Eco Project

Introduction to Money Banking & Public Finance
Project by: Amrita Singhal Bhumika Mistry Krupi Asher Swati Agarwal Shraddha Shikhare Vishwa Vyas
INTRODUCTION TO MONEY BANKING

The economics of money banking is integral to the proper functioning of the banking system of an economy. It not only prevents overheating of the economy by letting appropriate quantity of money flow in the economy.
BASICS OF MONEY BANKING

The definitive money in the nation that consists of all the base money in private hands comes from the monetary base created by the Fed. Besides this money(in the particular country's currency) is also held by government and foreign central banks but this is not included in the Federal Reserve notes. So far so good, the quantity of money in circulation is ultimately decided by the public.
The central bank just replenishes the lost reserves. The liquidity of the banking system is in jeopardy if the attempts made by the central bank fails. There is a monetary crisis and a deflationary situation is created. The interest rate adjustment then comes into play to correct the situation.
TYPES OF BANKS
THERE ARE TWO TYPES OF BANK: 1)COMMERICIAL BANK:THERE IS A LARGE NETWORK OF DIFFERENT COMMERCIAL BANKS IN A COUNTRY WHICH ARE CONTROLLED BY CENTRAL BANK. 2)CENTRAL BANK:THERE IS ONLY ONE CENTRAL BANK FOR THE WHOLE COUNTRY.
Commercial Bank
According to Banking Regulation Act,1949,accepting for the purpose of lending or investment of deposits of money from the public repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise. In other words Commercial Bank is also called profit making organization. It plays an important role in Money Economy.
Features of Commercial Bank

A bank is financial institution which deals with money and other related services. It plays a vital role in modern business, without which it would be difficult to conduct business activities. It is a vital aid to trade. A bank provides number of services to its customers like direct payment and receiving money.
The bank advances short term, medium term and even long term loans. The bank accepts deposits from the public. The bank operates with cash and bank money.
Functions of Commercial Bank

Primary Functions
Accepting Deposits Advancing Loans 1)Current Account 2)Savings Account 3)Fixed Deposit Account 4)Recurring Deposit A/c 1)Overdraft 2)Cash-credit 3)Loans 4)Bills of Exchange Investments
Functions of Commercial Bank

Secondary Functions
Agency Functions General Utility Functions 1)Transfer of funds 1)Locker Facility 2)Collection of Cheques 2)Underwriting of Shares 3)Periodic Payments 3)Dealing with foreign exchange 4)Portfolio Management 4)Project reports 5)Periodic collections 5)Social welfare programmes
Central Bank
The Central Bank is the apex bank in the country. The Bank in any country, which has been entrusted the duty of regulating the volume of currency and credit in the country . Central bank came into existence since the 19th century. Another major development in the central banking has been the establishment of federal reserve banks in USA under the control of Federal Reserve Boards. Many Central Banks were established after 1920. The most encouraging incentive for the growth of Central Banking has been the establishment of IMF(International Monetary Fund) as the overall controller of the central banks of the world to maintain exchange stabilizing and domestic price stabilizing. In India the Reserve Bank of India was established in 1935.
Functions of Central Bank

Functions of Central Bank
Monetary Functions 1)Issue of Currency Notes 2)Banker to Government 3)Banker s Bank 4)Credit Controller 5)Custodian of Foreign Exchange Reserves
Non Monetary Functions 1)Bank s Supervision 2)Development Functions 3)Data Collection 4)Research 5)Clearances
Methods of Credit Control

Credit Control measures refer to those measures adopted by RBI to increase or decrease the credit of money supply in the economy. If there is more money supply, it will lead to inflation and therefore RBI will adopt credit control measures to restrict money supply. The credit control measures can be broadly divided into two groups:
Credit Control Measures

Credit Control Measures
QUANTITATIVE General Credit Controls 1) Bank Rate 2) Open Market Operations 3) Cash Reserve Ratio 4) Statutory Liquidity Ratio
QUALITATIVE Selective Credit Controls 1) Ceiling on Credit 2) Margin Requirements 3) Directives 4) Moral Suasion

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Introduction to Money Banking & Public Finance

INTRODUCTION TO MONEY BANKING

BASICS OF MONEY BANKING

Features of Commercial Bank

Functions of Commercial Bank

Functions of Commercial Bank

Functions of Central Bank

Methods of Credit Control

Credit Control Measures

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