banking

reserve bank(austrailia)

2009-12-20T08:12:00.000-08:00

he Reserve Bank of Australia came into being on 14 January 1960 as Australia'scentral bank and banknote issuing authority, when the Reserve Bank Act 1959 removed the central banking functions from the Commonwealth Bank to it.^[2]

The Bank has the responsibility of providing services to the Government of Australia, which the profits of the Bank are transferred back to, in addition to also providing services to other central banks and official institutions.^[3] It currently consists of the Payments System Board, which governs the payments system policy of the Bank, and the Reserve Bank Board, which governs all other monetary and banking policies of the bank.^[4]

Both Boards consist of members of both the Bank, the Treasury, other Australian government agencies, and leaders of other institutions that are part of theeconomy.^[4]^[5] The structure of the Reserve Bank Board has remained consistent even since 1951, with the exception of the change in the number of members of the Board.^[2]The Governor of the Reserve Bank of Australia is appointed by the Treasurer and chairs both the Payment Systems and Reserve Bank Boards and when there are disagreements between both Boards, the Governor resolves them.^[4]^[6]

From the middle of the 19th century into the 1890s, the prospects of a national bankforming grew. In 1911, the Commonwealth Bank was established, but did not have the authority to print notes, which was a power that was still reserved to the Treasury. A movement toward reestablishing the gold standard occurred after World War I, with John Garvan leading various boards in contracting the money supply on the route to doing so, and the gold standard was instituted for both the British pound sterling and the Australian pound in 1925.^[7]

During the Great Depression, the Australian pound became devalued, no longer worth the pound sterling, and formally departed from the gold standard with the Commonwealth Bank Act of 1932.^[8] Legislation in 1945 led toregulation of private banks which H.C. Coombs was opposed to, and when he became Governor in 1949, he gave them more overall control over their institutions.^[2]^[7] When the monetary authorities implemented the advice of Coombs to have a flexible interest rate, it allowed the Bank to rely more on open market operations.^[7]

The float of the Australian dollar happened in 1983, around the same period of time that the financial system in Australia was deregulated. Administration of the banks was transferred in 1998 from the Bank to the Australian Prudential Regulation Authority and the Payments System Board was created, while the Bank was given power within the said Board in the same year.^[2] The current Governor of the Reserve Bank isGlenn Stevens, who has been the incumbent since 18 September 2006.^[9

banking career

2009-12-20T08:10:00.000-08:00

Commercial banks are in the business of providing banking services to individuals, small businesses and large organizations. While the banking sector has been consolidating, it is worth noting that far more people have jobs in the commercial banking sector than any other part of the financial services industry. Jobs in banking can be exciting and offer excellent opportunities to learn about business, interact with people and build up a clientele.

Today's commercial banks are more diverse than ever. You'll find a tremendous range of opportunities in commercial banking, starting at the branch level where you might start out as a teller to a wide variety of other services such as leasing, credit card banking, international finance and trade credit.

If you are well-prepared and enthusiastic about entering the field, you are likely to find a wide variety of commercial banking jobs open to you. Carefully read through the material below as you decide whether you've got what it takes to pursue a career in commercial banking.

merchant bank account

2009-12-20T08:08:00.000-08:00

Merchant Account Marketing

Merchant accounts are marketed to merchants by two basic methods: either directly by the processor or sponsoring bank, or by an authorized agent for the bank and additionally directly registered with both Visa and MasterCard as an ISO/MSP (Independent Selling Organization / Member Service Provider). Marketing details are by card issuers like Visa and MasterCard, and are enforced by various rules and fines. A few of the largest processors also partner with warehouse clubs to promote merchant accounts to their business members, such as Costco andElavon.

[edit]Marketing by Banks

A bank that has a merchant processing relationship with Visa and Mastercard, also known as a member bank, can issue merchant accounts directly to merchants. To reduce risk, some banks limit approval to merchants in its geographical area, those with a physical retail storefront, or those that have been in business for 2 years or more.

[edit]Marketing by Independent Sales Organization (ISO)/MSPs

To market merchant accounts, an ISO/MSP must be sponsored by a member bank. This sponsorship requires that the bank verify the financial stability and suitability of the company that will be marketing on its behalf. The ISO/MSP must also pay a fee to be registered with Visa and Mastercard and must comply with regulations in how they may market merchant accounts and the use of copyrights of Visa and Mastercard. One way to verify if an ISO/MSP is in compliance is to check a website or any other marketing material for a disclosure "company is a registered ISO/MSP of bank, town, state. FDIC insured". This disclosure is required by both Visa and Mastercard and will cause a fine of up to $25,000 if it is not clearly visible. In almost all cases, if there is no disclosure, the company is likely to be an uninformed 4th party or worse. In many cases unregistered operators have been responsible for some of the worst horror stories from merchants.

[edit]Rates and fees

A Merchant Account has a variety of fees, some periodic, others charged on a per-item or percentage basis. Some fees are set by themerchant account provider, but the majority of the per-item and percentage fees are passed through the merchant account provider to the credit card issuing bank according to a schedule of rates called interchange fees, which are set by Visa and Mastercard. Interchange fees vary depending on card type and the circumstances of the transaction. For example, if a transaction is made by swiping a card through a credit card terminal it will be in a different category than if it were keyed in manually.

[edit]Discount Rates

The discount rate comprises a number of dues, fees, assessments, network charges and mark-ups merchants are required to pay for accepting credit and debit cards, the largest of which by far is the Interchange fee. Each bank or ISO/MLS has real costs in addition to the wholesale interchange fees, and creates profit by adding a mark-up to all the fees mentioned above. There are a number of price models banks and ISOs/MLSs use to bill merchants for the services rendered. Here are the more popular price models:

[edit]3-Tier Pricing

The 3-Tier Pricing is the most popular pricing method and the simplest system for most merchants, although the new 6-Tier Pricing is gaining in popularity. In 3-Tier Pricing, the merchant account provider groups the transactions into 3 groups (tiers) and assigns a rate to each tier based on a criterion established for each tier.

merchant banking

2009-12-20T08:07:00.001-08:00

In banking, a merchant bank is a financial institution primarily engaged in offering financial services and advice to corporations and to wealthy individuals. The term can also be used to describe theprivate equity activities of banking.^[1] The chief distinction between an investment bank and a merchant bank is that a merchant bank invests its own capital in a client company whereas an investment bank purely distributes (and trades) the securities of that company in its capital raising role. Both merchant banks and investment banks provide fee based corporate advisory services including in relation to mergers and

History

Merchant banks, now so called, are in fact the original "banks". These were invented in the Middle Ages by Italian grain merchants. As the Lombardy merchants and bankers grew in stature based on the strength of the Lombard plains cereal crops, many displaced Jews fleeing Spanish persecution were attracted to the trade. They brought with them ancient practices from the middle and far east silk routes. Originally intended for the finance of long trading journeys, these methods were now utilized to finance the production of grain.

