Banking

Banking Segmentation

Bank customers can be ultimately divided into two large groups; individuals and business customers. Each group can be subdivided into smaller segments; individuals can be subcategorised geographically (local and foreign customers), and most commonly demographically; whereas potential business customers can be segmented based on origination type, size, and location. National Bank of Kuwait (NBK) provides specialised banking solutions for both personal and business clients. Foreign Corporate Department in NBK offers services to multi-functional foreign firms operating in Kuwait, ranging from diplomatic missions to foreign airlines.

Domestically, NBK team develops financial solutions to business clients including the government, public and private companies and institutions. These services are designed to meet the needs of business clients ranging from Treasury, Investment Banking, Credit line services, and Trade Financing. When it comes to personal banking, the demographics segmentation approach is clearly visible in NBK marketing strategies. Offering banking services that match the needs of a wide spectrum of the society, children can have separated banking account, in which children can start up with “Zaina” account, a specific saving account designated for younger customers; and as they grow, they pass through different account types such as “alazrag” and “alshabab” until they reach the regular salaries account.

NBK also provides shopping cards for female customers, with special discounts and incentives earned when using these cards. National Bank of Kuwait has created an image utility by providing premium accounts, and targeted those with higher education level and income in the society. The holders of “Althahabi” gold cards enjoy the special care by the bank officers, and often receive exclusive offers that match their spending habits. Read about 

Insurance Markets

When it comes to individuals, psychographic and behavior segmentation is clearly needed to provide a comprehensive customer satisfaction. Customers sometimes seek insurance packages that match their lifestyle needs (Marine insurance packages target customers who spend their leisure time on sea activities such as sailing, fishing etc).

Values and benefits desired do play roles in segmenting consumer insurance market; for instance, consumers would value home insurance packages as a sort of security.

Other custumers would pay premium charges in order to gain the benefits from gold automobile insurance packages. Insurance companies take demographics into consideration when targeting customers. Elderly customers lean toward health insurance, and those with risky jobs might be interested in both life and accidental coverage. Hence, demographic, psychographic, and consumer behaviours are among the factors of insurance market segmentation.

Nepal being small country with small size of economy between two giant countries in term of size as well as in economy has great prospects for the establishment of foreign banks in order to promote of international trade and to welcome foreign investment. With the purpose to welcome foreign banks in proper manner and to fulfill the obligation after becoming a member of WTO in 23rd April 2004, policy to open branch office by foreign banks has been formed in 2010 by NRB with an objective to allow foreign banks and financial institution to conduct whole business which would ultimately help for the economic development of the country.

Though Nepal has made law for the establishment of foreign bank branch in 2010, entry of foreign bank in the form of joint-ventures could be seen from the much earlier time and number of private banks has been established with joint-venture of foreign banks after the establishment of democracy in 1990 and adoption of free-economy policy by the government.

First foreign bank that entered in Nepal was Standard Charter Bank in 1987, by forming joint-venture Bank as Standard Chartered Bank Nepal Limited, with a 70% share of Standard Chartered Group and remaining 30% share of Nepalese general public. Later on Nepal SBI Bank was established in 1993, as subsidiary of State Bank of India (SBI), with 55% equity share holding by SBI India and remaining 15% from local partner (Employment provident Fund) and 30% from general public.

Technical Service Agreement has been concluded between Nepal SBI Bank and SBI India, through which SBI India provide management support to Bank in Nepal. In the present context, there are almost 1000 employee are working in Nepal SBI Bank limited, with 76 branches all over Nepal and involved in conducting retail transactions.

Similarly, Punjab National Bank (PNB) of India has also entered in Nepal as a foreign Bank, through be establishment of joint-venture Bank as Everest Bank Limited. PNB being one of the largest nationalized bank of India has acquired 20% equity shareholding in Everest Bank of Nepal. PNB, as a joint venture partner has been providing management service to the Bank through the Technical Service Agreement. In the present Context, Everest Bank Limited has been conducting retail banking transactions through the 92 branches all over the country.

In the present, context we can see that various banks from foreign country has been entered to Nepal through means of establishment of joint ventures banks in Nepal. Most of the largest bank owned by the private sector has been established with the joint- venture of foreign banks, such as Nepal Bangladesh Bank is established with the joint- venture of IFIC Bank Limited, Bangladesh, Nepal Investment Bank previously known as Nepal Indosuez Bank limited was established as joint venture between Nepalese partner and French Company. Currently there are 5 foreign joint-venture banks out of 25 private bank are operating in Nepal.

However, Nepal has made WTO commitment in 2004 for allowing foreign bank to open branch office in Nepal and similarly has made law to allow the opening of foreign bank branch in 2010. There is no substantial effect of these initiatives because till date only Doha bank, one of the largest bank of Qatar has got license to open branch in Nepal as a foreign bank and it has opened its Nepal branch office in 19th December 2018.

Nepal has made various request to Chinese Banks to open branch office in Nepal as china itself is one of the largest trade partner of Nepal, However Nepal fails to welcome the Chinese bank to establishment the branch office despite of the various initiatives taken by the authority to welcome the Chinese Bank, till date China is not much willing open branch office to Nepal. Various analyst has said that major reasons behind the Nepal failure to welcome foreign bank is the requirement of high level of investment in comparison to less return, allowing to conduct only wholesale transaction where the size of market itself is small and the political instability.

Modes of operation of Foreign Banks in Nepal

Globally there are various modes where host country permits, foreign bank to conduct business. Depending Upon various factors such as size, need of market certain restriction are made over the foreign banks to conduct the business. Bank and Financial Institutions Act (BAFIA), has prescribed the various modes for the operation of foreign banks in Nepal, which are briefly discussed below:

Joint Banking Venture: It is the mode of operation where arrangement is made between the domestic bank of host country and the foreign bank, through the agreement to provide technical and other kinds of support for the conducting of business. Section 5 of BAFIA has made provision for the requirement of prior approval for the establishment of banks and financial institution on the  joint investment with foreign banks or organization. In Nepal, Everest bank limited, Nepal Bangladesh bank limited has been operating under this mode.

