Banking Notes for XII Chapter 1 Origin of Banking
“Short Question Answer”
Q1) Define Banking?
According to Kinley
ANS: A bank is an institution that provides loans to people according to their financial needs and safety and the people trust to
keep their money with them when they do not need it.
An establishment which makes to individuals such advances of
money, or other means of payment, as may be required and safely made and to
which individuals entrust money or the mean of payment when not required for
use by them.
Q2) Define the origin of Banking?
Origin of Banking
ANS: It is very difficult to trace out the exact origin of
Banks. It is said that the evolution of the Banking Business is as old as the
concept of money. Crowther says that the present-day banker has three ancestors:
1) Merchants,
2) Money lenders,
3) Goldsmiths.
A modern bank is something of these. It is believed that
people started keeping deposits of valuables and jewelry. Bank charged a
certain amount from the depositors for the services. Modern banks are
performing the same functions as performed by the goldsmiths and money lenders
of older days. Therefore it is believed that goldsmiths and moneylenders are
the ancestors of banks.
Long Question/Answer
Q1) Write the Banking history of Pakistan?
Banking History of Pakistan
ANS) In Pakistan banking sector was created with the setting
up of the Habib Bank in 1947, which was shifted to Karachi from Bombay, Muslim
Commercial Bank in 1948, and from Calcutta to Chittagong. After the partition of the
subcontinent Reserve Bank of India assumed the responsibility of performing
central banking functions in Pakistan Subsequently, the functions were taken
over by the state bank of Pakistan. Which was organized in July 1948. It’s one
of the main feats was the rescue of the Bank of Bahawalpur which had gone on
the brink of bankruptcy. The salvage by the state Bank wrote a glittering
history of banking stability in Pakistan.
In July 1974, all commercial banks were nationalized, and In
August 1991, their privatization started. In the late 80s private-sector
banking was allowed.
Q2) Describe the origin and evaluation of Modern Banking?
The Origin and Evaluation of
Modern Banking
A form of business organization that is established as a joint stock company or corporation for the purpose of dealing in money to solve
financial problems by the circulation of accumulated or deposited money in
public is called Modern Banking.
Origin and Background of
Banking
When people started to save precious metals like gold,
silver, and their ornaments and started to save their deposits to the prominent
and powerful person of society. After this some people were totally involved in
the process of keeping the deposits of public and it became a business. Many
trustworthy keepers of deposits started to keep the deposits from public with
conditions and interest. When money started to use as a source of exchange,
people began to deposit money to these persons, thus their trustworthy keepers
started to borrow money from people with an agreement of their profit and the
period of returning the deposited money. Keepers also started to land money to
other needy persons which they had been borrowed at a higher rate of interest.
They also started to pay interest at a low rate on deposited money. The process
of Banking was started and the concept of banking started to grow In which
Merchants, Money landers, and goldsmiths played a very important roles.
Evolution and Growth of Modern Banking
Modern Banking is not the result of an accident but it
was started because of man’s increasing demands and needs. Three parties or
sectors of society played a very important role for the evolution and growth of
Modern Banking.
The Process of Modern
Banking
In the middle of 12th century, the banking sector
started to grow in Italy. In the city of Venice, the first formal bank was
established in 1157 named “Bank of Venice”. After that, another bank was set up in 1587, named “Bank of Banco di Riatto” in Genoa. According to modern
banking experts, the first modern bank was established in 1964, in England, named
“Bank of England”. In Europe, the banks comprising the function of accepting
deposits and transferring money were formed at different times. German public
bank was established in 1401. The first bank was established in India named
“Bank of India”. After this many other banks were established in Madras and
Calcutta. In 1946 there was only 93 scheduled banks were working in India
having 3106 branches in all over India.
At the time of partition banking sector of Pakistan was in
miserable condition but with the passage of time, it grew very rapidly. At the
time of partition, there were only 487 branches of scheduled banks in west Pakistan, which reduce to 81 in June
1948. Quaid-e-Azam Muhammad Ali Jinnah inaugurated the state bank of Pakistan
on July 1 1948, As the Central Bank of Pakistan started to create a national Banking
System in Pakistan. National Bank was established in 1949. The process of
privatization of commercial banks was started in August 1991 which is
continuing till now.
