc has revolutionized both national and international trade.

4. Development of agriculture:
The commercial banks particularly in developing countries are now providing credit for development of agriculture and small scale industries in rural areas. The provision of credit to agriculture sector has greatly helped in raising agriculture productivity and income of the farmers.

5. Balanced development of different regions:

The commercial banks play an important role in achieving balanced development in different regions of the country. They help in transferring surplus capital from developed regions to the less developed regions.

The traders, industrialist etc of less developed regions is able to get adequate capital for meeting their business needs. This in turn increases investment, trade and production in the economy.

6. Influencing economic activity:

The banks can also influence the economic activity of the country through its influence on a. Availability of credit b. The rate of interest If the commercial banks are able to increase the amount of money in circulation through credit creation or by lowering the rate of interest, it directly affects economic development. A low rate of interest can encourage investment.

7. Implementation of Monetary policy:

The central bank of the country controls and regulates volume of credit through the active cooperation of the banking system in the country. It helps in bringing price stability and promotes economic growth with in the shortest possible period of time.

8. Monetization of the economy:

The commercial banks by opening branches in the rural and backward areas are reducing the exchange of goods through barter. The use of money has greatly increased the volume of production of goods. The non monetized sector (barter economy) is now being converted into monetized sector with the help of commercial banks.

Role of Banks in 21st century

The commercial banks are now not confined to local banking. They are fast changing into global banking i.e., understanding the global customer, using latest information technology, competing in the open market with high technology system, changing from domestic banking to investment banking etc.

The commercial bank is now considered the nerve system of all economic
development in the country.

Financial Institutions

Savings

Growth

Business Investment

Under this scenario the financial institutions in an economy creates an opportunity. In this model the financial institutions leads to the official savings rates, which in turn lead to business investment, further growing the economy and resulting in a high level of financial institutions.