Banking Subsidiary: it is mode of operation where foreign bank establishes its subsidiary company on the host country through banking business is carried on. Foreign bank hold equity interest of the local subsidiary bank in the host country and control the activities of the bank in host country through directly or indirectly. Section 5 of BAFIA has made provision for the requirement of prior approval for establishment subsidiary banks and financial institution of foreign banks. In Nepal, Nepal SBI Bank limited has been established under this mode.

Foreign Bank Branch: it is a mode of operation where a branch of foreign bank is opened to the host country and acts as just a branch of other commercial banks. Section 6 of BAFIA has made provision for the requirement of prior approval for the opening of branch office by the international rated foreign bank, Similarly Nepal Rastra Bank (NRB) has made policy to open branch office by foreign banks 2010. In Nepal, Doha Bank has opened branch office in Kathmandu for the conducting of business transaction, however under this branch is only allowed to conduct wholesale tranasactions.

Licensing of foreign in Nepal

Licensing of subsidiary and joint-ventures banks Bank and Financial institution act, 2073 has made provision for the registration of subsidiary and joint-venture bank in Nepal. If any foreign bank is willing to establish subsidiary bank or establish joint-venture bank in Nepal, it has to take prior approval form the Nepal rastra bank.

While making application for the prior approval from NRB, foreign bank requires to furnish document such as certificate of registration and capital structure of foreign bank in home country, memorandum of association and Articles of Association of foreign bank, certificate of authorization provided by the regulator of home country for conducting banking business in Nepal, certified audit report of foreign bank, detailed plans for the business and the details of the place in Nepal for conducting business in Nepal.

Once foreign bank willing to start its business in Nepal has made application for the prior approval by furnishing above mentioned documents along with the document required for the domestic bank, NRB shall examine the application and document received for the prior approval and if satisfies with the document NRB within 120 days shall provide prior approval for the establishment of foreign bank. NRB while examining the application and document if finds that willing foreign bank does not meet the requirement then it shall deny to provide prior approval.
After receiving prior approval from NRB, foreign bank willing to establish subsidiary or Joint-Venture bank shall then register the bank and financial institution as a company under the Company

Act, 2063. Once subsidiary or joint-venture bank is registered under the company Act, it requires license to carry on financial transaction. Subsidiary or Joint-Venture Bank in order to get license from the NRB shall have make application along with the documents such as approval letter from the home country regulator of foreign bank to conduct financial transactions in Nepal, details of if any requirement that is not fulfilled by the willing bank and other document as prescribed by NRB. While examing the application and document furnish by foreign bank in pursuant to section 33, if NRB satisfies that it fulfills the requirement then NRB shall within 120 days provide license to carry on financial transaction.

Licensing of Foreign Bank Branch

Bank and Financial Institution Act,2073 and policy provision for opening branch office by foreign bank or financial institution in Nepal 2010 enacted by NRB mainly deals with licensing of foreign bank branch in Nepal.

If any internationally rated foreign bank is willing to open branch office in Nepal, it requires prior approval for the opening of the branch in Nepal , such foreign bank shall require to make application along with prescribed fee and required capital. Similarly, while making application for the approval foreign bank willing to establish branch office in Nepal shall furnish no-objection letter, letter mentioning that regulation and supervision of such branch shall be done in integrated manner by the regulator home country and Nepal jointly, letter indicating that banking company is at least rated as a BBB for continuous three year.

Once approval is received from the NRB, then again willing foreign bank shall make application to carry on financial transaction. While making application willing foreign bank is required to present prescribed document and fees (i.e. 5% of prescribed capital structure). Upon the examination of the document, if NRB satisfies that branch has fulfilled all the requirements then NRB shall provide approval to carry out financial transaction by the foreign bank.

Foreign bank willing to open the branch in Nepal and carry out financial transaction shall meet the capital structure of minimum 20 million US Dollar for a branch and if any foreign bank is willing to expand its branch from more than one then it requires additional 5 million US Dollar for each additional branch.

Permitted activities for the foreign Banks

Foreign banks in Nepal can enter through joint- venture or subsidiary mode and foreign Bank branch mode. Permitted activities for these two categories of banks are different. Foreign Banks that are established under joint-venture or subsidiary mode are considered equal to the domestic banks and once they get license for the commencement of business then they can perform activities listed in Section 49 of BAFIA, 2017 in accordance with their category.

While in context of foreign Bank Branch, they are only permitted to do whole sale transactions, they are only permitted to deal with large transactions rather than small transaction. Whole sale transactions includes acceptance of deposit of at least one hundred million rupees at once from one corporate entity, providing loan of at least two hundred million rupees for the infrastructure development project, involve in investment of securities issued by government and having more than one year maturity period.

Regulatory Framework of Foreign Banks in Nepal

In Nepal, any subsidiary bank, joint-venture bank established by the foreign bank along with the branch office established by the foreign bank falls under the scope of definition bank. Nepal Rastra Bank, as a central bank of the Nepal has statutory power to regulation, supervision and the give necessary direction to the bank and financial institutions. Section 5 of the Nepal Rastra Bank Act, 2002 has provided power to NRB to regulate, supervise and provide necessary directions to the bank and financial institution. Along with Nepal Rastra Bank Act, 2002 Bank and Financial Institution Act, 2073 made ample provisions for the regulation of Bank and financial institution with in Nepal.

Subsidiary bank or joint-venture bank established in Nepal is considered as a domestic bank and the all the regulatory rules, direction issued by the NRB for the purpose of the regulating domestic bank are equally applicable. Similarly in case of branch of foreign bank also, such branches are considered as a domestic bank registered in Nepal and unless otherwise is mentioned all the rules, by-laws, order, directions issued by the Nepal Rastra bank shall be equally applicable.

