Chapter 1- BANKING

by • 11/06/2011 • 2nd year BankingComments (2)1216

Evolution/Origin of Banking:
Mankind has always been seeking security and protection. This need has led him to scientific and technological development on one hand, and banking development on the other. In modern times the banking has become so necessary that if it is excluded from any economic system the whole business and economic world will collapse like house of cards.

Man has always found himself in the pursuit of safety and convenience. If we dig into the history we will come to know that his persistent effort to achieve these two targets brought him blessings in the form of not only evolution and later revolution in science and technology but also in the banking field. Today banking has assumed that high importance; you just withdraw and exclude it the whole economic and financial structure will collapse.
In the days gone by when man started saving money he felt himself unsecured. First he buried his savings underground. But this practice did not last long for its shortcomings. Consequently, he resorted to deposit his savings with the strong and robust persons for safekeeping who hired armed guards on wages. These trustees charged fee from depositors to earn livelihood and finance the expenditure on armed guards.

The practice turned into widely accepted business, which gave rise to the idea to lend the deposited money. Thus the innovator trustees earned income from two ends, from depositors and from borrowers. The reinforced business, in turn, attracted severe competition that led the idea to dropping the receiving of the fee from depositors. The new scheme proved a blessing in disguise because it, then, attracted even more business and brought the trustee new dimensions of profit, and thus modern banking started. In this banking development the services of three groups of persons cannot be ignored.
1. Monetary lenders
2. Merchants
The Bank of Venice is perhaps the first ever regular bank in the banking history and was established in 1157 followed by these banks as under:
Bank of Barcelona in 1401
Bank of Genoa (Italy) in 1407
Bank of Amsterdam in 1609

Definitions of Bank:
According to KINLEY


“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 means of payment when not required for use by them”.

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2 Responses to Chapter 1- BANKING

  1. chaya says:

    hello i m a student of 2nd year commerce kindly send me a all notes plz i have no books

  2. sadafbutt says:

    sir i am a student of ma islamait part 2 kindly send me notes my books are not found

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