The Jews could not hold land in Italy, so they entered the great trading piazzas and halls of Lombardy, alongside the local traders, and set up their benches to trade in crops. They had one great advantage over the locals. Christians were strictly forbidden the sin of usury. The Jewish newcomers, on the other hand, could lend to farmers against crops in the field, a high-risk loan at what would have been considered usurious rates by the Church, but did not bind the Jews. In this way they could secure the grain sale rights against the eventual harvest. They then began to advance against the delivery of grain shipped to distant ports. In both cases they made their profit from the present discount against the future price. This two-handed trade was time consuming and soon there arose a class of merchants, who were trading grain debt instead of grain.

The Jewish trader performed both finance (credit) and an underwriting (insurance) functions. He would derive an income from lending the farmer money to develop and manufacture (through seeding, growing, weeding and harvesting) his annual crop (the crop loan at the beginning of the growing season). He would underwrite (insure) the delivery of the crop (through crop or commodity insurance) to the merchant wholesaler who was the ultimate purchaser of the farmer’s harvest. And he would make arrangements to supply this buyer through alternative sources (the merchant function) of supply (such as grain stores or alternate producer markets), should any particular farming district suffer a seasonal crop failure. He could also keep the farmer (or other commodity producer) in business during a droughtor other crop failure, through the issuance of a crop (or commodity) insurance against the hazard of failure of his crop.

Thus in his underlying financial function the merchant banker (trader) would ensure the continuous smooth flowing of the commodity (crop, wool, salt; salt-cod, etc.) markets by providing both credit and insurance.

It was a short step from financing trade on their own behalf to settling trades for others, and then to holding deposits for settlement of "billete" or notes written by the people who were still brokering the actual grain. And so the merchant's "benches" (bank is a corruption of the Italian for bench, banca, as in a counter) in the great grain markets became centers for holding money against a bill (billette, a note, a letter of formal exchange, later a bill of exchange, later still, a cheque).

These deposited funds were intended to be held for the settlement of grain trades, but often were used for the bench's own trades in the meantime. The term bankrupt is a corruption of the Italian banca rotta, or broken bench, which is what happened when someone lost his traders' deposits. Being "broke" has the same connotation.

A sensible manner of discounting interest to the depositors against what could be earned by employing their money in the trade of the bench soon developed; in short, selling an "interest" to them in a specific trade, thus overcoming the usury objection. Once again this merely developed what was an ancient method of financing long distance transport of goods.

Islam makes similar condemnations of usury as Christianity.

The medieval Italian markets were disrupted by wars and in any case were limited by the fractured nature of the Italian states. And so the next generation of bankers arose from migrant Jewish merchants in the great wheat growing areas of Germany and Poland. Many of these merchants were from the same families who had been part of the development of the banking process in Italy. They also had links with family members who had, centuries before, fled Spain for both Italy and England.

This course of events set the stage for the rise of banking names which still resonate today: Schroders, Warburgs, Rothschilds, even the ill-fated Barings, were all the product of the continental grain trade, and indirectly, the early Iberian persecution of Jews. These and other great merchant banking families dealt in everything from underwriting bonds to originating foreign loans. Bullion trading and bond issuing were some of the specialties of the Rothschild family..

banking lesson plan

2009-12-20T08:04:00.001-08:00

urpose and Audience:

The purpose of these materials is to get the students speaking about all of the terms related to their personal finances in English. In particular, students will role-play being either bank clients or bankers. The bank clients will visit the bank and talk to the bankers about various financial products such as credit cards and mortgages. After the bankers explain the financial products, the client will select one product and apply. The bankers will then open up a bank profile and start a credit evaluation.

Having just moved back to Canada from Asia, I have undergone this exact process several times. The credit evaluation and bank profile are in reality not that difficult. For the most part, my bank representative just asked basic questions about income and debt. I think the hardest thing for students will be the amount of technical vocabulary involved. Though there is a lot, it is certainly worth learning for anybody who plans to work in banking, business, government, or finances. It is also very important for individuals moving to English countries as they probably will want to apply for credit cards, open accounts, and take out mortgages. It goes without saying that this lesson is intended for adults.

To smoothen the process of learning all of this technical vocabulary, I’ve created several pre-class vocabulary assignments. I recommend that students be made to finish these before the role-play begins. There will probably not be enough time to go over the sheets and do the role-play in a single class. In fact, the role-play itself could go for a full two hours if you have the time to do it.

banking activities

2009-12-20T08:02:00.001-08:00

In previous press releases ABN AMRO has announced that ABN AMRO Bank N.V. ("ABN AMRO") and RBTT Financial Holdings Limited ("RBTT") have signed a sale/purchase agreement regarding the sale of the onshore banking activities of ABN AMRO in Curaçao, and all its banking activities in Bonaire to Antilles Banking Corporation (Curaçao) N.V. ("ABC"), and the banking activities of ABN AMRO in Sint Maarten to Antilles Banking Corporation (Sint Maarten) N.V. ("ABC").

ABN AMRO is pleased to announce that on 5 November 2001 all assets and liabilities pertaining to ABN AMRO's onshore banking activities in Curaçao and all its banking activities in Bonaire, and the banking activities of ABN AMRO in Sint Maarten, have been transferred to ABC.

ABC has changed its name to RBTT Bank Antilles N.V. and RBTT Bank St. Maarten N.V. respectively to identify it as a member of the RBTT Group. The transfer of assets and liabilities includes the transfer of ABN AMRO's entire banking relationship with its clients, which means that their banking relationship with effect from 5 November 2001 is with RBTT Bank Antilles N.V. and RBTT Bank St. Maarten N.V. respectively.

ABN AMRO is grateful for the confidence the clients have given during all these years and trusts that with RBTT the business, the employees and the clients of ABN AMRO are in good hands. ABN AMRO will have a minority stake in RBTT Bank Antilles N.V. for a period up to three years.

ABN AMRO will continue its offshore banking activities in Curaçao, as well as its present activities carried out through ABN AMRO Bank Asset Management N.V. and ABN AMRO Trust Company N.V.

Banking Companies Ordinance

2009-12-20T07:57:00.000-08:00

The State Bank of Pakistan (SBP) has proposed major changes to the Banking Companies Ordinance-1962 to bring all deposit taking Non-Bank Financial Companies (NBFCs) like investment banks, leasing companies and housing finance companies completely under the fold of SBP.

The major rationale behind this move is that these NBFCs are engaged in activities which are quite incidental to banking both on the liability as well as asset side.