This indicates that though the procedures and formalities that is to be fulfilled by the foreign bank while establishing financial institution Nepal is different than domestic banks but after the incorporation or entering into financial market of Nepal, treatment for the foreign banks in course of regulating supervision is similar to the domestic bank.

Consolidate Supervision and regulation:

Nepal has been participating on international forum and have also made various commitments in the international forum. In course of making such commitment Nepal has also accepted the BASEL principle accepted the idea of consolidated supervision of foreign banks.

Nepal has adopted consolidated supervision mechanism for the regulation and supervision of the foreign bank, law has made provision for the exchange of mutual cooperation and exchange of the information to the supervisory authority of the home country of foreign bank. While having mutual cooperation between supervisory authority of home country and NRB, concerned foreign bank shall have to work as a facilitator and help to establish the connection between two supervisors.

Supervision and Inspection:

• A) Bank Supervision Department:

NRB in order to execute its supervisory power provided by the act, has established Bank Supervision Department under its organizational structure. Department is responsible for the implementing polices, guideline, laws issued by NRB for the commercial banks. Department prepares plan at the starting of the fiscal year, get approved form the board and conduct banking supervision on the basis of that plan.

• B) Supervisory Methodology:

Nepal has continued to adopt methodology laid down in Core principle for effective banking supervision formulated by the BASEL Committee. Principle has laid down off-site and on-site supervisory technique for the supervision of bank. In light of this principle, Nepal has also adopted off-site and on-site supervisory methodology to supervise the banks.

BSD can have supervision of bank and financial institution by authorizing team of department to go the bank itself. This category of supervision is carried on for overall site supervision, objective supervision, and special supervision. Similarly BSD can also have off-site supervision of bank and financial institution on the basis of information provided by the bank and financial institution.

Issue of Directives, policies and order.

NRB as a central bank has been established with the main purpose of maintaining financial stability in country and to increase the public confidence over the banking system of country. In order to achieve this objective NRB issues various directives, polices and order to the commercial banks in country and this power to issue directives, polices, guidelines and order has been provided by NRB Act, 2002. NRB can frame and issue any bye-laws, directives, policies, order and guidelines to commercial banks on any issues which it feels appropriate. All the commercial banks are abide to follows those bye-laws, directives, polices and guidelines.

As NRB is central bank of Nepal and its main objective is to maintain financial integrity of the country. In order to achieve this objective NRB has framed and issued various bye-laws, directives, polices and guide-line. For the purpose of inspection and supervision of commercial banks, Bye-law relating to inspection and supervision of bank has issued. Similarly in order to regulate and facilitate the establishment of foreign bank, policy provision for opening foreign bank branch in Nepal. Similarly NRB issues directives to regulate foreign exchange, to furnish the information by commercial banks which indicate its financial position, to discourage money laundering.

Nepal has accepted the concept of equal treatment of foreign banks, law has clearly stated that all those directives, polices and guide-lines issued by the NRB shall be equally applicable to foreign banks. All the foreign banks that entered in Nepal in any form either in subsidiary, joint-venture or branch shall have abide directives, policies, guidelines issued by the NRB.

Minimum Capital requirement

Bank and Financial institution’s deals with the money and their business revolves around movement of capital. While performing its business bank and financial institution poses various kinds of risk. One of the major risk that bank and financial institution bear is capital adequacy risk. This risk involves that bank and financial institution may have lack of capital while performing its business. In order to mitigate this central bank requires commercial banks and financial institution to meet minimum capital adequacy required by central bank.

Foreign banks, are also involved in different categories of banking business so they are required to meet the capital adequacy as determined by NRB. In Nepal, there are two categories of minimum capital requirement for foreign bank. These two categories includes one for joint-venture and subsidiary banks where as another is foreign bank branch.

Foreign banks established inform of joint-venture and subsidiary requires minimum paid-up capital of two hundred crore Nepali rupees.Similarly, minimum paid up capital required for the opening of foreign bank branch in Nepal is 20 million US Dollar, beside this if foreign bank wants to extend the branch office it requires 5 million US Dollar for opening of each branch.

Control on Board of directors

Cancellation of license.

Provision for the cancellation of license of domestic bank is equally applicable in case of joint-venture foreign banks and subsidiary of foreign bank, however if foreign bank is operating is in more than one country then license is cancelled in accordance with international rules and practices. BAFIA, 2017 has prescribed two mode for the cancellations of license of joint-venture and subsidiary foreign banks. These two are voluntary cancellation which is applicable when bank and financial institution itself is willing to cancel its license and forceful cancellations which means NRB when satisfies that bank and financial institution is not able to perform its business properly when with the order of court license is cancelled.

Similarly in case of foreign bank branch, their license are cancelled if they did not comply with the BAFIA,2017 and NRB Act,2002 , along the directives, policies, guidelines issued by NRB on time to time basis as per requirement.

Cashless India is a mission launched by the Government of India led by Prime Minister Narendra Modi to reduce dependency of Indian economy on cash and to bring hoards of stashed black money lying unused into the banking system. The country embarked upon this transition to a cashless economy when the government took the revolutionary step of demonetization of old currency notes of Rs 500 and Rs 1000 on November 08, 2016. This move was targeted at the fake currency circulating in Indian market and the black money that somehow escaped the radar of tax authorities.

Post demonetization acute shortage of currency in Banks and long queues outside ATMs, gradually turned people towards digital transactions, one of the prime requirements under cashless India. If the government succeeds in providing secure and fast digital payment methods to the consumers and merchant establishments across the nation, then the dream of India becoming a completely cashless economy will materialize.

Long and Short Cashless India Essay in English

We are here providing a variety of long and short essay on Cashless India to empower the students with ready material available online in different word length – in 100, 150, 200, 250, 300 and 400 words.

