• What is Banking?

    Banking is defined as the method of accepting deposits in the form of Cash from some entities with surplus money (lenders and depositors) and lending these funds to the needy entities with need of cash or money (borrowers).

    Banking is one of the most important services in financial sector which builds the base of a country. The main functions of banking sector are outlined below

    • It provides liquidity for economic growth of a country
    • It acts as the main pillar of the whole financial system
    • It offers safety for the depositors who want to deposit their savings in the Bank
    • It offers liquidity for the borrowers both on short and long term basis based on their need
    • If provides credit or loan to dealers, households, small as well as large business houses
    • It helps to manage all the financial transactions between different parties
    • It provides the Government the flexibility to reach to the masses across the country

    Efficiency of a bank depends on its ability to satisfy its investors and customers by offering better interest rate and services compared to its peers. Their main source of profit is the interest spread between the interest earned from lending and expensed from borrowing of money.

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