Banking center is a
financial institution where various services and facilities are offered to the people keeping in mind the needs, market conditions and other factors.
Banking center is governed by certain
banking laws and
banking regulations which may be at the
state level or
federal level or both.
Without being granted the permission of the
banking authorities , a
banking center is not allowed to operate. It is obligatory to take the permission prior to commence functioning.
Without the permission of the
state jurisdiction or the
federal jurisdiction, a
banking center cannot operate.
A
banking center influences the economies of not only the home country but also of economies worldwide.
The area of services offered by a
banking center is vast and one needs to choose from a wide range of
banking center products on the shelf.
Banking center yields gains from the money the
banking center lends to the consumers.
Gains yielded by the
banking center depends to a large extent on the requirements and the potentialities of the customers.
Banking center charges the customers or the consumers for the several facilities the
banking center offers. The charges may vary depending on the type of service the
banking center offers.
Banking center also assists individuals traveling abroad.
With the advent of
ATM (automated teller machine), electronic fund transfer or
digital money one may access ones account from anywhere in the world.
Facilities offered by a banking center are enumerated below:
a banking center collects money from the customers in form of deposits and provides an account to the customer. The nature of the account can be savings, current etc.,.
The accounts may belong to individuals or business houses.
A banking center offers loans to the customers. The borrower may be an individual or a business house.
Providing vaults or lockers to the customers where the valuables of an individual can be safely put in.
Issuing debit cards and credit cards to the customers thus facilitating the use of plastic cards. The plastic cards are used for a variety of purposes.
A banking center also helps individuals in getting the cheques encashed.
A banking center also provides the facility of maintaining salary accounts of various employees. The employers usually do the needful in order to get the salary accounts activated.
A banking center also maintains accounts for the elderly people. People who retire can avail of several facilities meant for them. Retirement plans offered by the banking center can also be availed of.
Mailing system is also one of the services offered by a banking center.
Tele banking is a facility offered by a banking center where a customer can conduct all the banking procedures over he phone.
Online banking is another facility which is catered to by a banking center. It is also called internet banking.
Different types of banking within the purview of a banking center:
A banking center has within the jurisdiction the following kinds of banking:
Retail banking:
Retail banking under the jurisdiction of a banking center is a type of banking where individuals bank with the branches of the locality.
The services offered by retail banking are as follows:
- debit cards
- credit cards
- loans
- savings account
- current account
- mortgages etc.,.
Retail banking can be of the following types:
- Commercial banks
- Postal savings banks
- Community banks
- Community development banks
- Private banks
- Savings banks
- Offshore banks
- Ethical banks
- Building societies
Business banking:
A banking center offering business banking caters to the needs of the middle business class.
corporate banking
A banking center offering corporate banking caters to the requirements of the powerful business houses.
investment banking
A banking center providing investment banking enables individuals to invest on various financial products like shares, bonds, mutual fund etc.,.
Different types of investment banks or a banking center can be of the following
types:
Investment banks
Merchant banks.
A banking center having the different types of banks within the purview are basically private and profit making banks.
The banks which are possessed by the government do not fall in the category of profit making .
In addition to the types of banking center mentioned above, another category of a banking center is called Islamic banking.
An Islamic banking center is a banking center where the banking activities take place in accordance to the Islamic law known as Sharia and Fiqh.
Function of a banking center in the economy of a country:
A banking center promotes it's fund by luring the customers for bringing in deposits, taking money form the inter bank market lenders.
A banking center also increases it's fund pool by making available several financial tools to the common man.
After acquisition of these funds, a banking center is then in a position to give out or lend this money to the investors or borrowers.
The flow of money in a banking center simply follows a cycle. After money comes in, the same is made available to the public in different forms.
The banking center in turn takes fees from the ones using the money.
A banking center does not empty it's reserves all in one go. The banking center should also keep a substantial amount of money for the ones who are withdrawing cash from the banking center.
The money pool of a banking center is kept safely as deposit with a central banking body. This conduct or practice is known as fractional-reserve banking.
Banking center emergency:
Just as the borrowers get trapped in several financial mishaps, similarly a banking center may be subjected to several unforeseen events.
The conditions which determine a phase of crisis for a banking center are as below:
hazards of liquidity:
a banking center may be regarded as facing a crisis when a banking center is unable to pay enough money to the account holders in situations when the account holders withdraw money which exceeds the fund reserve of the banking center.
Hazard of credit:
under this hazard or risk, a banking center is apprehensive if the borrower fails to return the money borrowed from the banking center.
Rate of interest risk:
A banking center is said to be facing a crisis if rates of interest in the market change.
The rates of interest change to such an extent , that the banking center is unable to make any gain.
Under these circumstances the banking center is compelled to shell out more on deposits as compared to the deposit money received by the banking center.
Banking center regulation:
Banking center operates under certain banking center regulations:
A banking center operates under certain banking center regulations.
A banking center is expected to abide by the banking center regulation for the smooth and efficient functioning.
The banking center regulation are propounded by the government and expects the banking center to function according to the needs, limitations and plan guide.
A banking center is regulated because in the event of an emergency like dangers of liquidity, the government can get involved to help out the banking center.
Every efforts will be made by the government in that case to prevent the banking center from bankruptcy.
Unstable position of a banking center coupled with the role which a banking center plays in the economy of a country necessitated the regulation of a banking center.
Basel Capital Accord brought out by Bank for International Settlements have some of the major banking centers within the purview.
An investor giving less deposit to the banking center is sheltered or prevented from losing money in situations when a banking center is facing crisis and this leads to the failure of the banking center.
Protection is rendered by the banking center by buying deposit insurance.