These Cashless India Essay written in a simple language will help the students choose any one as per their requirements.

After going through these essays you will understand the concept of cashless India and its benefits on the economy.

You can use the essays in your school/college competitions for writing essays, debates or giving speech.

Cashless India Essay 1 (100 words)

It was on 8 November 2016 that the Government of India took the whole country by storm by announcing that the currency notes of Rs 500 and Rs 1,000 were no longer legal tender. The government move aimed at curtailing the menace of black or counterfeit money which is largely used to fund criminals and terrorists as part of a parallel economy. The acute shortage of money in the wake of this decision led to long queues of people outside ATMs or banks seeking to exchange their notes or withdrawing cash.

But eventually, the move has turned out to be a push towards cashless India that is bound to pave the way for a cashless economy, marked by greater transparency, ease and convenience in monetary transactions.

Cashless India Essay 2 (150 words)

The Union government’s demonetization initiative and the subsequent drive towards developing a cashless India have invited its share of both bricks and bouquets. There have been widespread protests organised by the opposition parties across the country against the cash crunch in the wake of ban on old currency notes of Rs 500 and Rs 1000.

However, the initial difficulties have subsided now and the people are beginning to realize the safe and convenient modes of digital payment. Moreover, to encourage the people to further go for cashless modes, the Narendra Modi Government has provided a slew of incentives and measures.

The latest World Bank report has mentioned that the demonetization will not have any long-term adverse effect on the health of Indian Economy. Rather it will prove beneficial with growth of the Indian economy rising to 7.6% in fiscal year 2018. Liquidity expansion in the banking system post-demonetization has helped the banks to lower lending rates, which in turn is bound to lift economic activity.

Cashless India Essay 3 (200 words)

The Union government headed by Prime Minister Narendra Modi has been moving towards realizing his vision for a cashless India, ever since the demonetization of the old currency notes of Rs 500 and Rs 1000, which was announced by it on November 8, 2016. It was really a bold move considering the fact that in India people are more reliant on cash than in other countries of the world. Suddenly, there was severe shortage of cash in the wake of this decision and people had to encounter great difficulties in buying things they wanted with little cash available in banks and ATMs they would throng in unending queues day and night.

Conclusion: However, the benefits of this move have now started trickling in with more and more people switching to digital modes of receiving and making payment. India is gradually transitioning from a cash-centric to cashless economy. Digital transactions are traceable, therefore easily taxable, leaving no room for the circulation of black money. The whole country is undergoing the process of modernisation in money transactions, with e-payment services gaining unprecedented momentum. A large number of businesses, even street vendors, are now accepting electronic payments, prompting the people to learn to transact the cashless way at a faster pace than ever before.

Cashless India Essay 4 (250 words)

Cashless India is a term coined recently after the Union government went ahead with its plans to demonetize currency notes of Rs 500 and Rs 1000. Initially, it led to severe criticism as people faced great difficulties in exchanging the old currency notes or withdrawing cash from their accounts.

According to the critics of the government, adequate arrangements should have been made in advance to support the people in dealing with cash crunch in the wake of this move towards cashless India. Also, adequate security measures are required to guard online transactions against fraud which is very common in India. They critics further argue that due to unavailability of required cash flow in the market, many people died and lost their jobs, painting a scary picture of India becoming cashless post-demonetization.

However, after the demonetization of the currency notes of Rs 500 and Rs 1,000, the country has witnessed a surge in cashless transactions through the digital mode, be it through credit/debit cards, mobile phone applications, Unified Payments Interface (UPI), BHIM (Bharat Interface for Money) app under Aadhaar Enabled Payment System (AEPS) or e-wallets etc.

Conclusion: True, there are difficulties in implementing the idea of cashless economy in a vast country like India where a large number of people are living under misery and poverty, yet a beginning had to be made someday. Today, there is a sea change in the mindset of people with regard to digital means of monetary dealings which are safe, easy, convenient and transparent. There is no place for black money or counterfeit currency in cashless India.

Cashless India Essay 5 (300 words)

Cashless India is a recently introduced phenomenon targeted to bring a sea change in the country’s economy by the Indian government, transforming the cash-based economy into cashless through digital means.

However, still there are various challenges to be addressed if we want to make India cashless in true sense. India is a vast country and the convenience of making transactions through the online mode is not available across the country. In small cities and villages, the people are mostly suffering due to acute cash crunch situation. To make India cashless in true sense, investment is required to be made in enhancing the facility required on a mass scale for cashless transactions across the country.

Handling the flow of cash with digital technology has a range of advantages. Cashless transactions have made people keep all their cash into the bank and hence liquidity in the banking system has increased. Also, it has stopped the flow of black money, up to some extent. Now the banks and financial institutions have more money to lend to the people to support the growth of Indian economy. The other most important advantage is that this situation will make people pay their taxes in a transparent manner; hence the government will have more money to run various schemes meant for the welfare of the public.

Conclusion: Post-demonetisation, the people have finally started believing in the power of the plastic money in the form of credit card/debit card, and other channels of electronic payment. Online banking has gained prominence due to unavailability of enough cash in the market. Moreover, E-commerce modes of making payments have also become popular, as most of the people have now started making payments of even Rs 50 through the digital modes. All these developments are considered to be good for the healthy growth of the economy.

Cashless India Essay 6 (400)

Introduction

Cashless India is a move that has assumed significance in the backdrop of demonetisation of high value currency by the NDA government at the Centre. On November 8, 2016, Prime Minister Narendra Modi announced demonetisation of currency notes of Rs 500 and Rs 1000 and took the people by surprise. People standing in spiralling queues at ATMs and banks’ counters to exchange their old currency notes or withdraw cash became a familiar scene across the country.

However, the new cashless revolution ignited by this move has gradually started changing the mindset of people, who were earlier mostly dependent of currency notes only for doing transactions.

