Banking and Insurance

Bank

Bank is an organization established for the purpose  of  exchange money deposit lending money and participation in the transaction.
Nepal commercial Bank Act 2031 Types of banks
Retail banks are probably the banks you’re most familiar with: your checking and savings accounts are held at a retail bank, which focuses on consumers as customers.
Commercial banks focus on business customers. Businesses need checking and savings accounts just like individuals do, but they also need more complex services. They might need to accept payments from customers, rely heavily on lines of credit to manage cash flow, and they might use letters of credit to do business overseas.
Investment banks help businesses work in financial markets. If a business wants to go public or sell debt, they’ll use an investment bank.
Central banksmanage the monetary system for a government. For example, the Federal Reserve Bank is the US central bank responsible for managing economic activity and supervising banks.
Credit unions are similar to banks, but they are not-for-profit organizations owned by their customers (most banks are owned by investors). Credit unions offer products and services more or less identical to most retail and commercial banks.
Online banks operate entirely online – there are no physical branch locations to talk with a teller or personal banker. Many brick-and-mortar banks also offer online services, such as the ability to view accounts and pay bills online, but internet-only banks are different: they often offer competitive rates on savings accounts and they’re likely to offer free checking.
Savings and loans are less prevalent than they used to be, but they are still important. This type of bank was important in making home ownership mainstream, using deposits from customers to fund home loans.

Development of bank in Nepal

1. Nepal Bank Limited 1994 B.S.
2. Nepal Rastra Bank 2013 B.S.
3. Nepal Industrial Development Corporation 2016 B.S.
4. Rastriya Baninya Bank 2022 B.S.
5. Agricultural Development Bank 2024 B.S.
6. Nabil Bank Limited 2041 B.S.

Services offered by bank to public

1. Accept deposit in saving current and fixed deposit
2. Giving loan
3. Investment of funds
4. Agency functions
5. Credit Creation
6. General utility functions
7. Selling insurance services

Impact of government policy and regulation of banking

Majors Nepalese banking laws

1. Nepal rastra bank act 2058 (2002)
2. Foreign exchange regulation act 2019 (1963)
3. Bank and financial form loan recovery act 2058 (2002)
4. Financial intermediation act 2055 (1999)
5. Public debt act 2059 (2003)
6. Company Act 2063 (2006)
7. Liquidation act 2053 (1997)
8. Secured transaction act 2063 (2006)
9. Bank and financing institutions act 2063 (2006)
10. Public purchase act 2063 (2006)
11. Assets (Money ) laundering Prevention act 2065 (2008)

Functions of central bank

1. Issue of paper money and coins
2. Banker to the government
3. Agent to the government
4. Advisor to the government
5. Control other banks
6. Control of foreign currency exchange
7. Credit control
8. Control and supervision of financial institutions
9. Transfer of funds
10. Clearing house function

Array of organizational structure in banking

• Unit banking
• All services are offered from one office

Advantages

1. Easy management
2. Less operational cost
3. Little capital and staff
4. Efficiency
5. Local development

Disadvantage

1. Prone to risk and failure
2. No risk diversion
3. Costly remittance of funds
4. Unhealthy competition
5. Local pressure

Branch banking
Where full range banking services are offered from several locations including a head office and other one or more full service branch offices.
Advantages

1. Less costly
2. Diversification
3. Greater efficiency
4. More safer
5. Variety of services and low transaction costs
6. Easy, improved and convenience services to customers

Disadvantage

Calculation of stock (P0)= D1/(k-g)Where P0 value of stock K discount rate G growthImportant ratios in banking