Bringing such entities under SBP would lead to greater supervisory efficiency as being regulator of banks. Its supervisory approach was well-equipped for their kind of business. The proposed amendments would enable Pakistan to ensure compliance with this principle said Governor, State Bank of Pakistan Dr Shamshad Akhtar while delivering her key-note address on Pakistan : Framework for Consolidated Supervision at the 58th annual general meeting of Institute of Bankers Pakistan (IBP) here on Friday. She indicated that the SBP is positioning itself for moving to consolidated supervision, in anticipation of amendments in Banking Companies Ordinance (BCO)-1962 to empower SBP to launch this initiative. This is a timely move in the wake of potential risks arising from complex structures of financial groups and emergent supervisory challenges.

Dr Akhtar stated the SBP has proposed significant amendments in the Banking Companies Ordinance. The objective of these proposed amendments is to strengthen the oversight of financial sector in accordance with the 10- year strategy and blueprint of financial sector reforms of the SBP. Although Pakistan’s financial sector as a whole has a lot to gain through increased integration and conglomeration, the newly emerging phenomenon has to be properly monitored and governed under proper legal framework to mitigate the potential risks, she added.

The SBP, as part of its overall financial sector reforms launched in July 2008, has been advocating the need for legislature to empower the Central Bank to augment its oversight of the financial sector, she said adding that the legislative reforms proposed by the SBP in this area have recently been approved, in principle, by the Cabinet and will be tabled for consideration of the Parliament.

The SBP governor said the banking sector being at the core of all activities of the financial sector, its safety and soundness is critical for public, financial sector itself and the economy as a whole. However, the current legislation and regulatory tools are not adequate to effectively address the threats to safety and soundness of the financial sector, she observed.

Dr Akhtar said the amendments proposed by the SBP would result into significant benefits in the form of operational efficiency, lower costs, reduced prices and innovation in products and services. She said one of the Core Principles for effective banking supervision (CP-24) issued by Basel Committee on Banking Supervision requires that a banking supervisor should be able to supervise the banking groups on a consolidated basis.

Presently, Pakistan is either compliant or largely compliant with all the core principles except those dealing with consolidated supervision, she said.

Dr Akhtar said another change being sought in BCO is to authorise the SBP to designate and regulate the financial groups. Financial group for this purpose will be any group containing at least one of the entities, directly regulated by the SBP. This is an extremely important step because it will enable the central bank to effectively monitor the intra-group potentially dubious transactions involving banks and NBFCs and also will enable it to curtail the possible contagion risk.

The proposed amendments will also enable the SBP to seek information from the unregulated commercial entities and conduct limited inspection for verification of such information, she added. The SBP governor observed that for entities in a financial group, which are falling under securities regulator’s supervision, current supervisory mechanism also needs to be amended to move towards greater consolidated supervision. She further said that the time is ripe for the introduction of a Financial Holding Company (FHC) concept. For facilitating the FHC model, we are also seeking several amendments in the BCO covering its definition, licensing and supervision (which will be done by SBP), capital requirement and various other aspects, Dr Akhtar said.

banking tactics

2009-12-20T07:54:00.000-08:00

USSR-POLAND: Soviet Banking Tactics

Moscow in late December reportedly instructed Soviet-owned banks chartered abroad to createreserve accounts to guardossible Polish default. The Poles owed these banks more0 million by midyear, but the Foreign Trade Bank of the USSR apparently assumed moreillion of this debt during the fall.

Comment: While the reported instruction may simply reflect concern over Western regulatory requirements, it also suggests Soviet pessimism about Poland's ability to resolve its financial problems. The Foreign Trade Bank's apparent assumption of roost of the Polish debt owed to these Soviet-owned banks puts themtronuer position toossible Polish default.

banking history(US)

2009-12-20T07:53:00.000-08:00

History in the United States

Early Years to the Federal Reserve

In the United States the first bank was the Bank of North America, established (1781) in Philadelphia. Congress chartered the first Bank of the United States in 1791 to engage in general commercial banking and to act as the fiscal agent of the government, but did not renew its charter in 1811. A similar fate befell the second Bank of the United States, chartered in 1816 and closed in 1836.

Prior to 1838 a bank charter could be obtained only by a specific legislative act, but in that year New York adopted the Free Banking Act, which permitted anyone to engage in banking, upon compliance with certain charter conditions. Free banking spread rapidly to other states, and from 1840 to 1863 all banking business was done by state-chartered institutions. In many Western states it degenerated into "wildcat" banking because of the laxity and abuse of state laws. Bank notes were issued against little or no security, and credit was overexpanded; depressions brought waves of bank failures. In particular, the multiplicity of state bank notes caused great confusion and loss. To correct such conditions, Congress passed (1863) the National Bank Act, which provided for a system of banks to be chartered by the federal government.

In 1865, by granting national banks the authority to issue bank notes and by placing a prohibitive tax on state bank notes, an amendment to the act brought all banks under federal supervision. Most banks in existence did take out national charters, but some, being banks of deposit, were unaffected by the tax and continued under their state charters, thus giving rise to what is generally known as the "dual banking system." The number of state banks expanded rapidly with the increasing use of bank checks.

Recurrent banking panics caused by overexpansion of credit, inadequate bank reserves, and inelastic currency prompted Congress in 1908 to create the National Monetary Commission to investigate the banking and currency fields and to recommend legislation. Its suggestions were embodied in the Federal Reserve Act (1913), which provided for a central banking organization, the Federal Reserve System (see also central bank).

Further Legislation

Since the establishment of the Federal Reserve system, federal banking legislation has been limited largely to detailed amendments to the National Bank and Federal Reserve acts. The Glass-Steagall Act of 1932 and the Banking Act of 1933 together formed an extensive reform measure designed to correct the abuses that had led to numerous bank crises in the years following the stock market crash of 1929. The Glass-Steagall Act prohibited commercial banks from involvement in the securities and insurance businesses. The Banking Act strengthened the powers of supervisory authorities, increased controls over the volume and use of credit, and provided for the insurance of bank deposits under the Federal Deposit Insurance Corporation (FDIC). The Banking Act of 1935 strengthened the powers of the Federal Reserve Board of Governors in the field of credit management, tightened existing restrictions on banks engaging in certain activities, and enlarged the supervisory powers of the FDIC.

Deregulation, Bank Failures, and New Technology

Several deregulatory moves made by the federal government in the 1980s diminished the distinctions among various financial institutions in the United States. Two major changes were the Depository Institutions Deregulation and Monetary Control Act (1980) and the Depository Institutions Act (1982), which allowed savings and loan associations to engage in often-risky commercial loans and real estate investments, and to receive checking deposits. By 1984, banks had federal support in buying discount brokerage firms, and commercial banks were beginning to acquire failed savings banks; in 1985 interstate banking was declared constitutional.

