Economics

TOPIC•Banking System

•Bank•H/O of State Bank•Functions & Role Of State Bank

•Interest•What is Interest Rate•Advantages % Disadvantages of Interest•Economics Important•Interest Rate in Pakistan

Introduction

• Kamran Ali– Roll#03

• Waqar Aslam– Roll#36From: MBA-14-I

• Teacher– Mam Anika

Shaheed Benazir Bhutto University

(SBBU)

Banking System

Structural  network of institutions that offer financial services within a country.Banking System is a principal mechanism through which the money supply of the country is created and controlled.

Bank

An officially chartered institution empowered to receive deposits, make loans, and provide checking and savings account services, all at a profit.

History Of State BankBefore independence on 14 August 1947, the Reserve Bank of India (central

bank of India) was the central bank for what is now Pakistan.

On 30 December 1948 the British Government's commission distributed the

Bank of India's reserves between Pakistan and India - 30 percent for Pakistan

and 70 percent for India.

The losses incurred in the transition to independence were taken from

Pakistan's share (a total of 230 million). In May, 1948, Mr. Jinnah took steps to

establish the SBP immediately. These were implemented in June 1948, and

the State Bank of Pakistan commenced operation on July 1, 1948.

Functions & Roles of “SBP”

What Is Interest Rate

• Interest rate is the extra amount of money charge on the borrowed money or asset.

• First time use in French Central Bank for controlling money supply and stability in economy in 1847.

Advantages & Disadvantages

• In Case of High Interest– People maximum invest in banks (Savings)– Purchase bonds– Provide loans

• In Case of Low Interest Rate– People takes Maximum Loan– Benefits on Mortgage– Investment in market (Saving Things)

• Interest rates are one of the major drivers of our economy, setting the pace for investment markets. Learning how interest rate changes can influence the marketplace can also help you understand how they impact your wallet.

Economics Important

Economic Importants

Rs: 125 150 175

Amount of money Demanded and Supplied(Millions of Rupees)

Rs: 15 20 25

Amount of Investment(Millions of Rupees)

10

8

6

0

Rate of Interest, (Percent)

Money Investment

Interest Rate (IR) in Pakistan

• Minimum IR 7.50 in 2002, Maximum IR 20% in 1996 and current IR is 8%.

• Simple interest • Compound interest• Floating Interest

CONCLUSION

TIME