7/30/2019 Banks Types
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KINDS OF BANKSTypes of Banks on the basis of sphere of
activities:
The commercial banks are classified into various types on the
basis of their spheres of activities, ownership, domicile etc. The
main types of banks in Pakistanare as under:-
(A) Classification on the basis of functions(1) Every civilized
country now has its own central bank. The primary function of the
central bank is to regulate the flow of money and credit in order
to promote efficiency, stability and growth in the country. In
Pakistan State Bank of Pakistan, is the countrys central bank. (In
England it in Bank of England, in America it is the Federal Reserve
System).
(2) Commercial Banks.Commercial Banks are those banks which are
engaged in performing the routine duties of banking business. They
collect surplus money from the people. They make loans and advances
in the form of overdrafts, cash credits, discounting bills
ofexchange. Commercial banks also manufacture credit money. They
also provide agency services and general utility services. The
banks, in short are considered thelifeblood of the economic
society. In Pakistan National Bank of Pakistan, United Bank
Limited, Habib Bank Limited, etc. are performing the functions of
commercial banks
(3) Exchange Banks.Exchange banks mainly deal with international
trade. These banks take the responsibility of settlement of foreign
exchange and arrange the foreign business. InPakistan, all the
nationalized commercial banks have been allowed to do the business
of exchange banks.
(4) Saving Banks.Saving banks are those banks which collect and
keep the small savings of the public. They are called thrift
promoting institutions. The saving banks invest thefunds in the
safest government securities. Post offices and saving centers
perform the business of saving banks in Pakistan.
(5) Agricultural Banks.
Agricultural banks are set up to provide financial assistance to
the agriculturists. The agricultural banks provide short term
credit to the farmers for the purchase of seeds, manure, etc. They
also make medium term advances for buying tractors and introducing
modern techniques in farming. In Pakistan, Agricultural Development
Bank of Pakistan was set up in 1981 for meeting the financial
requirement of agriculture.
(6) Industrial Banks.The industrial banks mainly provide medium
and long term credit to the industries. Since the industrial banks
have long term deposits, they are in a position topermit long term
investment in industries. In Pakistan, the Industrial Development
Bank (IDBP) was set up in 1961. The other institutions engaged in
providingfinancial assistance to industries are PICIC, NDFC, ICP,
etc.
(B) Classification on the basis of ownership(7) The banks are
classified, on the basis of ownership, into three categories i.e.,
(i) Public sector banks, (ii) Private sector banks, (iii)
Cooperative banks.(a) Public sector banks.They are owned and
controlled by the government such as National Bank, Habib Bank
etc.(b) Private sector banks.These are owned by corporations such
MCB, ABL, City Bank etc.