Benefits of cashless India

• Cashless transaction does away with any hassle to carry cash.
• It is in keeping with the worldwide trend. People need not carry any cash in various countries around the world as most of the transactions there are done electronically.
• In digital transactions, you can view history of your expenses at one go which helps you to manage your budget easily.
• Since cashless transactions are traceable, they invite payment of taxes, wherever applicable, thus ruling out use of black money.
• As tax collections become easy through the cashless mode, it accelerates the pace of economic development, making it easier for the government to spend on education, health care, employment generation, infrastructure and the overall welfare of the people.
• Increased tax collections lead to reduction and simplification of the tax structure.
• Transfer of monetary benefits to the poor and the needy through bank transfer rules out their exploitation by the unscrupulous middle men.
• Cashless transactions deal a body blow to counterfeit currency or distribution of black money through Hawala channels. It also cuts the supply of unaccounted money used in funding of criminal and terrorist activities.
• It saves the government substantial costs in printing and circulation of currency notes.
• Increased liquidity of money with the banks makes them lower their interest rates puts the huge amounts of cash deposited with them to some productive use.

Conclusion: A part of Digital India programme, the concept of cashless economy in India is centred around the vision of transforming the country into a society, which is digitally enabled and empowered by several modes of cashless transactions. Consequently, digital modes like credit/debit cards, mobile wallets, banks pre-paid cards, UPI, AEPS, USSD, Internet banking etc have gained in currency, leading to cashless India in near future.

Banks are financial institutions that deal in monetary transactions. Banks form an integral part of any society. There are numerous banks located in different parts of our country. While earlier there were limited number of banks with a few branches in big cities and towns in India, a number of new banks have opened in the last few decades with branches in every nook and corner of the country. Banks provide a lot of services based on the customer’s requirements. They provide locker facilities, safe deposits, ATM Services, Fixed Deposits, money transfer, loan for business and houses and several other monetary services to their customers.

Long and Short Essay on Bank in English

Here are essay on Bank in English of varied lengths to help you with the topic whenever you required.

After going through these Bank essay, your knowledge about banks, their functioning and their usefulness will enhance and you will emerge as a knowledgeable person.

These essays will prove useful in your school or college assignments, especially for students of commerce or banking.

You can select any bank essay of your choice given below:

Bank Essay 1 (200 words)

The banking system that involves accepting deposits and lending money initiated centuries back in various parts of the world. The system improvised over the time and the banks these days offer various other facilities in addition to the basic depositing and lending of money.

People are encouraged to keep their money in the banks because it is a safe and secure way to store the money. The money stored in the bank in the form of fixed deposits and recurring deposits also fetches a good amount of interest. In addition to money, one can also keep jewellery and important papers in the bank lockers.

Providing loans, which is another primary function of the banks, is also beneficial for individuals and businesses in many ways. Salaried people can build their assets such as property, car, etc easily with the help of loans from the bank. Businessmen can expand their businesses with this facility. A number of other services are also provided to the businessmen to ease their financial transactions and aid in the growth of their business.

Online Banking has further enhanced the process of banking. Various banking services such as checking balance, transferring amount, applying for loan are now provided on the bank’s website. All the customers require doing is opting for internet banking service.

Bank Essay 2 (300 words)

Introduction

Banking system has been in place since centuries. The system has been prevalent in India as well as other parts of the world. Only the services provided and the functions carried out have enhanced over the time.

History of Banks

Banking service began back in the 14^th century in some parts of Renaissance Italy. It was initiated on the lines of the concept of lending and borrowing that took place among people since the ancient era. In the ancient times, the merchants gave grain loans to the traders and farmers. This was called the barter system. Over the time the system evolved to accepting deposits and lending money.

The Fuggers, the Medicis, the Berenbergs, the Rothschilds are among some of the banking dynasties that are known to play a central role in the history of banking. They dominated this sector for centuries. Modern banking services such as issuance of banknotes and reserve banking started in the 17^th century. Bank of England and The Royal Bank of Scotland are some of the oldest banks in the world.

History of Banks in India

In India, the banking system dates back to the Vedic civilization. Loans were given to the needy in that era too only the nitty-gritty’s involved in the same were different. Loans deeds in that period were known by the name rnalekhya or rnapatra.

Big businessmen and landlords gave money to the small traders and farmers on interest in the earlier times. This culture is still prevalent in some villages in the country. The lands or other valuable assets of those who were unable to pay the amount were confiscated just as the banks do these days.

The first bank established in India was the Bank of Hindustan. It was opened in the year 1770 in Calcutta. Bank of Bombay, Bank of Calcutta and Bank of Madras were set up later in the early 19^th century.

Conclusion

There are numerous types of banks in every country to cater to the needs of different customers. They provide various services and aid in the growth of the country’s economy.

Bank Essay 3 (400 words)

Introduction

A bank is an institution that accepts money deposits from the public and provides funds on credit to individuals as well as firms. These are the primary functions of a bank but not the only functions. They provide various other services to its customers such as locker facility, transfer of funds, issuance of drafts and portfolio management to name a few.

Importance of Banks

Banks are important for the individuals as well as the development of the country’s economy. Here is why these institutions are of importance:

1. Provides Safety and Security

Money kept at home is not safe. It is prone to burglary. When you keep your money in the bank, it is the bank’s responsibility to safeguard it. You do not have to worry about its security.

2. Encourages Saving Habits

Banks offer various schemes from time to time to encourage saving habits in people. The money put in the bank is not only saved but also grows. You have the option of withdrawing it any time you want.

3. Eases Trade and Commerce

Banks promote trade within the country by providing loans and advances to the traders. It also eases the process of trading between different countries. They provide easy money transaction options to smoothen the process. It is easy to send and receive funds from anywhere with the advancement in the banking system.