Such deregulation was blamed for the unprecedented number of bank failures among savings and loan associations , with over 500 such institutions closing between 1980 and 1988. The Federal Savings and Loan Insurance Corporation (FSLIC), until it became insolvent in 1989, insured deposits in all federally chartered—and in many state-chartered—savings and loan associations. Its outstanding insurance obligations in connection with savings and loan failures, over $100 billion, were transferred (1989) to the FDIC.

Further deregulation occurred in 1999, when Congress overhauled the entire U.S. financial system. Among other actions, the legislation repealed the Glass-Steagall Act, thus allowing banks to enter the insurance and securities businesses. Supporters predicted that the measure would permit U.S. banks to diversify and compete more effectively on an international scale. Opponents warned that this deregulation could lead to failures of many financial institutions, as had occurred with the savings and loans.

In the last decades of the 20th cent., computer technology transformed the banking industry. The wide distribution of automated teller machines (ATMs) by the mid-1980s gave customers 24-hour access to cash and account information. On-line banking through the Internet and banking through automated phone systems now allow for electronic payment of bills, money transfers, and loan applications without entering a bank branch.

general history(banking)

2009-12-20T07:52:00.000-08:00

General History

A simple form of banking was practiced by the ancient temples of Egypt, Babylonia, and Greece, which loaned at high rates of interest the gold and silver deposited for safekeeping. Private banking existed by 600 BC and was considerably developed by the Greeks, Romans, and Byzantines. Medieval banking was dominated by the Jews and Levantines because of the strictures of the Christian Church against interest and because many other occupations were largely closed to Jews. The forerunners of modern banks were frequently chartered for a specific purpose, e.g., the Bank of Venice (1171) and the Bank of England (1694), in connection with loans to the government; the Bank of Amsterdam (1609), to receive deposits of gold and silver. Banking developed rapidly throughout the 18th and 19th cent., accompanying the expansion of industry and trade, with each nation evolving the distinctive forms peculiar to its economic and social life.

banking facts

2009-12-20T07:47:00.000-08:00

banking primarily the business of dealing in money and instruments of credit. Banks were traditionally differentiated from other financial institutions by their principal functions of accepting deposits—subject to withdrawal or transfer by check—and of making loans.

Types of Banks

Banks have traditionally been distinguished according to their primary functions. Commercial banks, which include national- and state-chartered banks, trust companies, stock savings banks, and industrial banks, have traditionally rendered a wide range of services in addition to their primary functions of making loans and investments and handling demand as well as savings and other time deposits. Mutual savings banks , until recently, accepted only savings and other time deposits, and offered limited types of loans and services. The fact that commercial banks were able to expand or contract their loans and investments in accordance with changes in reserves and reserve requirements further differentiated them from mutual savings banks, where the volume of loans and investments was governed by changes in customers' deposits. Membership in the Federal Deposit Insurance Corporation is compulsory for all Federal Reserve member banks but optional for other banks.

Other Financial Institutions

Types of financial institutions that have not traditionally been subject to the supervision of state or federal banking authorities but that perform one or more of the traditional banking functions are savings and loan associations , mortgage companies, finance companies, insurance companies, credit agencies owned in whole or in part by the federal government, credit unions, brokers and dealers in securities, and investment bankers. Savings and loan associations, which are state institutions, provide home-building loans to their members out of funds obtained from savings deposits and from the sale of shares to members. Finance companies make small loans with funds obtained from invested capital, surplus, and borrowings. Credit unions , which are institutions owned cooperatively by groups of persons having a common business, fraternal, or other interest, make small loans to their members out of funds derived from the sale of shares to members. The primary functions of investment bankers are to act as advisers to governments and corporations seeking to raise funds, and to act as intermediaries between these issuers of securities, on the one hand, and institutional and individual investors, on the other.

International Banks

The International Bank for Reconstruction and Development (World Bank) was organized (1945) to make loans both to governments and to private investors. The discharge of debts between nations has been simplified and facilitated through the International Monetary Fund (IMF), which also provides members with technical assistance in international banking. The former European Monetary Agreement also made possible the rapid discharge of debts and balance of payments obligations between nations. The European Central Bank (see European Monetary System ) was established in 1998 to help formulate the joint monetary policy of those European Union nations adopting a single currency.

banking shares

2009-12-06T01:12:00.000-08:00

As well as the banks, British Airways climbed 6p to 208.4p ahead of passenger figures for November due later in the session.

Among other top flight stocks, home improvement retailer Kingfisher gave up gains seen after it revealed like-for-like sales were up 5.7% in the 13 weeks to October 31, driven by higher sales of "big ticket" items and improved DIY performance. Shares were later 0.2p lower at 235.8p, although Homebase rival Home Retail Group still cheered 3.1p to 313.1p.

Outside the top flight, shares in brewer Marston's were 4% higher, up 4p to 93.9p, as the company offset any disappointment over lower full-year profits by reporting an improved sales trend at its managed pubs in recent weeks.

Transport firm Go-Ahead was another stock on the front foot after it announced the disposal of its loss-making aviation services business. Shares were 36p higher at 1264p, even though it warned the move would result in a £20 million hit to results.

bank loans

2009-12-06T01:11:00.000-08:00

Assess your current financial situation by listing your assets, detailing your monthly income and deducting any liabilities, debts or expenses.
Step2
Ask your employer for a letter confirming your monthly income and job security, and back it up with pay stubs or, if your salary is deposited directly into your bank account, invoice statements.
Step3
Do some shopping. You may or may not qualify to get a personal loan through your regular bank. If you don't, there are dozens of lenders out there who specialize in personal loans.
Step4
Compare not only interest rates, but also repayment terms. Find out if your monthly loan payment is fixed or variable, and opt for a fixed term whenever possible. Ask about any up-front fees, and make sure you know whether the loan is disbursed all at once or in installments.
Step5
Offer collateral to get a lower interest rate. Even if you have excellent credit, an unsecured personal loan will always come at a higher interest rate than a secured one.
Step6
Complete all application materials in full, including supporting documentation listing your assets, liabilities and income.
Step7
Check over the loan documents once they're prepared. The terms you and the lender agreed to should be represented honestly and in good faith in the loan documents. You can sign off on the loan if all items appear as discussed with the lender.
Step8
Repay the loan according to the terms outlined in your agreement. If you default, you risk losing the collateral you offered up to secure your loan. If you have an unsecured loan, failure to make payments will have a profoundly negative impact on your credit rating.

bank profits

2009-12-06T01:08:00.000-08:00

Citigroup’s $1.6 billion in first-quarter profit would vanish if accounting were more stringent, says Martin Weiss of Weiss Research Inc. in Jupiter, Florida. “The big banks’ profits were totally bogus,” says Weiss, whose 38-year-old firm rates financial companies. “The new accounting rules, the stress tests: They’re all part of a major effort to put lipstick on a pig.”

