Kinds/types of banks

 

The main types of banks in Pakistan are as under.

1.                 Central bank:

The primary function of the central bank is to regulate the flow of money and credit in order to promote efficiency, stability and growth in the country.

2.                 Commercial banks:

Commercial banks collect surplus money from the people. They make loans and advances. These banks collect the money on low rate of interest from the people and use this money to make loans to the businessmen on high rate of interest and the difference in the ration of interest is the project or main resource of income of commercial banks.

3.                 Exchange banks:

These banks take the responsibility of settlement of foreign exchange and arrange the foreign business.

4.                 Saving bank:

Saving bank is those banks which collect and keep the small savings of people. The saving banks invest the funds in the safest government securities.

5.                 Agriculture banks:

The agriculture bank provides medium and short term credit to the formers for the purchase of seeds, manure etc. they provides loans for buying tractors and introducing modern techniques in farming in Pakistan.

6.                 Industrial bank:

The industrial bank provides medium and short term loans to the industries. Since the industrial banks have long term deposits, they are in a position to  permit long investment in industries.