4. Promotes Agricultural Sector

Agricultural sector is an important part of the economy. There are special banks that provide loans to the farmers at low interest to promote agricultural activities. Banks thus aid in promoting the agricultural sector.

5. Aids in Development of Industries

Banks accept deposits from individuals and businesses and provide loads to the industries. They thus aid in the development of various industries in this way. The loan can be repaid in easy instalments.

6. Provides Employment Opportunities

Banks provide loans for the growth and development of the agricultural and industrial sectors. As these sectors expand, a number of employment opportunities are created for the public.

Conclusion

Banks are an important part of any country. The modern banking services have helped in easing the process of trade, development of industries and other activities that help in the development of the country’s economy. Banks and other financial institutions that promote the growth of businesses and safeguard the money and other valuable assets of individuals are certainly play an integral role in the development of a country’s economy.

Bank Essay 4 (500 words)

Introduction

Banks play an important role in maintaining financial stability in the country. They offer numerous services to help you manage your finances better. These institutions thus form a vital part of any society.

Functions of Banks

The functions of banks have broadly been classified into two categories. These are the primary functions and the secondary functions. Here is a look at these in detail:

Primary Functions

Primary functions are the main functions of the banks. These include accepting deposits and providing loans. Here is a brief look at these functions:

1. Accepting Deposits

These deposits are basically of four different types:

Saving Deposits: These deposits encourage public to save money. The money can easily be withdrawn and deposited in the saving account without much restriction. The interest rate here is however quite low.

Current Deposits: This account is especially for the businessmen. These accounts offer facilities such as overdraft that are beneficial for the businesses. No interest is paid in this account.

Fixed Deposits: In a fixed deposit a considerable big amount is deposited in the account for a fixed period of time. The rate of interest is high in such deposits.

Recurring Deposits: A certain amount is deposited at regular intervals in such an account. The rate of interest is high. However, the amount cannot be withdrawn before a certain period.

2. Providing Loans

Here are the types of loans and advances offered by the banks:

Loans: Loans are offered for both short term and long term period. The rate of interest charged on the same varies based on the type and duration of loan. It can be repaid in instalments.

Cash Credits: The customers have the facility to take cash credit up to a certain amount which is fixed in advanced. A separate cash credit account needs to be maintained for this.

Overdraft: This facility is for businessmen. It is thus provided to the current account holders. They do not require maintaining a separate account to avail this facility.

Secondary Functions

Secondary functions, also known as non-banking functions, are of two types. These are agency functions and general utility functions. Here is a brief look at both these types of functions:

1. Agency Functions

The bank also acts as an agent for its customers. A number of agency functions are performed by this institution. These include collection of cheques, periodic payments, portfolio management, periodic collections and transfer of funds. Banks also act as executors, administrators, advisors and trustees for their customers. They help their customers deal with other institutions.

2. General Utility Functions

Banks also perform general utility functions that include providing locker facility, underwriting of shares, dealing in foreign exchange, issuance of drafts and letter of credits, drafting project reports, undertaking social welfare programmes such as public welfare campaigns and adult literacy programmes.

Discounting of bill of exchange is another service provided under this.

Conclusion

While initially the functions of banks only included accepting deposits and providing loans; they have started providing various other services now. All these facilities are aimed at helping the customers with their finances.

Bank Essay 5 (600 words)

Introduction

Banks are financial institutions that lend money and accept deposits from general public. Banks maintain the flow of money in the country and are important for its economic growth. There are different types of banks that offer different kinds of services to individuals as well as businesses.

Types of Banks

Here are the various types of banks and their functions:

1. National Banks

Also known by the name, Central or Federal bank, these banks manage the financial system of the government. These non-profit making institutes serve as bankers to the other banks. There is one Central bank in every country. Some of the functions of National banks include supervising foreign exchange, controlling the country’s currency and issuance of paper currency. They do not deal with the general public.

2. Retail Banks

These are the most common types of banks. These are mainly set up to focus on the requirements of the general public. They open your savings account, provide credit cards, give loans and provide locker facility among other services.

3. Saving Banks

These are especially established to inculcate the habit of saving money among the people. The deposits from the customers are turned into securities and bonds in these banks. These were set up way back in the 18^th century in European countries. Besides, accepting deposits from individuals these banks offer various other services too.

4. Commercial Banks

The main aim of these banks is to aid the business class. They provide loans to the businessmen and also provide other services that are useful for the business men. Some of these services include bill of exchange, overdraft and cheque collection.

5. Investment Banks

These banks are also set up to aid the businesses. These banks help the businessmen establish a foothold in the financial markets. Investment banks facilitate those businessmen who require selling debt to the investors or want to go public with their business.

6. Land Mortgage Banks

Also known as agricultural banks or Land Development banks, these are mainly set up to aid the agricultural sector by financing it. These banks also play an important part in land development. The reason why this special category of banks has come into being is that there is a lot of risk in financing the agricultural sector and the commercial banks that support other businesses are not ready to take such risk.

7. Co-operative Banks

Co-operative banks provide loans to small-scale farmers, small-scale businesses and salaried people. They provide both commercial and retail services to people. These banks are registered under Co-operative Societies Act, 1912.

8. Consumer Banks

These banks have exclusively been set up to provide loan for purchasing durable consumer goods such as car, washing machine, refrigerator, furniture, etc. These banks give their consumers the leverage to repay loans in easy instalments. These are mostly found in first world countries.

9. Industrial Banks

Also known by the name Development Banks, these banks are established to aid the industrial sector. These banks accept cash by issuing shares and debentures. They provide long-term loan to the industries to help them expand and develop. Many such banks have been established in the country post independence.

10. Exchange Banks

These banks are particularly engaged in financing foreign trade. Some of the main functions of these banks include discounting foreign bills, purchasing and selling silver and gold and providing assistance in carrying out export and import trade.