Further deterioration of loans will eventually force banks to recognize losses that their bookkeeping lets them ignore for now, says David Sherman, an accounting professor at Northeastern University in Boston. Janet Tavakoli, president of Tavakoli Structured Finance Inc. in Chicago, says the government stress scenarios underestimate how bad the economy may get.

The accounting rule changes that matter most for the banks came on April 2, when the Financial Accounting Standards Board gave companies greater latitude in how they establish the fair value of assets. Lawmakers, including Representative Paul Kanjorski, a member of the House Financial Services Committee, had complained that existing mark-to-market standards worsened the financial crisis.

Debt Valuation

Along with that change, FASB also let companies recognize losses on the value of some debt securities on their balance sheets without counting the writedowns against earnings. If banks plan to hold the debt until maturity, they can avoid hurting the bottom line.

At Citigroup, the recipient of $346 billion in fresh capital and asset guarantees from the government, about 25 percent of the quarterly net income came thanks to the debt securities rule change, the bank said.

Another $2.7 billion before taxes came from an accounting rule that lets a company record income when the value of its own debt falls. That reflects the possibility a company could buy back bonds at a discount, generating a profit. In reality, when a bank can’t fund such a transaction, the gain is an accounting quirk, Weiss says.

Citigroup also increased its loan loss reserves more slowly in the first quarter, adding $10 billion compared with $12 billion in the fourth quarter, even as more loans were going bad. Provisions for loan losses cut profits, so adding more to this reserve could have wiped out the quarterly earnings.

Wells Fargo

Without those accounting benefits, Citigroup would probably have posted a net loss of $2.5 billion in the quarter, Weiss estimates. In the five previous quarters, Citigroup lost more than $37 billion.

Wells Fargo also took advantage of the change in the mark- to-market rules. The new standards let Wells Fargo boost its capital $2.8 billion by reassessing the value of some $40 billion of bonds, the bank said in May. And the bank augmented net income by $334 million because of the effect of the rule on the value of debts held to maturity.

Wells Fargo spokeswoman Julia Tunis Bernard declined to comment, as did Citigroup’s Jon Diat.

Banking & capital markets issues

2009-09-10T01:14:00.000-07:00

Disruptions in the financial markets, increased regulatory complexity and operational risk are major challenges for domestic and international banking institutions and capital markets-securities firms. These challenges, along with event-driven opportunities and new technologies have transformed the sector. In the current risk-adverse climate, institutions seek innovative solutions and ways to reduce their exposure.PricewaterhouseCoopers professionals can assist with your most critical business needs including:
Risk management
Regulatory & compliance
Anti-money laundering
Securitizations & valuations
Cost containment
Tax
Sarbanes-Oxley
Mergers & acquisitions
How PwC can helpOur banking and capital markets practice is organized to fully leverage our global team of over 33,000 professionals in every segment of the financial industry – consumer/retail banking, commercial banking, wholesale banking, mortgage banking, securitization, capital markets, insurance, investment management, broker/dealer and real estate. Our professionals include not only auditors and tax specialists with deep industry experience, but dedicated teams that provide internal control assessments, financial systems design and implementation services and solutions across a broad range of industry-related matters, including regulatory compliance and risk management.

Mobile banking

2009-09-10T01:12:00.000-07:00

Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today (2007) is most often performed via SMS or the Mobile Internet but can also use special pMobile Banking Services
Mobile banking can offer services such as the following:

[edit] Account Information
Mini-statements and checking of account history
Alerts on account activity or passing of set thresholds
Monitoring of term deposits
Access to loan statements
Access to card statements
Mutual funds / equity statements
Insurance policy management
Pension plan management
Status on cheque, stop payment on cheque
Ordering check books
Balance checking in the account
Recent transactions
Due date of payment (functionality for stop, change and deleting of payments)
PIN provision, Change of PIN and reminder over the Internet
Blocking of (lost, stolen) cards

[edit] Payments, Deposits, Withdrawals, and Transfers
Domestic and international fund transfers
Micro-payment handling
Mobile recharging
Commercial payment processing
Bill payment processing
Peer to Peer payments
Withdrawal at banking agent
Deposit at banking agent
Especially for clients in remote locations, it will be important to help them deposit and withdraw funds at banking agents, i.e., retail and postal outlets that turn cash into electronic funds and vice versa. The feasibility of such banking agents depends on local regulation which enables retail outlets to take deposits or not.
A specific sequence of SMS messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. When depositing money, the merchant receives cash and the system credits the client's bank account or mobile wallet. In the same way the client can also withdraw money at the merchant: through exchanging sms to provide authorization, the merchant hands the client cash and debits the merchant's account.

[edit] Investments
Portfolio management services
Real-time stock quotes
Personalized alerts and notifications on security prices

[edit] Support
Status of requests for credit, including mortgage approval, and insurance coverage
Check (cheque) book and card requests
Exchange of data messages and email, including complaint submission and tracking
ATM Location

[edit] Content Services
General information such as weather updates, news
Loyalty-related offers
Location-based services
Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the younger, more "tech-savvy" customer segment. A third of mobile phone users say that they may consider performing some kind of financial transaction through their mobile phone. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment.rograms called clients downloaded to the mobile device.

threats to online banking

2009-09-10T01:09:00.000-07:00

Network Security,
Online Banking,
Security Management amples presented in this paper shows that the biggest threat to online banking is still malicious code executed carelessly on the end-user's computer. The attackers tend to target the weakest link. Once the attacker has control over a user's computer, he or she can modify the information flow to his or her advantage. This may have happened in the case of the businessman from Miami. The situation most likely will not change until new transaction methods are introduced. So, whenever using an online financial system, ensure that the system is still under control and not a spoofed puppet, or one could end up featuring as the businessman in the next fraud case article.

banking regulations

2009-09-10T01:06:00.000-07:00

Objectives of bank regulation
The objectives of bank regulation, and the emphasis, varies between jurisdiction. The most common objectives are:
Prudential -- to reduce the level of risk bank creditors are exposed to (i.e. to protect depositors)
Systemic risk reduction -- to reduce the risk of disruption resulting from adverse trading conditions for banks causing multiple or major bank failures
Avoid misuse of banks -- to reduce the risk of banks being used for criminal purposes, e.g. laundering the proceeds of crime
To protect banking confidentiality
Credit allocation -- to direct credit to favored sectors

[edit] General principles of bank regulation
Banking regulations can vary widely across nations and jurisdictions. This section of the article describes general principles of bank regulation throughout the world.

