KINDS OF BANKS Types of Banks on the basis of sphere of activities: The commercial banks are classified into various

types on the basis of their sph eres of activities, ownership, domicile etc. The main types of banks in Pakistan are as under:(A) Classification on the basis of functions (1) Every civilized country now has its own central bank. The primary function o f the central bank is to regulate the flow of money and credit in order to promo te efficiency, stability and growth in the country. In Pakistan State Bank of Pa kistan, is the country s central bank. (In England it in Bank of England, in Ameri ca it is the Federal Reserve System). (2) Commercial Banks. Commercial Banks are those banks which are engaged in performing the routine dut ies of banking business. They collect surplus money from the people. They make l oans and advances in the form of overdrafts, cash credits, discounting bills of exchange. Commercial banks also manufacture credit money. They also provide agen cy services and general utility services. The banks, in short are considered the lifeblood of the economic society. In Pakistan National Bank of Pakistan, Unite d Bank Limited, Habib Bank Limited, etc. are performing the functions of commerc ial banks (3) Exchange Banks. Exchange banks mainly deal with international trade. These banks take the respo nsibility of settlement of foreign exchange and arrange the foreign business. In Pakistan, all the nationalized commercial banks have been allowed to do the bus iness of exchange banks. (4) Saving Banks. Saving banks are those banks which collect and keep the small savings of the pub lic. They are called thrift promoting institutions. The saving banks invest the funds in the safest government securities. Post offices and saving centers perfo rm the business of saving banks in Pakistan. (5) Agricultural Banks. Agricultural banks are set up to provide financial assistance to the agriculturi sts. The agricultural banks provide short term credit to the farmers for the pur chase of seeds, manure, etc. They also make medium term advances for buying trac tors and introducing modern techniques in farming. In Pakistan, Agricultural Dev elopment Bank of Pakistan was set up in 1981 for meeting the financial requireme nt of agriculture. (6) Industrial Banks. The industrial banks mainly provide medium and long term credit to the industrie s. Since the industrial banks have long term deposits, they are in a position to permit long term investment in industries. In Pakistan, the Industrial Developm ent Bank (IDBP) was set up in 1961. The other institutions engaged in providing financial assistance to industries are PICIC, NDFC, ICP, etc. (B) Classification on the basis of ownership (7) The banks are classified, on the basis of ownership, into three categories i .e., (i) Public sector banks, (ii) Private sector banks, (iii) Cooperative banks . (a) Public sector banks. They are owned and controlled by the government such as National Bank, Habib Ban k etc. (b) Private sector banks. These are owned by corporations such MCB, ABL, City Bank etc.

(c) Cooperative banks. Cooperative banks are established mainly to provide short and medium term loans for rural development in general. In Pakistan, these banks are set up under the Cooperative Society Act of 1925 in the country. (8) The (a) (b) y. Classification on the basis of domicile. banks are divided on the basis of domicile into two categories Domestic banks which are registered and incorporated within the country and Foreign banks which have their origin and head offices in the foreign countr

(9) Scheduled and non-scheduled banks. (i) The scheduled banks are those which have paid up capital reserves of not les s than Rs. 5 million in Pakistan. They are members of the clearing house managed and supervised by SBP. (ii) The non scheduled banks are those which are not included in the Second Sche dule of State Bank of Pakistan (SBP) Act, 1956. They have a minimum paid up capi tal value of Rs. fifty thousand but does not exceed Rs. five million.