Conclusion

Banks are established to ease the financial issues of the general public as well as the country as a whole. Different types of banks serve different purposes and have been set up to cater to the needs of various classes.

The major issue was that the commercial banks overstressed in such mortgage backed securities. Another part of the story Is that Basel I accords are credited with giving seeds to the idea of all things that could lead to recession and Basel II Is credited with magnifying Its Impact. Formed In 1988 and adopted by 1992, Basel I accords were a set of rules and regulations, to be adopted by GIG countries, that allotted different risk ratings to various types of assets held by banks. Assets, here, referred to bonds, mortgages undo etc.

It took a long time for the economies to realist the problems associated with such types of system. For example, in such a framework a commercial bank was permitted to keep aside no liquid capital if it had all government bonds or gold as assets. This was so because such assets were considered safe. Further, it was required of them to keep aside small percentages of capital for every mortgage, commercial loan or bonds they Issued. With the introduction of Basel 2, the list was expanded to bonds backed by debts like ar or property loans and yet had to keep only a 2 percent of spare capital.

Flip side to this was that the bonds ought to have AAA or AAA credit ratings from the government. Statistics tell that Just prior to the recession, 81 percent of all Mortgage backed securities held by the commercial banks had AAA credit rating. Further, 93 percent of all mortgage-backed securities held by these banks had AAA credit rating or held bonds Issued by a government-sponsored enterprise. Now this Is where the role of moral hazard comes Into play.

When Basel I and abstinently Basel II accords were Introduced, the primary aim of the developed economies was to encourage consumer spending and Investments by the banks. It was not completely unforeseeable for everyone to realize that backing debt or junk manipulating credit ratings, economies tried to create a self-fulfilling system that provided for feed as well as fed upon its own. The bankers were in turn incentives to take risks of high magnitude, with all the depositors’ money in hand, believing that there is a government always backing them.

Soon the entire system gave away. This created a bigger moral hazard. How to minimize such problems? TO reduce such a problem of Principal Agent problem leading to recession, it is imperative that the regulators are on their toes. In USA, SEC did not take proper steps to ensure that the Rating agencies don’t rate securities high without any strong backing to do so. Also the FIDE, the Fed, the Comptroller of the Currency, and the Office of Thrift Supervision relied blindly on the ratings given by the Credit rating agencies.

Therefore, all rules and regulations given under law should be implemented properly and Justly by the regulators. The government should also ensure the timely passage of relevant legal provision and bills. Also, although Basel Ill accords have been adopted and implemented by most of the countries and the deadline is 2019 for it, the present market conditions show that the Minimum Capital requirements need an overhaul as well. Hence, Basel 4 could be started to be worked upon with refined changes and the governments should follow the rules under such requirements.

The two Institutions chosen or comparison are Wells Fargo (WFM) and Bank of America (BACK). To evaluate the overall strength the major assets, liabilities, capital, risk, liquidity and operating decisions of the three chosen institutions will be discussed. Balance Sheet Analysis Out of the three banks US bank is the smallest in regards to assets with Bank of America being the largest followed by Wells Fargo. When comparing total assets to total liabilities USB finds itself in the weakest position having a total debt to total assets ratio of 0. 11 . Commercial banks are known to leverage themselves highly and leverage Is normal in the Industry.

However In comparison to BACH’S ratio of 1 . 124 and Wife’s ratio of 0. 89 this relatively high leverage Is a cause for concern. Federal Deposit Insurance Corp… Chairman Sheila Fair has advocated for the US Bank to reduce their leverage to half believing that their financial position poses too great a risk. The industry averages for long term debt to equity and total debt to equity ratios are 64. 36 and 177. 19 respectively. In respect to this, US Bank finds itself taking the middle ground between Wells Fargo and Bank of America. Wells Fargo seems to be In equity ratio of 84. 6, well below the industry average. The most indebted institution would be Bank of America who’s ratios of 120. 09 and 249. 67 are well above the industry average. US Bank in comparison has a long term debt to equity ratio of 67. 93 which is right around the industry average while their total debt to equity is far below it at 139. 98. Despite being in good position relative to the industry and the two chosen similar financial institutions in these metrics, this indicator should be held with skepticism as many believe that all commercial banking institutions are unreasonably leveraged.

One of the reasons for US Banks highly leveraged position ay lay in the management’s decision to acquire more banks through IBID-assisted deals. It is stated that, “In total, the firm has acquired $35 billion of banking assets through these deals at minimal costs. ” Though these deals have been stated to be not significant enough to pose such a threat. They are still campaigning to acquire even more assets. Assets All three companies have real estate loans as their largest asset category. This includes residential loans, commercial real estate, and other loans secured by farmland.

These loans can be considered safe as they are secured with liens on the reporter however they are illiquid and would be considered a long term asset. Wells Fargo has the largest amount of real estate loans as a percentage of their assets at 35. 81%, followed by US Banks 32. 18% and finally Bank of America’s far smaller 20. 97%. All the banks second largest assets are debt securities over one year and they all have similar sizes as percentage of total assets. Commercial and industrials are the third largest asset for Wells Fargo and US Bank and they hold similar sizes as percentage of assets.

Bank of America’s third largest asset however is trading assets which should be more marketable. Much of the securities held by US Bank are not held for sale which makes them susceptible to interest rate risk. It is unclear how much of the banks loans use a floating interest rate but we can assume which would better help determine the risks involved. With US Banks fairly high percentage of real estate loans and commercial and industrial loans which are usually long term these risks to the bank are significant. The largest liability for the three financial institutions are interest bearing deposits.

Wells Fargo holds the largest proportion at 50. 14% followed by US Bank at 47. 70% and then Bank of America at 32. 0%. US Bank holds and Wells Fargo have similar proportions of this liability. While these liabilities accrue interest the banks do have to expect frequent cash outflows from this. The three banks third largest liabilities are interested-bearing deposits with US Bank having the largest proportion of 23. 36%, followed by Wells Fargo at 21. 93% and Bank of America at 18. 97%. These proportions seems relatively similar to each other but with US Banks higher proportion they should be weary.