[edit] Minimum requirements
Requirements are imposed on banks in order to promote the objectives of the regulator. The most important minimum requirement in banking regulation is maintaining minimum capital ratios.

[edit] Supervisory review
Banks are required to be issued with a bank license by the regulator in order to carry on business as a bank, and the regulator supervises licenced banks for compliance with the requirements and responds to breaches of the requirements through obtaining undertakings, giving directions, imposing penalties or revoking the bank's licence.

[edit] Market discipline
The regulator requires banks to publicly disclose financial and other information, and depositors and other creditors are able to use this information to assess the level of risk and to make investment decisions. As a result of this, the bank is subject to market discipline and the regulator can also use market pricing information as an indicator of the bank's financial health.

[edit] Instruments and requirements of bank regulation

[edit] Capital requirement
Main article: Capital requirement
The capital requirement sets a framework on how banks must handle their capital in relation to their assets. Internationally, the Bank for International Settlements' Basel Committee on Banking Supervision influences each country's capital requirements. In 1988, the Committee decided to introduce a capital measurement system commonly referred to as the Basel Capital Accords. The latest capital adequacy framework is commonly known as Basel II. This updated framework is intended to be more risk sensitive than the original one, but is also a lot more complex.

[edit] Reserve requirement
Main article: Reserve requirement
The reserve requirement sets the minimum reserves each bank must hold to demand deposits and banknotes. This type of regulation has lost the role it once had, as the emphasis has moved toward capital adequacy, and in many countries there is no minimum reserve ratio. The purpose of minimum reserve ratios is liquidity rather than safety. An example of a country with a contemporary minimum reserve ratio is Hong Kong, where banks are required to maintain 25% of their liabilities that are due on demand or within 1 month as qualifying liquefiable assets.
Reserve requirements have also been used in the past to control the stock of banknotes and/or bank deposits. Required reserves have at times been gold coin, central bank banknotes or deposits, and foreign currency.

[edit] Corporate governance
Corporate governance requirements are intended to encourage the bank to be well managed, and is an indirect way of achieving other objectives. Requirements may include:
To be a body corporate (i.e. not an individual, a partnership, trust or other unincorporated entity)
To be incorporated locally, and/or to be incorporated under as a particular type of body corporate, rather than being incorporated in a foreign jurisdiction.
To have a minimum number of directors
To have an organisational structure that includes various offices and officers, e.g. corporate secretary, treasurer/CFO, auditor, Asset Liability Management Committee, Privacy Officer etc. Also the officers for those offices may need to be approved persons, or from an approved class of persons.
To have a constitution or articles of association that is approved, or contains or does not contain particular clauses, e.g. clauses that enable directors to act other than in the best interests of the company (e.g. in the interests of a parent company) may not be allowed.

[edit] Financial reporting and disclosure requirements
Banks may be required to:
Prepare annual financial statements according to a financial reporting standard, have them audited, and to register or publish them
Prepare more frequent financial disclosures, e.g. Quarterly Disclosure Statements
Have directors of the bank attest to the accuracy of such financial disclosures
Prepare and have registered prospectuses detailing the terms of securities it issues (e.g. deposits), and the relevant facts that will enable investors to better assess the level and type of financial risks in investing in those securities.

[edit] Credit rating requirement
Banks may be required to obtain and maintain a current credit rating from an approved credit rating agency, and to disclose it to investors and prospective investors. Also, banks may be required to maintain a minimum credit rating.

division of banking

2009-09-10T01:04:00.000-07:00

Main Phone: 609-292-7272
The Division of Banking consists of two major units - the Office of Consumer Finance and the Office of Depositories.
The Office of Consumer Finance provides consumer protections through the regulation of 16 types of businesses that provide a variety of consumer financial services. Included in the Office's supervisory responsibilities are the investigation of complaints, on-site examinations, the monitoring of net worth and surety bonding requirements through annual report filings, and the initiation of enforcement actions as may be required. In addition, the Office supervises state-chartered credit unions through on-site examinations and report filings to ensure safety and soundness, as well as compliance with applicable state and federal laws.
The Office of Depositories processes and reviews applications by depository institutions for new charters, branches, relocations, plans of acquisition, mergers, bulk sales, stock conversions and auxiliary offices. In addition, the Office is responsible for the examination of state-chartered commercial banks, savings banks and savings and loan institutions and for enforcement actions involving these depositories.

banking and securities

2009-09-10T01:00:00.000-07:00

Total Assets of Banks andCredit Unions in Alaska
Total assets for all banks with home offices in Alaska were $4,581,657,000 as of December 31, 2008, an increase of $179,323,000 or 4.07% from a year ago. This total excludes Key Bank, National Association and Wells Fargo Bank, National Association, which are interstate branches and do not furnish balance sheet information for Alaska.
Total assets of all state-chartered banks in Alaska were $1,953,698,000 as of December 31, 2008, an increase of $48,465,000, or 2.54% from a year ago. Approximately 43% of the total assets of all banks headquartered in Alaska were held in state-chartered institutions.
Total assets for all credit unions in Alaska were $5,544,045,216 as of December 31, 2008, an increase of $473,375,573 or 9.34% from December 31, 2007. Total assets for all state-chartered credit unions in Alaska were $624,672,189 as of December 31, 2008, an increase of $83,679,791 or 15.47 % from the end of 2007. Approximately 11.27% of the total assets of all credit unions were held in state-chartered institutions.

