Bank of Operation

• Overview of Banks

1.      Introduction

·         Definition of Bank ; Bank is financial institution which deal with debts and credits. It is accept deposit, lend money and also create the money. It bridges gap between the saver and borrower. The bank is not merely trader in money but also it an important sense manufacture of the money.

·         Bank occupies one of the important positions in the modern economic world. It is necessary for trade in industry.

·         It is one of the great agencies of commerce.

·         Its presence is very helpful to the economic activity of the country.

2.      Meaning of Bank

·         The bank is profit-seeking business firm, dealing in money and credit.

·         It is a financial institution dealing in money the sense that it acceptdeposit of money from the public to keep them in it custody for safety.

·         It is also deal the credit. It the credit creates by making advance out of the fund receive as deposit to the needy people.

·         It is like a reservoir into with flow the saving, the idle surplus money of household and from which loan are given on the interest to the businessman and other who need them for investment or productive use.

3.      Type of Banks

Broadly speaking, bank can be classified into central bank and banking institution. The central bank has the function controlling the banking institution and various other economic activities. The banking institution is those which provide banking profit service for profit. 

            The most important function of a central bank is to regulate the volume of the currency and credit in the country. In developing economies, the central bank has also to perform certain promotional and developmental function to acceleration the pace of economic growth.

A.    Central Banks

A central bank is an apex institution in the banking structure of a country. It supervises controls and regulates the activity of banking institution and act as the banker to them. It also act as the banker, agent and advisor to the government in all financial and monetary matters.

B.     Banking Institutions

The banking institution is usually call banks. There are many type of banking institution such as commercial bank, deposit bank, industrial bank, saving bank, agriculture bank, exchange bank and miscellaneous banks.

·         Commercial banks: These banks have been established to assist trade, commercial and industries in their effort toward development commercial bank assist their costumer by deposit their fund in various account and releasing them as per their requirement. In the deposit and lending money, commercial bank renders various agencies and other service.

·         Deposit Banks: These banks are accepting deposit from the public and lend them to needy party. Since their deposit are for the short period only. Ordinary these banks lend money for the period between 3 to 6 months. They do not like lend money for the long period or to invest their fund to any way in the long term securities.

·         Industrial Bank : industrial bank  request in the huge capital for the long period to buy machinery and equipment. Industrial bank help such industrialist. They provide the long term loan to industrial, Beside, they buy share of companies and enable them to have fixed capital. The important function institution of industrial bank are :

-          They accept long term deposit.

-          They meet the credit requirement of industrial by extending long term loan.

-          These bank advise the industrial firm regarding the sale and purchase of share.

·          Saving Bank: these bank is very especially established to encourage thrift amount small saver and therefor, they were willing accept small sum as deposits. They encourage savings of the poor and middle class people.

·         Agriculture Bank: agriculture bank has it own problem and hence there are separate bank to finance it. These bank meet the credit requirement of the firmer through them loan.

·         Exchange Bank: this bank finance mostly for the foreign trade of a country. There is a main function is to accept and collect foreign bills of exchange. They buy and sell foreign currency and thus help businessmen in their transaction. They also carry on the ordinary banking business.

·         Miscellaneous bank: there are certain kinds of bank which have arisen in the course to meet the specialize need of the people. In English and American, there are investment bank whose subject is to control the distribution of capital into several uses. American trade union has got labor banks, where the saving of the laborer are pools together.

·         Specialize Bank: these bank carry out only the three basic activities

·         Microfinance Institution: These institutions are provider of financial service in small size and medium enterprise and low-income families especially in the remote areas.

·         Other Financial Institution: These institutions are refer to the one which relate in the financial service the supervision of the Nation Bank of Cambodia. These institution are include financial leasing company, bank representative  office and money changers.