These interested bearing accounts are likely to be checking outs and while they do not accrue interest you can expect frequent editorials from customers which should keep them weary of loaning out too much money. Finally all three banks have listed other borrowed money as their third capitalized leases. Bank of America has the largest proportion of 14. 24%. Next is US Bank with 13. 66% and then Wells Fargo with 9. 62%. These proportions also seem quite similar too each other. Interest Revenue, last Quarter US Bank largest source of revenue is on fully taxable income on loans and leases at 44%.

This proportion is comparable to Bank of America that accounts for 41% of their revenues. What is surprising is the large mount of revenue Wells Fargo receives from interest and fees on which accounts for 76% of their revenues. While US Bank only receives 42% of its income in the same category. Interested Revenue, Last Quarter The largest sources of interested income for the chosen financial institutions vary greatly which makes it difficult to compare US Banks position in comparison to the other financial institutions.

The largest category listed in sources of interested income for US Bank was stated as unspecified at 18% and 19% for Wells Fargo. The largest source for Bank of America is investment banking fees and commissions. Expenses Last Quarter Largest Expenses US Bank amount % of expenses Interest on other borrowings & trade Lab 987,000 2 Interest on time deposits < $100K 191,000 3 Interest on time deposits of $100K or more 184,000 1 1. 02% Largest Expenses Bank of America % of total expenses Interest on borrowings and trade liabilities 80. 03% Interest on sub debt and mand conv sec 8. 2% Interest on other deposits 601,993 4. 60% Largest Expenses Wells Fargo Interest on other borrowing & Trad Liab 55. 05% Interest on sub debt & mand conv sec 471 ,OOO 11 . 93% The largest expenses for each company is interest on other borrowings and trade iabilities. US Banks proportion of 59. 14% is comparable to that of Wells Fargds 55. 05%. Bank of America on the other hand has a much larger expense in this category of 80. 03%. The other expense categories vary between the banks. Interest on time deposits is US Banks next largest category. Cash Flow investing activities.

Cash from operating activities has been steadily increasing which is a good sign but so is cash from financing activities which is much larger. As commercial bank it can be expected that they finance their operation with a significantly large portion of debt. However in combination with their highly averaged position with their competitors this could be a cause for concern in their financial viability. Corporate Risk Profile: As a company that operates in the financial services, U. S. Banks largest exposure of risk comes from credit risk, operational, residual value, interest rate, market, liquidity and reputation risk.

U. S. Bank has spent many years working to perfect managing these risks. For credit risk, U. S. Bank has incorporated “well-defined, centralized credit policies, uniform underwriting criteria, and ongoing risk monitoring and review processes for all commercial and consumer credit exposures” (SEC. Gob). US Bank has developed a very strenuous and extensive procedure in order to evaluate the credit risk that it handles on a day to day basis. Another way US Bank manages its credit risk is “through diversification of its loan portfolio and limit setting by product type criteria and concentrations” (SEC.

Gob). US Bank divides its overall loan portfolio into three separate segments to, following the “don’t put all your eggs in the same basket” theory. The three portions of the portfolio consist of commercial lending, consumer lending and covered loans. The risks associated with commercial lending include a rarity of factors including many risks associated with the borrower’s business such as industry, geography, the loan’s purpose, how the borrower will repay, debt capacity among others.

In order to prioritize these risks and keep them all organized, US Bank assigns risk ratings to these characteristics in attempt to create the ability to focus on specific risks depending on importance. As far as the consumer lending sector goes, this encompasses “residential mortgages, credit card loans, and other retail loans such as revolving consumer lines, auto loans and leases, student loans, and home equity loans and lines” (SEC. Gob). The risk characteristic of this section of the portfolio is focused on the borrower and their keenness to pay off the loan as well as prior repayment history.

The 3rd portion of the loan portfolio is the covered loan segment. Before touching on the risk of this venture, it must first be noted that there are loss sharing agreements between US Bank and the IBID that ultimately “reduce the risk of future credit losses to the company’ (SEC. Gob). The risks that are associated with covered loans are “consistent with the segment they would otherwise be included in had the loss share coverage not been in place” (SEC. Gob). Another important aspect of US Bank to take into account is the sub-prime lending side of the banking industry.

A service, especially designed for entities having a large number of branch transactions. Doorstep banking helps you save considerable time and effort. Result? More time to focus on your core business activities and accelerate the growth of your business. Doorstep Banking Services (DB’S): A facility provided to customers where the bank appoints an agency to pick-up/ Deliver cash, pick-up cheese or Plock-up/delver trade documents from the client’s doorstep.

Its Convenient No traveling or queuing at the branch Bank within the secure environment to your office 1 No need to break your busy schedule for routine transactions Its hassle free Service offered through reliable service providers Dedicated courier agencies for Cheese pick up Experienced Cash-in-Transit for cash pick-up delivery It’s secure Fool proof, multiple verification and reconciliation process 0 Agency personnel to produce their Civil id (Kuwait Residency permit ‘d) on demand 0 unique transaction ID generated for agent verification It reduces risk Reduces the risk of carrying large sum of cash to or from the branch Banking allows you round-the-clock access.

You do not need to stand In queue In order to perform Important banking orientations. The Doorstep Banking allows you to do Just that right from the ultimate comfort and privacy of your homes. Are interested to avail the said services, for pick up of cash and delivery of cash from the door step of customer: The services are to be offered only to those customers in whose case proper SKY procedures have been followed. The service should be offered either at the residence or at the office of the customer. Customers will be pre- registered for this scheme. An agreement will be entered into with customer. The ADDS include: I. Pick up of Cash Maximum Limit up to KID. 10,000.