banking sectors

2009-09-10T00:57:00.000-07:00

The once boisterous media industry comprising traditional news media and advertising agencies, is now experiencing trying times. This follows reduction in the volume of adverts occasioned by the recession, centralisation of global marketing communication budgets by multinationals and increasing newsprint costs. Some local advertising agencies have become office extensions to global media agencies that control multinationals’ account. Therefore, they now affiliate themselves with international advertising groups that conceptualise the ads from which they make adaptations for the local audience. Effects of recessionInstitutional advertisers, whether local or foreign, regarded as the goose, are traumatised by the hard economic times and therefore have had to cut ad spend. For this reason, the advertising agencies and news media which feed on the golden eggs are facing difficult times. Presently, advertisement placements in mostly the print media have been scaled down by the banking and manufacturing industries that had earlier reviewed their marketing communication budgets downwards as a measure to hedge the global recession. The chief executive of a professional body who prefers anonymity notes that the multinationals who dominate the economy and whose ads spend account for over 60 percent of total ads spend in Nigeria, had recently cut down on their budgets due to the recession. This situation, he says, seriously pushed the media industry into a tight corner. For instance, Lere Alimi of Optimum Exposures confirms that the outdoor advertising business has been tremendously affected, just as the former president of AAAN, Lolu Akinwunmi, agrees that agencies are facing difficult times. Also, the president of Outdoor Advertising Association of Nigeria (OAAN), Kole Ademulegun, recently noted that “most clients are not renewing expired site rental contracts, and when contracts are renewed, some clients are asking for reduction in rates, sometimes by as much as 50 percent.” Wrap around ceasesThe present development is a sharp contrast to the period between 2005 and 2008, when it was calculated by operators in the consulting business that the media industry raked in over N2 billion from wrap around advertisement alone. The wrap around boomed during the consolidation exercise in the banking industry, when companies floated their initial public offers (IPOs), which saw increase in their capitalisation But following the stock market crash late last year, coupled with the global financial meltdown, companies have discontinued to engage in any form of wrap around advert that costs an average of N16 million per newspaper. Companies now rely on conventional ads that cost an average of N300.000 for full page to promote their brands. CBN order on banks to curtail adsBut observers in both advertising agencies and the news media are worried that wrap around appears further nailed, especially from the financial sector following the CBN’s directive late March to banks to curtail their adverts. The CBN had in March this year issued a directive to banks to restrict the publication of their annual reports to just two national dailies of their choice, a policy that the present management of CBN may not review. The restriction further denied the advertising agencies and the traditional news media advert revenues as the media outlets now struggle to find ways to become profitable again. Predictably, the fear of media columnists who drew their sword from the sheath against the CBN governor for giving an order that threatened their livelihood was not allayed as the policy indeed affected the media revenue. Within this period, the weight of global recession set in and forced companies including banks to review downwards their marketing communication budgets, a development that compelled advertising agencies and other media houses to downsize their workforce. As in the western world, observers issued the direst near-term forecast for the advertising industry, warning that the advertising business will shrink this year. For instance, Kunle Alake, the chief operating officer of Dangote Group predicted that some plants would shut down while others would go lean in operations. When this happens, it is expected that advertisement would take back stage. Recent stir in banking sector as another blowForeseeing all the challenges that lay ahead, operators in the media industry who had been holding series of seminars this year to check the effects of slide in volume of business appear further frustrated with the recent stir in the banking industry. The stir has resulted into freezing of credit to the economy by the banking sector, a situation that ultimately will stifle other sectors, especially the manufacturing and SME sector, a development analysts describe as precarious for an economy that is in a hurry for growth. The banking sector had in the face of the situation further scaled down their advertisement in the newspapers, while the advertising agencies who depend on these adverts for survival are not finding this easy, a chief executive of an agency confided in BusinessDay.He agreed that the problem of the five banks had affected the entire economy and worsened the effect of the recession on the advertising and traditional news media industry. Sources in some media houses put the reduction in the volume of advertising to about 30 percent as some of the banks whose credits are trapped with debtors may not want to embark on heavy product advertisement now, as what they needed is confidence build-up which could be achieved through public relations. Ken Egbas of TruContact lent credence to this when he said time of crisis was not the time for advertisement, it was time to use PR.These actions have resulted in adoption of some survival measures among marketing communication agencies and news media, and this includes cutting operational costs.

Finance, Banking and Investment

2009-09-10T00:54:00.000-07:00

For the entrepreneur and the investor alike, finance, and therefore finance related information, is of paramount importance. This page lists and rates internet resources related to financial matters and financial information including real time financial news, information on banks and financial institutions, financial analysis software, small business financing, investment, stock exchanges and market informAsian equity markets were mostly higher, with financial stocks gaining and technology shares aided by a positive update from Texas Instruments. The Nikkei gained 1.5%.ation, etc.

bank

2009-09-10T00:51:00.000-07:00

bank is a financial institution licensed by a government. Its primary activities include borrowing and lending money. Many other financial activities were allowed over time. For example banks are important players in financial markets and offer financial services such as investment funds. In some countries such as Germany, banks have historically owned major stakes in industrial corporations while in other countries such as the United States banks are prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the zaibatsu. In France, bancassurance is prevalent, as most banks offer insurance services (and now real estate services) to their clients.
The level of government regulation of the banking industry varies widely, with countries such as Iceland, the United Kingdom and the United States having relatively light regulation of the banking sector, and countries such as China having relatively heavier regulation (including stricter regulations regarding the level of reservesTraditional banking activities

Large door to an old bank vault.
Banks act as payment agents by conducting checking or current accounts for customers, paying cheques drawn by customers on the bank, and collecting cheques deposited to customers' current accounts. Banks also enable customer payments via other payment methods such as telegraphic transfer, EFTPOS, and ATM.
Banks borrow money by accepting funds deposited on current accounts, by accepting term deposits, and by issuing debt securities such as banknotes and bonds. Banks lend money by making advances to customers on current accounts, by making installment loans, and by investing in marketable debt securities and other forms of money lending.
Banks provide almost all payment services, and a bank account is considered indispensable by most businesses, individuals and governments. Non-banks that provide payment services such as remittance companies are not normally considered an adequate substitute for having a bank account.
Banks borrow most funds from households and non-financial businesses, and lend most funds to households and non-financial businesses, but non-bank lenders provide a significant and in many cases adequate substitute for bank loans, and money market funds, cash management trusts and other non-bank financial institutions in many cases provide an adequate substitute to banks for lending savings to.[).

banking in islam

2009-09-10T00:49:00.000-07:00

Islamic banking refers to a system of banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. Sharia prohibits the payment of fees for the renting of money (Riba, usury) for specific terms, as well as investing in businesses that provide goods or services considered contrary to its principles (Haraam, forbidden). While these principles were used as the basis for a flourishing economy in earlier times, it is only in the late 20th century that a number of Islamic banks were formed to apply these principles to private or semi-private commercial institutions within the Muslim community.Classical Islamic banking
Main article: Islamic economics in the world
Further information: Early reforms under Islam
During the Islamic Golden Age, early forms of proto-capitalism and free markets were present in the Caliphate,[1] where an early market economy and an early form of mercantilism were developed between the 8th-12th centuries, which some refer to as "Islamic capitalism".[2] A vigorous monetary economy was created on the basis of the expanding levels of circulation of a stable high-value currency (the dinar) and the integration of monetary areas that were previously independent.
A number of innovative concepts and techniques were introduced in early Islamic banking, including bills of exchange, the first forms of partnership (mufawada) such as limited partnerships (mudaraba), and the earliest forms of capital (al-mal), capital accumulation (nama al-mal),[3] cheques, promissory notes,[4] trusts (see Waqf), startup companies,[5], transactional accounts, loaning, ledgers and assignments.[6] Organizational enterprises similar to corporations independent from the state also existed in the medieval Islamic world, while the agency institution was also introduced during that time.[7][8] Many of these early capitalist concepts were adopted and further advanced in medieval Europe from the 13th century onwards.[3]

[edit] Riba
The definition of riba in classical Islamic jurisprudence was "surplus value without counterpart." or "to ensure equivalency in real value" and that "numerical value was immaterial." During this period, gold and silver currencies were the benchmark metals that defined the value of all other materials being traded. Applying interest to the benchmark itself (ex natura sua) made no logical sense as its value remained constant relative to all other materials: these metals could be added to but not created (from nothing).
Applying interest was acceptable under some circumstances. Currencies that were based on guarantees by a government to honor the stated value (i.e. fiat currency) or based on other materials such as paper or base metals were allowed to have interest applied to them.[9] When base metal currencies were first introduced in the Islamic world, no jurist ever thought that "paying a debt in a higher number of units of this fiat money was riba" as they were concerned with the real value of money (determined by weight only) rather than the numerical value. For example, it was acceptable for a loan of 1000 gold dinars to be paid back as 1050 dinars of equal aggregate weight (i.e., the value in terms of weight had to be same because all makes of coins did not carry exactly similar weight).

[edit] Modern Islamic banking
The first modern experiment with Islamic banking was undertaken in Egypt under cover without projecting an Islamic image—for fear of being seen as a manifestation of Islamic fundamentalism that was anathema to the political regime. The pioneering effort, led by Ahmad Elnaggar, took the form of a savings bank based on profit-sharing in the Egyptian town of Mit Ghamr in 1963. This experiment lasted until 1967 (Ready 1981), by which time there were nine such banks in the country.[10]

This section requires expansion.
In 1972, the Mit Ghamr Savings project became part of Nasr Social Bank which, till date, is still in business in Egypt. In 1975, the Islamic Development Bank was set-up with the mission to provide funding to projects in the member countries. The first modern commercial Islamic bank, Dubai Islamic Bank, opened its doors in 1975. In the early years, the products offered were basic and strongly founded on conventional banking products, but in the last few years the industry is starting to see strong development in new products and services.
Islamic Banking is growing at a rate of 10-15% per year and with signs of consistent future growth[11]. Islamic banks have more than 300 institutions spread over 51 countries, including the United States through companies such as the Michigan-based University Bank, as well as an additional 250 mutual funds that comply with Islamic principles. Conservative estimates suggest that over US$500 billion of assets are managed according to Islamic investment principles.
The World Islamic Banking Conference, held annually in Bahrain since 1994, is internationally recognized as the largest and most significant gathering of Islamic banking and finance leaders in the world.
The Vatican has put forward the idea that "the principles of Islamic finance may represent a possible cure for ailing markets."[12]

[edit] Principles
Islamic banking has the same purpose as conventional banking except that it operates in accordance with the rules of Shariah, known as Fiqh al-Muamalat (Islamic rules on transactions). The basic principle of Islamic banking is the sharing of profit and loss and the prohibition of riba (usury). Common terms used in Islamic banking include profit sharing (Mudharabah), safekeeping (Wadiah), joint venture (Musharakah), cost plus (Murabahah), and leasing (Ijarah).
In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in installments. However, the fact that it is profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. This arrangement is called Murabaha. Another approach is EIjara wa EIqtina, which is similar to real estate leasing. Islamic banks handle loans for vehicles in a similar way (selling the vehicle at a higher-than-market price to the debtor and then retaining ownership of the vehicle until the loan is paid).
An innovative approach applied by some banks for home loans, called Musharaka al-Mutanaqisa, allows for a floating rate in the form of rental. The bank and borrower forms a partnership entity, both providing capital at an agreed percentage to purchase the property. The partnership entity then rent out the property to the borrower and charges rent. The bank and the borrower will then share the proceed from this rent based on the current equity share of the partnership. At the same time, the borrower in the partnership entity also buys the bank's share on the property at agreed installments until the full equity is transferred to the borrower and the partnership is ended. If default occurs, both the bank and the borrower receives the proceeds from an auction based on the current equity. This method allows for floating rates according to current market rate such as the BLR (base lending rate), especially in a dual-banking system like in Malaysia.
There are several other approaches used in business transactions. Islamic banks lend their money to companies by issuing floating rate interest loans. The floating rate of interest is pegged to the company's individual rate of return. Thus the bank's profit on the loan is equal to a certain percentage of the company's profits. Once the principal amount of the loan is repaid, the profit-sharing arrangement is concluded. This practice is called Musharaka. Further, Mudaraba is venture capital funding of an entrepreneur who provides labor while financing is provided by the bank so that both profit and risk are shared. Such participatory arrangements between capital and labor reflect the Islamic view that the borrower must not bear all the risk/cost of a failure, resulting in a balanced distribution of income and not allowing lender to monopolize the economy.
And finally, Islamic banking is restricted to Islamically acceptable transactions, which exclude those involving alcohol, pork, gambling, etc. Thus ethical investing is the only acceptable form of investment, and moral purchasing is encouraged. In theory, Islamic banking is an example of full-reserve banking, with banks achieving a 100% reserve ratio.[13] However, in practice, this is not the case, and no examples of 100 per cent reserve banking are observed.[14]
Islamic banks have grown recently in the Muslim world but are a very small share of the global banking system. Micro-lending institutions founded by Muslims, notably Grameen Bank, use conventional lending practices and are popular in some Muslim nations, especially Bangladesh, but some do not consider them true Islamic banking. However, Muhammad Yunus, the founder of Grameen Bank and microfinance banking, and other supporters of microfinance, argue that the lack of collateral and lack of excessive interest in micro-lending is consistent with the Islamic prohibition of usury (riba).[15][16]

[edit] Shariah Advisory Council/Consultant
Islamic banks and banking institutions that offer Islamic banking products and services (IBS banks) are required to establish a Shariah Supervisory Board (SSB) to advise them and to ensure that the operations and activities of the bank comply with Shariah principles. On the other hand, there are also those who believe that no form of banking can ever comply with the Shariah.[17]
In Malaysia, the National Shariah Advisory Council, which additionally set up at Bank Negara Malaysia (BNM), advises BNM on the Shariah aspects of the operations of these institutions and on their products and services. (See: Islamic banking in Malaysia). In Indonesia the Ulama Council serves a similar purpose.
A number of Shariah advisory firms (either standalone or subsidiaries of larger financial groups) have now emerged to offer Shariah advisory services to the institutions offering Islamic financial services. Issue of independence, impartiality and conflicts of interest have also been recently voiced.

banking in india

2009-09-10T00:47:00.000-07:00

Banking in India originated in the last decades of the 18th century. The oldest bank in existence in India is the State Bank of India, a government-owned bank that traces its origins back to June 1806 and that is the largest commercial bank in the country. Central banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over these responsibilities from the then Imperial Bank of India, relegating it to commercial banking functions. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. In 1969 the government nationalized the 14 largest commercial banks; the government nationalized the six next largest in 1980.
Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively